TIDMGMR
RNS Number : 8024Q
Gaming Realms PLC
22 February 2019
22 February 2019
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Gaming Realms plc
("Gaming Realms" or the "Company" or, together with its
subsidiaries, the "Group")
Proposed sale of Bear Group Limited, licensing of real money
gaming platform and sale of residual interest in River UK Casino
Limited
and
Notice of General Meeting
Gaming Realms plc (GMR.L), the developer, publisher and licensor
of mobile real money and social games, announces that the Company
has entered into agreements with River iGaming plc, a company
listed on the Merkur Market of the Oslo Bors ("River iGaming"
which, together with its subsidiaries and associated companies, are
the "River Group Companies") and certain other River Group
Companies. Under these agreements, which are conditional amongst
other things upon shareholder and regulatory approval, the Company
will sell the entire issued share capital of Bear Group Limited
("Bear Group"), the Company's real money operating subsidiary, to
River Game Operations Limited ("RGO", a River Group Company) and
grant River Technologies Limited ("RTL", also a River Group
Company) a sole perpetual licence to the Group's real money gaming
platform, as well as sell its residual 30% stake in River UK Casino
Limited ("River UK Casino") to River iGaming.
The cash consideration for these transactions will total GBP11.5
million, which will include the settlement of the contracted
deferred consideration of GBP4.2 million owed by River UK Casino to
the Group (due in October 2020) under the terms of the Acquisition
(as defined below) (the "Contracted Deferred Consideration"). All
the above proposed transactions comprise the "Transaction" as
described in further detail below.
Transaction highlights and background:
-- RGO will acquire Bear Group and RTL will be granted a sole
perpetual licence to the Group's real money gaming platform
-- River iGaming will acquire the Company's 30% stake in River
UK Casino and accelerate payment of the Contracted Deferred
Consideration
o As announced on 27 June 2018, River UK Casino agreed to
acquire certain real money gaming brands owned by Gaming Realms,
namely Pocket Fruity, Spin Genie, Britain's Got Talent Games, X
Factor Games and the associated business (the "Acquisition")
o Following completion of the Acquisition, River iGaming held a
70% stake in River UK Casino and the Company held the remaining 30%
stake (subject to a mutual put and call option arrangement
exercisable no later than 31 October 2020)
o Gaming Realms is of the opinion that River UK Casino is
unlikely to meet the GBP2.2 million EBIT target for the 12 months
to 30 June 2019 required for the Company to gain any further
deferred consideration in connection with the Acquisition (as set
out on 27 June 2018) beyond the Contracted Deferred
Consideration
o The Transaction will terminate the terms of the Acquisition
documents, save for continuation of certain of the warranties given
by the Company pursuant to the Acquisition documents
-- The total consideration payable to the Group on completion of
the Transaction (unless otherwise stated) is GBP11.5 million in
cash (which includes the settlement of the Contracted Deferred
Consideration) and comprises:
o a total payment of GBP7.0 million under the terms of the Share
Purchase Agreement entered into today in relation to the
Transaction pursuant to which the Group shall sell both the entire
issued share capital of Bear Group and its 30% stake in River UK
Casino. Of such total payment, GBP5.5 million is payable on
completion and GBP1.5 million is payable without set-off on or
before 31 December 2020; and
o a payment of GBP4,497,000 million in respect of the sole
perpetual licence of the Group's real money gaming platform and
GBP3,000 in respect of the 30% stake in River UK Casino
-- River UK Casino has repaid the Company's outstanding working
capital loan to River UK Casino of GBP0.9 million (net of any sums
owing by the Group)
-- The net consideration from the Transaction will provide
sufficient working capital for the development of games, the remote
game server and worldwide licensing. In addition, it will provide
resources for the repayment by the Group of the GBP3.5 million loan
from JPJ Group Plc (entered into in December 2017)
-- The Group will retain the Slingo brand and slingo.com IP, and
shall, on completion, enter into a white label agreement with River
iGaming ensuring that the Group's slingo.com brand can continue to
operate on the Bear Group gaming platform
-- For the 12 months ended 31 December 2017 (audited) ("FY17"),
Bear Group and the real money gaming platform, being sold as part
of the Transaction, delivered GBP8.8 million of net gaming revenue
and adjusted EBITDA of GBP0.5 million
-- The Transaction is subject to the approval of both Gaming
Realms' and River iGaming's shareholders, as well as the UK and
Alderney Gambling Commissions, and certain other third party
consents, and is expected to complete in Q2 2019
Strategic rationale
-- The Transaction is in line with the Company's strategy of
focusing its resources on content development and international
licensing of the Slingo brand and IP. Gaming Realms is already
building an excellent pedigree in this area having developed and
launched approximately 20 games to date, and the Board believes it
makes strategic sense to build on this success. The revenue from
games licensing grew 220% from GBP0.55 million in FY17 to GBP1.75
million for the unaudited 12 months ended 31 December 2018
("FY18")
-- The Transaction is expected to result in a reduction of the
Group's operating and administrative expenses amounting to
approximately GBP3 million on an annualised basis
Current Trading
The Board announces that the unaudited trading results for FY18
are expected to show revenue and adjusted EBITDA in line with
market expectations, with an adjusted EBITDA loss of approximately
GBP0.7 million (unaudited). As a result of the Transaction and
looking to the future, the Group will focus on the development and
licensing of proprietary online games, which had a strong FY18, and
revenue for the first six weeks of 2019 was running 118% above the
daily average of FY18.
Commenting on the proposed Transaction, Patrick Southon, CEO of
Gaming Realms, said:
"The new UK regulatory environment, together with increases in
Point of Consumption tax, has made it increasingly difficult to
operate a sole UK facing casino and real money platform. However,
the acquisition of the Slingo brand and IP in 2015 has enabled the
Company to become a highly regarded developer and licensor of games
in the international gaming market. This is a high growth market
and one that the Board believes can be further developed for the
benefit of shareholders."
Notice of General Meeting
The Transaction is deemed to be a "fundamental change of
business" as described in Rule 15 of the AIM Rules for Companies
and, therefore, the Company is required to seek the consent of
Gaming Realms' shareholders, which it is doing by way of a
resolution (the "Resolution") to be proposed at a general meeting
to be held at 11.30 a.m. on Monday, 18 March 2019 at the offices of
Memery Crystal LLP, 165 Fleet St, London EC4A 2DY (the "General
Meeting"). The Transaction is also conditional on the approval of
River iGaming's shareholders and on receiving regulatory and
certain third party consents.
The Notice of General Meeting and accompanying circular, which
will provide further details of the proposed Transaction, will be
sent to Gaming Realms' shareholders and will be available on the
Company's website on Friday, 22 February 2019.
Intentions to vote in favour
The Directors, who in aggregate hold 48,734,052 ordinary shares
of 10p each in the Company ("Ordinary Shares"), representing 17.1%
of the current issued share capital, have irrevocably agreed to
vote in favour of the Resolution to be proposed at the General
Meeting.
As at 20 February 2019 (being the latest practicable date prior
to the publication of this announcement), 284,428,747 Ordinary
Shares were in issue (no Ordinary Shares were held in treasury).
Accordingly, the total number of voting rights of the Company as at
20 February 2019 was 284,428,747.
Enquiries:
Gaming Realms plc 0845 123 3773
Patrick Southon, CEO
Mark Segal, CFO
Akur Limited (Financial Adviser) 020 7493 3631
David Shapton
Siobhan Sergeant
Matthew Smith
Peel Hunt LLP (Nominated Adviser and
Broker) 020 7418 8900
Dan Webster
George Sellar
Guy Pengelley
Yellow Jersey (PR Adviser) 07747 788 221
Charles Goodwin
Georgia Colkin
About Gaming Realms
Gaming Realms creates and publishes innovative real money and
social games for mobile, with operations in the UK, US and Canada.
Through its unique IP and brands, Gaming Realms is bringing
together media, entertainment and gaming assets in new game
formats. The Gaming Realms management team includes accomplished
entrepreneurs and experienced executives from a wide range of
leading gaming and media companies.
Disclaimer
The Transaction described in this announcement is conditional,
inter alia, on receiving certain third party consents and the
Resolution being passed by Gaming Realms' shareholders at the
General Meeting to be held at 11.30 a.m. on Monday, 18 March 2019
at the offices of Memery Crystal LLP, 165 Fleet St, London EC4A 2DY
for the purpose of considering and, if thought fit, passing the
Resolution.
Akur Limited ("Akur"), which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority ("FCA"), is
acting exclusively for the Company and for no-one else in
connection with the matters set out in this announcement. Akur will
not regard any other person (whether or not a recipient of this
announcement) as its client in relation to the Transaction and will
not be responsible to anyone other than the Company for providing
the protections afforded to its clients or for providing advice in
relation to the Transaction or any transaction or arrangement
referred to in this announcement.
Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated
in the United Kingdom by the FCA, is acting exclusively for the
Company and for no one else in relation to the matters set out in
this announcement. Peel Hunt will not regard any other person
(whether or not a recipient of this announcement) as its client in
relation to the Transaction and will not be responsible to anyone
other than the Company for providing the protections afforded to
its clients or for providing any advice in relation to the
Transaction or any transaction or arrangement referred to in this
announcement.
Apart from the responsibilities and liabilities, if any, which
may be imposed on Akur or Peel Hunt by FSMA or the regulatory
regime established thereunder, neither Akur nor Peel Hunt makes any
representation express or implied in relation to, or accepts any
responsibility whatsoever for, the contents of this announcement or
any other statement made or purported to be made by it or on its
behalf in connection with the Transaction. Both Akur and Peel Hunt
(and their affiliates) accordingly, to the fullest extent
permissible by law, disclaim all and any responsibility or
liability (save for any statutory liability) whether arising in
tort, contract or otherwise which it might have in respect of the
contents of this announcement or any other statement made or
purported to be made by it or on its behalf in connection with the
Transaction.
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END
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