Alliance Gaming Announces Amendment to the Purchase Agreement for Sierra Design Group
January 04 2005 - 7:00AM
PR Newswire (US)
Alliance Gaming Announces Amendment to the Purchase Agreement for
Sierra Design Group Completes Its Acquisition of SDG and Satisfies
the Three-Year Contingent Commitment for $40 Million LAS VEGAS,
Jan. 4 /PRNewswire-FirstCall/ -- Alliance Gaming Corp. (NYSE:AGI)
announced today that it has agreed to pay $40 million to buy out
the contingent consideration ("earnout") portion of the purchase
price paid for the acquisition of Sierra Design Group ("SDG"). The
original earnout was contingent upon SDG's achievement of certain
revenue and EBITDA targets over the next three fiscal years, and
could have resulted in Alliance paying additional consideration
totaling as much as $95 million. The Company agreed to a one-time
cash payment of $12 million, and delivery of a $28 million
unsecured promissory note payable over five years with interest at
LIBOR + 2%, to the former shareholder and certain employees of SDG
in full satisfaction of the earnout. The promissory note is payable
in cash or in shares of the Company's common stock, at the
Company's election, and may be prepaid at any time. The
consideration paid will be treated by Alliance as additional
purchase price for SDG, bringing the total purchase price to
approximately $165 million, and will be treated as additional
goodwill for accounting purposes. "The settlement of the contingent
consideration is one more step in the ongoing strategy of further
aligning each of our product lines within Bally Gaming and
Systems," stated President and Chief Executive Officer Richard
Haddrill. "In the time since the acquisition, the SDG product line
has proven to be a formidable force in the markets in which its
gaming devices and technology have been deployed, and as we further
utilize these technologies in traditional gaming venues it has
become more important to complete the purchase of the remaining
contingent consideration to further accelerate the integration of
SDG into one cohesive product provider, Bally Gaming and Systems.
From an economic standpoint, the SDG results have been accretive
since the acquisition, and the buyout represents a fair settlement
of the potential amounts contingently payable under the original
agreement." "With the continued integration of the SDG technology,
including the Alpha game platform, into the Bally product group, I
believe that we are poised to be able to offer our customers games
that are significantly enhanced from today's offerings," stated
Robert Luciano, Chief Technology Officer of the Company and founder
of SDG. As of the last reporting date of September 30, 2004,
contributions from the SDG acquisition have provided: *
Approximately 27 percent share of the New York lottery contract for
games operated in racinos. * 2,000 units and central determination
links placed in various Class II facilities throughout Oklahoma.
Given the recent positive legislative action in the state that
moves gaming to a defined compacted Class III environment, this is
expected to be a high growth market for the Company, as the market
moves to the regulated and approved equipment, and expands into new
and larger approved facilities. * More than 90 percent market share
placed in the Class II Florida Seminole facilities. * The central
determination linking of 10,600 units, or approximately 80 percent,
of the Washington state Class III market, where more than five
years ago SDG took a leading role in developing the centrally
determined technology used in this market. Alliance Gaming is a
diversified gaming company with headquarters in Las Vegas. The
Company is engaged in the design, manufacture, distribution and
operation of advanced gaming devices and systems worldwide and owns
and operates Rainbow Casino in Vicksburg, Miss. Additional
information about the Company can be found at
http://www.alliancegaming.com/. This news release may contain
"forward-looking" statements within the meaning of the Securities
Act of 1933, as amended, and is subject to the safe harbor created
thereby. Such information involves important risks and
uncertainties that could significantly affect the results in the
future and, accordingly, such results may differ from those
expressed in any forward- looking statements. Future operating
results may be adversely affected as a result of a number of risks
that are detailed from time to time in the Company's filings with
the Securities and Exchange Commission. For further information
please contact: Investors and Media, Robert L. Saxton of Alliance
Gaming, +1-702-270-7600. DATASOURCE: Alliance Gaming Corp. CONTACT:
Investors and Media, Robert L. Saxton of Alliance Gaming,
+1-702-270-7600 Web site: http://www.alliancegaming.com/
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