RNS Number:6300L
Leisure & Gaming plc
06 November 2006
6 November 2006
Leisure & Gaming plc ("L&G" or the "Company")
Sale of US-facing operations
Appointment of new Chief Executive Officer
Appointment of Corporate Synergy Plc as Nominated Adviser and Broker
Renegotiation of banking facilities and satisfaction of other sale conditions
and
Notice of Extraordinary General Meeting
Highlights
* Henry Birch to be appointed as Chief Executive Officer
* Corporate Synergy Plc appointed as Nominated Adviser and Broker
* Renegotiation of banking facilities and satisfaction of other conditions
subsequent to sale of US-facing operations
* Circular posted to shareholders today
* Extraordinary General Meeting ("EGM") will be held at 10.00 a.m. on 29
November 2006 at the offices of Berwin Leighton Paisner LLP, Adelaide House,
London Bridge, London EC4R 9HA
Philip Parker, Chairman of Leisure & Gaming plc said:
"We have today sent a circular to shareholders outlining our future plans for
the Company. We are strongly recommending that Shareholders vote in favour of
the Resolutions proposed at the EGM to be held on 29 November such that your
Board is given the opportunity to restore value to shareholders."
Enquiries:
Henry Birch/Josh Joshi, Leisure & Gaming plc, 020 7248 6343
Jonathon Brill/Billy Clegg/Caroline Stewart, Financial Dynamics, 020 7831 3113
John Prior/David Seal, Corporate Synergy Plc, 020 7448 4400
Your Board announced on 13 October 2006 that it has sold all of the shares of
its wholly-owned subsidiaries, Bon Bini, ECom ServCorp Inc., English Harbour,
Nine.com and VIP, to Stockdale, a newly incorporated company established by
Alistair Assheton, former Chief Executive of the Company. The Sale represented
the divestiture of all US-facing operating assets of the Company ahead of the
signing into law of the SAFE Port Act (including the associated Unlawful
Internet Gambling Enforcement Act). The consideration for the Sale was $1. There
were various conditions subsequent (the "Conditions") to the Sale, including the
ratification of the Sale by the Company's shareholders.
Your Board is pleased to announce that it has today posted a circular to
shareholders convening an EGM and that, subject to (i) the passing of
Resolutions 1 and 2 at the EGM; and (ii) appropriate documentation being
executed to reflect the terms of the agreed banking facilities with Barclays,
all of the Conditions have now been satisfied. Further details of the terms of
the Sale and the Conditions (including how they have been satisfied) are set out
in paragraphs 2 and 3 below. The Continuing Group comprises the BetShop group
businesses which the Directors will seek to further develop into a leading
European gaming group.
The Board is also pleased to announce that Henry Birch has agreed to join the
Company's board as Chief Executive Officer, subject only to the Resolutions
being passed at the EGM, Alistair Assheton having stood down from the Company's
board immediately prior to the Sale being effected.
Your Board also announces that it has today appointed Corporate Synergy as its
Nominated Adviser and Broker for the purposes of the AIM Rules.
1. Background
History
Leisure & Gaming was admitted to trading on AIM on 3 September 2004 with a view
to identifying and acquiring businesses in the online betting and gaming sector.
The Company completed its first acquisition, of VIP, on 28 June 2005.
In October 2005 the Company signed a strategic online marketing agreement with
Stanley Leisure plc and the Stanley casino estate and acquired their Acropolis
online casino business.
In December 2005 the Company completed the acquisitions of Nine.com, an online
sports betting and gaming operator, and English Harbour, a vertically integrated
online casino business.
In June 2006 the Company completed the acquisition from Gabriel Chaleplis of
BetShop, a European betting and gaming business comprising three operating
divisions:
(a) BetShop Italia, a franchised chain of over 800 branded shops and
networked retail sports betting and gaming outlets across Italy;
(b) BetShop.com, a pan-European online sports betting and gaming business
operating in eight languages; and
(c) GoalsLive.com, a soccer information and results portal service for
internet and mobile phone users.
Background to and reasons for the sale of the US-facing operations
On 30 September 2006 the United States Congress passed the SAFE Port Act of 2006
which included, as a rider, the Unlawful Internet Gambling Enforcement Act of
2006. The SAFE Port Act seeks to prohibit the processing and acceptance of
financial transactions in connection with certain types of internet gambling and
effectively makes it illegal for anyone in the business of betting or wagering
to accept monies in association with unlawful internet gambling in the US.
Whilst the SAFE Port Act does not clarify the definition of unlawful internet
gambling, it is the first piece of federal legislation directly aimed at
internet gambling and it makes clear that the US government is intent on
stopping the flow of monies from Americans to online gaming operators through
criminal sanction. The SAFE Port Act also asserts that, under US law, a wager
must be permitted under the laws of both the customer's place of residence and
that of the operator. The SAFE Port Act was signed into law by US President Bush
on 13 October 2006.
After extensive discussions with the Company's various advisers, the Company
released an announcement on 10 October 2006 setting out the view of the Board
that, following the signing into law of the SAFE Port Act, it would no longer be
appropriate for the Company to serve US-based customers and that the Company
should focus solely on its existing European businesses. The Company
subsequently undertook a strategic review in order to decide whether to suspend,
close or sell its US-facing operations.
As a result of this strategic review (which included a financial review that
concluded that the Company would incur closure costs of approximately $6 million
in connection with the shutting down of the US-facing operations), your Board
determined that it was in the best interests of Shareholders and other
stakeholders to proceed with the Sale immediately. The Sale constituted (i) a
transaction with a related party under Rule 13 of the AIM Rules ("Rule 13"); and
(ii) a "fundamental change of business" for the purposes of Rule 15 of the AIM
Rules ("Rule 15") and, accordingly, required the approval of Shareholders prior
to its completion. However, given the speed of legal developments in the United
States, there was not enough time to convene a shareholders' meeting in advance
of the SAFE Port Act coming into law and, accordingly, your Directors sanctioned
the completion of the Sale without seeking shareholder approval in advance to
protect the interests of the Shareholders. Had the Company continued to operate
its US-facing businesses once the SAFE Port Act came into law, it would have had
to immediately close down these businesses incurring the closure costs referred
to above. The Board strongly believes that such a course of action would not
have been in the interests of Shareholders. Whilst the action taken constituted
a technical breach of the AIM Rules, your Directors believed that this was the
best course of action to follow given their responsibilities to Shareholders and
other stakeholders.
As a result of the technical breach of Rule 15 referred to above, Altium Capital
Limited resigned as the Company's Nominated Adviser and Broker immediately prior
to the Sale becoming effective at 1.12pm on 13 October 2006, and trading in the
Company's shares was suspended in accordance with the AIM Rules. The Company
has today appointed Corporate Synergy as its new Nominated Adviser and Broker.
However trading in the Company's shares will remain suspended pending the result
of the EGM.
Shareholders will be asked to ratify the Sale at the EGM and, whilst not a
requirement of the AIM Rules, the Directors insisted, for reasons of good
corporate governance so as to ensure that the "independent" Shareholders, as a
whole, can demonstrate that they are in favour of the Sale, that it was a term
of the Sale Agreement that Alistair Assheton use his best endeavours to procure
that his related trusts and private foundations do not vote their Ordinary
Shares on the resolutions relating to the Sale (Resolutions 1 and 2). The
Company has since received undertakings from these entities not to vote on these
Resolutions. If the Sale is not ratified by Shareholders at the EGM, Stockdale
has agreed to close down the US-facing businesses without recourse to Leisure &
Gaming.
Shareholders are advised that, in the event that Resolutions 1 and 2 are not
passed at the EGM, none of the Conditions will be satisfied and the terms of the
various waivers and releases described above will not come into effect. In
these circumstances, the Company's shares will remain suspended from trading and
the Directors are likely to have no alternative other than to arrange for the
Company to be put into administration.
2. Principal terms of the Sale
Under the terms of the Sale Agreement, the Company sold the Sale Companies to
Stockdale for a consideration of $1. The Sale was effective at 1.12 pm on 13
October 2006 with various conditions subsequent (the "Conditions"), including
the ratification of the Sale by Shareholders. Further details of the Conditions
(and how they have been satisfied) are set out in paragraph 3 below.
The Company has retained a copy of all records, information and rights relating
to all customers outside the US and the Company has also retained certain URLs.
In addition, the Company has retained a copy of all proprietary software
applications, code and intellectual property which have been developed and
operated by the Sale Companies (or their subsidiaries) with a right to operate
and further develop the same for use by the Continuing Group and/or resell the
same as it requires.
The Sale was completed on the following basis:
(a) all group debts payable to Barclays remained the liability of the
Company and any and all security over the Sale Companies and/or their share
capital were to be released; and
(b) all funds held on account for US players/customers as at 13 October
2006, plus immediate accruals, were provided for as to $2.5m in cash, plus the
balancing receivables from payment processors relating to such customer funds.
Alistair Assheton agreed to use his best endeavours to procure that his related
trusts and private foundations do not vote their Ordinary Shares on the
resolutions relating to the Sale (Resolutions 1 and 2).
If Resolutions 1 and 2 are not passed, Stockdale has agreed to close down the
businesses subject to the Sale without recourse to Leisure & Gaming and the
Company has agreed to immediately pay all reasonable costs of Stockdale
(including legal fees) up to #50,000 (including any disbursements).
3. The Conditions
Pursuant to the terms of the Sale Agreement, the Sale was subject to the
Conditions, the particulars of which and how they have been satisfied, are set
out below. Unless otherwise stated, the Conditions will be satisfied immediately
upon, and subject to, the passing of Resolutions 1 and 2.
Banking arrangements
The Company and its bankers, Barclays, have entered into credit approved heads
of terms (the "Credit Approved Terms") for the provision by Barclays of banking
facilities for the Continuing Group and appropriate releases of security in
relation to the Sale Companies and their subsidiaries. The principal terms of
the banking arrangements include total financing of $4,000,000 and a guarantee
and debenture from various members of the Continuing Group including the Company
and BetShop. The financing comprises:
(a) a term loan of $900,000 to the Company (to be repaid in five equal
quarterly repayments commencing in March 2007);
(b) a fully fluctuating on demand overdraft facility of $1,000,000 to the
Company (to be reviewed at the expiry of 12 months); and
(c) a term loan of $2,100,000 to BetShop (to be repaid in five equal
quarterly repayments commencing in March 2007),
(together the "New Facilities").
The provision of the New Facilities is subject, inter alia, to the following
conditions precedent (the "Banking CPs"):
(i) completion and execution of appropriate documentation to reflect the
Credit Approved Terms (including facilities and security documentation which are
in agreed form);
(ii) the passing of Resolutions 1 and 2 at the EGM; and
(iii) repayment in full of the existing loan arrangements with Barclays,
to be achieved in part by the drawdown of the New Facilities and in part by the
transfer by the Company to Barclays of the funds held on retention and to be
released to the Company pursuant to the Nine Waiver and Release and the EH
Waiver and Release, further details of each of which are set out in this
paragraph 3 below.
Subject to satisfaction of the Banking CPs, the term loans referred to at (a)
and (c) above will be fully drawn on the later of (i) the passing of Resolutions
1 and 2; and (ii) the execution of the documentation referred to in (i) above,
and will be used as noted in (iii) above.
Appointment of Nominated Adviser and Broker
Corporate Synergy has today been appointed as the Company's Nominated Adviser
and Broker. This is not subject to the passing of Resolutions 1 and 2.
The Directors have consulted with Corporate Synergy in considering whether the
terms of the Sale and the arrangements entered into with Gabriel Chaleplis
described in this paragraph 3 below, each being a transaction with a related
party within the meaning of rule 13 of the AIM Rules, are fair and reasonable
insofar as the Company's shareholders are concerned.
Agreement with the Original Nine Vendor
Pursuant to the Nine Waiver and Release, the Company has agreed terms with the
Original Nine Vendor such that:
(a) the monies held on retention pursuant to the terms of the Nine
Acquisition Agreement in respect of earn-out targets in the sum of US$4,987,500
(plus interest accrued thereon) be paid to the Company;
(b) the monies held on retention pursuant to the terms of the Nine
Acquisition Agreement in respect of any possible warranty or other claims
thereunder in the sum of US$2,500,000 (plus interest accrued thereon) be paid as
follows:
(i) US$500,000 to the Original Nine Vendor; and
(ii) the remainder to the Company; and
(c) the Company and the Original Nine Vendor each unconditionally and
irrevocably releases the other from all present and future obligations,
liabilities and claims under the Nine Acquisition Agreement, including the
waiver by the Original Nine Vendor of any entitlement to receive additional
consideration.
Agreement with the Original EH Vendors
Pursuant to the EH Waiver and Release, the Company has agreed terms with the
Original EH Vendors such that:
(a) the monies held on retention pursuant to the terms of the EH
Acquisition Agreements in respect of possible warranty or other claims
thereunder in the sum of US$365,000 (plus interest accrued thereon) be paid to
the Company; and
(b) the Company and the Original EH Vendors each unconditionally and
irrevocably releases the other from all present and future obligations,
liabilities and claims under the EH Acquisition Agreements, including the waiver
by the Original EH Vendors of any entitlement to receive additional
consideration.
Agreement with the Original VIP Vendors
Pursuant to the VIP Waiver, the Company has agreed terms with the Original VIP
Vendors such that the Company and the Original VIP Vendors each unconditionally
and irrevocably releases the other from all present and future obligations,
liabilities and claims under the VIP Acquisition Agreement, including the waiver
by the Original VIP Vendors of any entitlement to receive any additional
consideration (including the $5,700,000 which may have been payable for the
year ended 31 December 2006).
Agreement with Gabriel Chaleplis
Pursuant to the BetShop Amendment, Waiver and Release, the Company has agreed
terms with Gabriel Chaleplis such that:
(a) the monies held on retention pursuant to the terms of the BetShop
Acquisition Agreement against any possible warranty or other claims (being
#475,781.25 (plus accrued interest)) be released to Mr Chaleplis;
(b) the balance of the initial consideration due under the terms of the
BetShop Acquisition Agreement (being #356,000), be satisfied by the payment by
the Company to Mr Chaleplis of such amount (together with interest at the rate
of two per cent. above LIBOR) within five business days of the earlier of (i)
the repayment of all outstanding amounts to Barclays under the term loan
arrangements described above; (ii) any steps being taken by Barclays to enforce
its security under the New Facilities and (iii) 30 June 2009; and
(c) Mr Chaleplis waives any entitlement to receive additional
consideration under the BetShop Acquisition Agreement for the year ended 31
December 2006.
Further details of the terms of the BetShop Acquisition Agreement (as amended,
subject to the passing of Resolutions 1 and 2 at the EGM, by the BetShop
Amendment, Waiver and Release) are set out in paragraph 4 below.
Compromise agreements with Alistair Assheton and others
The Company has entered into compromise and settlement agreements with former
employees and consultants of the Company (including Alistair Assheton) who have
departed in accordance with the terms of the Sale. These agreements do not
involve any payment of compensation for termination or loss of office to the
departing individuals.
Waiver of intercompany balances
Pursuant to the Intercompany Waiver, English Harbour and VIP have released the
Company from all and any liabilities and obligations due, owing or incurred by
the Company.
Accordingly, subject to (i) the passing of Resolutions 1 and 2 at the EGM; and
(ii) appropriate documentation being executed to reflect the Credit Approved
Terms, the Conditions will have been satisfied in full.
As referred above, in the event that Resolutions 1 and 2 are not passed at the
EGM, none of the Conditions will be satisfied and the terms of the various
waivers and releases described above will not come into effect. In these
circumstances, the Company's shares will remain suspended from trading and the
Directors are likely to have no alternative other than to arrange for the
Company to be put into administration.
4. Summary of the BetShop Acquisition Agreement
With the exception of the amendments described in paragraph 3 above, which are
subject to the passing of Resolutions 1 and 2 at the EGM, the original terms of
the BetShop Acquisition Agreement (including all warranties, representation and
indemnities) will not have been amended by the BetShop Amendment, Waiver and
Release. The principal outstanding terms remain as follows:
(a) the issue of new Ordinary Shares (at a price per share equal to
approximately 154.89p) retained against possible warranty and other claims (with
a value of #475,781.25 (plus accrued interest)) is deferred until 23 December
2007; and
(b) Mr Chaleplis may receive additional "earn-out" consideration of up
to, in aggregate, #16,725,000 for the years ending 31 December 2007 (the "2007
Additional Consideration") and 31 December 2008 (the "2008 Additional
Consideration"), payable by the issue of loan notes (guaranteed on issue). For
additional consideration to become payable, the minimum EBIT for the years
ending 31 December 2007 and 31 December 2008 must be #2,600,000 and #5,000,000
respectively. For the maximum additional consideration of #16,725,000 to be
payable, the maximum EBIT targets of #5,200,000 and #7,250,000, respectively,
must be met or exceeded. Subject to ensuring that Mr Chaleplis would not be
obliged to make an offer for the Company under the terms of the Takeover Code,
Leisure & Gaming is entitled to satisfy up to 50 per cent. of the 2007
Additional Consideration and/or the 2008 Additional Consideration by the issue
of Earn Out Shares at an issue price per Ordinary Share equal to the average of
the middle market closing prices of such an Ordinary Share on AIM for the 30
Business Days up to and including the Business Day immediately prior to the date
the EBIT for that period has been agreed or determined. In addition, the Company
can buy out the 2007 Additional Consideration for #2,983,774 (payable in loan
notes only) at any time on or before 1 January 2007, and the 2008 Additional
Consideration for #3,915,833 (payable in loan notes only) at any on or before 1
January 2008. Alternatively the Company can simultaneously buy out the 2007
Additional Consideration and the 2008 Additional Consideration, at any time on
or before 1 January 2007, for #6,116,441 (payable in loan notes only). The
Company's rights to buy out the 2007 Additional Consideration and the 2008
Additional Consideration can not be exercised without Barclays' consent.
5. Strategy and prospects for the Continuing Group
Overview
The Continuing Group comprises BetShop, a European gaming business with three
operating divisions:
(a) BetShop Italia, a franchised chain of over 800 branded shops and
networked retail sports betting and gaming outlets across Italy;
(b) BetShop.com, a pan-European online sports betting and gaming business
operating in eight languages; and
(c) GoalsLive.com, a soccer information and results portal service for
internet and mobile phone users.
The Company has also retained copies of software and systems used by the Sale
Companies, including the IGW sports betting software (acquired in June 2006),
the OddsOn casino software (acquired with English Harbour), various affiliate
management and customer loyalty software solutions, as well as all the database
records for all non-US customers. In addition, the Company has retained various
URLs.
BetShop Italia accounts for approximately 74 per cent. of the Continuing Group's
net revenue. In addition to the 800 branded shops and outlets referred to above,
BetShop has contracts signed for a significant number of further outlets,
awaiting telecoms connections and formalities. Of BetShop's current outlets,
approximately two-thirds are fully branded betting shops and the remainder are
non-dedicated (typically bars or newsagents with one or more branded terminals).
Strategy
BetShop Italia's franchise model has allowed it to grow very rapidly with
minimal capital outlay, since each of the shops is owned and operated by the
franchisee, who receives a revenue share. The BetShop management's knowledge of,
and contacts in, the Italian market have allowed BetShop Italia to secure the
relevant Italian betting licences and attract franchisees such that it is one of
the leading independent operators in Italy. As part of the Italian government's
tender for a number of new betting licences, BetShop Italia has applied for new
horse betting licences as well as additional sports betting licences to
complement its existing estate. In addition to Italy, BetShop is focused on
working with governments and regulators to develop its franchised sports betting
and gaming retail shop network in Central and Eastern European markets including
Poland, the Czech Republic and Romania, as well as in Lebanon.
The BetShop.com internet business, which provides online sports betting and
casino games will continue to be developed as a distinct business unit. The
BetShop.com brand and website, which already operates in eight languages across
Europe, will be marketed to the database of non-US customers retained under the
terms of the Sale Agreement. In addition, the BetShop.com business will be able
to leverage all existing proprietary gaming software of the Sale Companies
(including the IGW sports betting software platform, the OddsOn casino software
and various affiliate management and customer loyalty software systems), a copy
of which was retained by the Company under the terms of the Sale Agreement,
together with various retained URLs.
BetShop and all other companies in the Continuing Group actively block deposits
and wagers from customers residing in territories where there is legislation
that deems online gaming to be illegal. In conjunction with its payment
processor Bibit, a subsidiary of the Royal Bank of Scotland, BetShop blocks
deposits from online customers in the US, France and Holland through the use of
address verification and address mapping software. BetShop also does not allow
Italian residents to access its BetShop.com service, although they are able to
access the BetShopItalia.com service.
Prospects
As described in paragraph 4 above, the earn-out provisions of the BetShop
Acquisition Agreement for the years ending 31 December 2007 and 31 December 2008
remain in place. The Directors remain confident that the BetShop businesses will
meet their minimum earn-out EBIT levels for 2007.
The Sale materially impacts the Company's earnings for the year ending 31
December 2006. The Sale Companies had net income for the six months ended 30
June 2006 of approximately $9.4 million. The Continuing Group had a net loss of
approximately $2 million for the same period. Head office and other Company
costs for the period were approximately $2 million, as reported in the Company's
consolidated interim results for the six months ended 30 June 2006.The Company
is expected to record a loss on disposal following the Sale of approximately
$106 million.
The reduced scale of the Continuing Group has required a corresponding reduction
in head office and, to the extent possible, Company costs. The Company will not
incur any charges relating to such downsizing. Subject to the Resolutions being
passed at the EGM, Philip Parker, Giles Willits and Benjamin Shaw have agreed to
variations to their service agreements (or, as the case may be, letters of
appointment) such that the annual remuneration payable to them will be reduced,
with effect from 1 January 2007, to #15,000 (currently #52,500), #12,000
(currently #36,750) and #18,000 (currently #118,125) respectively.
The Company will consider changing its year end to 30 June in due course,
thereby better reflecting the sporting calendar. The Company will also consider
changing its functional currency, given that the Company no longer operates any
US dollar businesses.
6. Corporate Synergy, the Employee Benefit Trust and the Management
Share Incentive Programme
As referred above, Corporate Synergy has today been appointed as the Company's
Nominated Adviser and Broker. In connection with this appointment, the Company
has agreed to pay Corporate Synergy corporate finance advisory fees and to issue
Corporate Synergy 500,000 new Ordinary Shares. Following the issue of these
shares, the issued share capital of the Company will comprise 64,445,152
Ordinary Shares.
Subject to the passing of the Resolutions at the EGM, the Company proposes to
set aside up to 7,000,000 new Ordinary Shares (representing up to approximately
9.8 per cent. of the Enlarged Issued Share Capital) for awards to directors and
employees of the Continuing Group pursuant to the Management Share Incentive
Programme which will be established in due course. The allocation of the
Management Shares will be administered by the Remuneration Committee and, where
appropriate, the Board.
The Employee Benefit Trust established by the Company at the time of its
acquisition of VIP and Bon Bini will be dissolved in conjunction with the
proposal to establish the Management Share Incentive Programme. Outstanding
options granted by the Company over 5,292,343 Ordinary Shares will be cancelled,
including options in respect of approximately 1,500,000 Ordinary Shares
allocated for the benefit of the Company's current and proposed directors.
Application will be made for the CS Shares to be admitted to trading on AIM. It
is expected that Admission will become effective, and that dealings in the CS
Shares will commence, on 30 November 2006. Application will be made for the
Management Shares to be admitted to trading on AIM following implementation of
the Management Share Incentive Programme.
7. New board appointment
As referred above, Henry Birch has agreed, subject to the passing of the
Resolutions, to rejoin the board of the Company as Chief Executive Officer,
having been a director of the Company at the time of its original flotation on
AIM in September 2004.
The directorships (other than that of the Continuing Group) which Henry Birch
holds or has held and partnerships in which he is or has been a partner, in each
case over the previous five years preceding the date of this announcement are as
follows:
Current directorships/partnerships Past directorships/partnerships
Silver Rose Management LLP VIP Management Services (Europe) Limited
Ecom Servcorp Inc
Mr Birch has:
(a) no unspent convictions in relation to indictable offences;
(b) not had any bankruptcy order made against him or entered into any
individual voluntary arrangements;
(c) not been a director of a company which has been placed into
receivership, compulsory liquidation or creditors' voluntary liquidation or
administration or which has entered into any company voluntary arrangement or
any composition or arrangement with its creditors generally or any class of its
creditors, nor has he been a director of any such company within the 12 months
preceding such an event;
(d) not been a partner of any partnership which has been put into
compulsory liquidation or administration or entered into partnership voluntary
arrangements, nor has he been a partner of such partnership within the 12 months
preceding such an event;
(e) not had a receivership of any of his assets or of a partnership where
he was a partner at the time or within the 12 months preceding such event;
(f) not been publicly criticised by statutory or regulatory authorities
(including recognised professional bodies); and
(g) not been disqualified by a court from acting as a director of a
company or from acting in the management or conduct of the affairs of any
company.
Under the terms of Mr Birch's service agreement with the Company, he will be
employed as Chief Executive Officer with effect from the passing of the
Resolutions at the EGM, for an initial period of 12 months, terminable
thereafter by either party on 12 months' written notice at a salary (subject to
annual review) of #95,000 per annum and other benefits commensurate with his
position.
Mr Birch holds 9,990 Ordinary Shares, representing approximately 0.016 per cent.
of the existing issued share capital of the Company.
8. Extraordinary General Meeting
An Extraordinary General Meeting of the Company is to be held at 10.00 a.m. on
29 November 2006 at the offices of Berwin Leighton Paisner LLP, Adelaide House,
London Bridge, London EC4R 9HA. The notice convening the EGM will be sent to
shareholders.
At the EGM, the following resolutions will be proposed:
(a) an ordinary resolution to approve the terms of the Sale and ratify
the entering into by the Company of the Sale Agreement, as required under Rule
15 of the AIM Rules;
(b) an ordinary resolution to ratify the entering into by the Company of
the Sale Agreement with Stockdale, a company established by Alistair Assheton,
former Chief Executive Officer of the Company, as required by section 322 of the
Act; and
(c) a special resolution to:
(i) increase the Company's authorised share capital from #25,000,000 to
#50,000,000 by the creation of an additional 100,000,000 new Ordinary Shares;
(ii) grant the Directors authority to allot relevant securities pursuant to
section 80 of the Act for the purposes of, inter alia, effecting the issue of
the CS Shares, the Management Shares and the Earn Out Shares, and giving the
Company sufficient headroom going forward; and
(iii) disapply the pre-emption rights contained in section 89(1) of the Act, for
the purposes of, inter alia, effecting the issue of the CS Shares and the
Management Shares, and otherwise up to an aggregate nominal amount of #3,572,258
(representing approximately 20 per cent. of the Company's issued share capital
following the issue of the CS Shares and the Management Shares).
9. Action to be taken
Shareholders are requested to complete, sign and return the form of proxy for
use at the EGM as soon as possible but in any event not later than 10.00 a.m. on
27 November 2006.
Copies of the circular will be available from the office of Berwin Leighton
Paisner LLP, Adelaide House, London Bridge, London, EC4R 9HA for a period of one
month from the date of this announcement.
10. Recommendation
The Directors, who have consulted with Corporate Synergy, the Company's
Nominated Adviser, consider the terms of the Sale and the arrangements entered
into with Gabriel Chaleplis described in paragraph 3 above to be fair and
reasonable insofar as Shareholders are concerned. In its discussions with the
Company, Corporate Synergy has taken into account the commercial assessments of
the Directors in relation to the Sale and such arrangements.
The Directors unanimously recommend that Shareholders vote in favour of the
Resolutions as they intend to do in respect of, in aggregate, 962,802 Ordinary
Shares in which they are interested, representing approximately 1.5 per cent. of
the existing issued Ordinary Shares.
Definitions
The following definitions apply throughout this announcement unless the context
requires otherwise:
''Act'' the Companies Act 1985 (as amended)
"Admission" admission of the CS Shares to trading on AIM
''AIM'' AIM, a market operated by the London Stock Exchange
''AIM Rules'' the rules published by the London Stock Exchange relating to AIM
''Alistair Assheton'' Alistair Assheton, former Chief Executive Officer of the Company
''Barclays'' Barclays Bank plc
''BetShop'' BetShop Group (Europe) Limited, a member of the Continuing Group
"BetShop Acquisition Agreement" the agreement dated 16 June 2006 between the Company and Gabriel
Chaleplis relating to the acquisition by the Company of Betshop
(comprising the "Betshop Italia", "Betshop.com" and "GoalsLive.com"
businesses)
"BetShop Amendment, Waiver and the conditional agreement of today's date between the Company and
Release" Gabriel Chaleplis
''Bon Bini'' Bon Bini Investments NV
''Company'' or ''Leisure & Leisure & Gaming plc
Gaming''
"Continuing Group" the Company and its subsidiaries since completion of the Sale
''Corporate Synergy'' Corporate Synergy Plc
"CS Shares" the 500,000 new Ordinary Shares to be issued to Corporate Synergy
pursuant to the terms of its appointment as the Company's Nominated
Adviser and Broker
''Directors'' or ''Board'' the directors of the Company, being Philip Parker, Benjamin Shaw,
Josh Joshi and Giles Willits
"Earn Out Shares" new Ordinary Shares which may fall to be issued to Gabriel Chaleplis
pursuant to the terms of the BetShop Acquisition Agreement
"EBIT" earnings before interest and tax
''EGM'' or ''Extraordinary the extraordinary general meeting of the Company convened for 10.00
General Meeting'' a.m. on 29 November 2006, or any adjournment thereof
"EH Acquisition Agreements" the agreements dated 11 November 2005 between the Company and the
Original EH Vendors relating to the acquisition by the Company of the
"English Harbour" online casino operations
"EH Waiver and Release" the conditional agreements of today's date between the Company and
the Original EH Vendors
''English Harbour'' E H Gaming Ventures Inc.
''Enlarged Issued Share the issued ordinary share capital of the Company on Admission
Capital''
''FSA'' Financial Services Authority
''FSMA'' the Financial Services and Markets Act 2000
"Intercompany Waiver" the conditional agreement of today's date between the Company,
English Harbour and VIP
''London Stock Exchange'' London Stock Exchange plc
"Management Share Incentive the new share incentive programme to be established for awards to the
Programme" directors and employees of the Continuing Group
"Management Shares" up to 7,000,000 new Ordinary Shares to be allocated pursuant to the
Management Share Incentive Programme
"Nine Acquisition Agreement" the agreement dated 11 November 2005 between the Company and the
Original Nine Vendor relating to the acquisition by the Company of
the "Nine.com" online sports betting and gaming operations
''Nine.com'' Nine Holdings NV
"Nine Waiver and Release" the conditional agreement of today's date between the Company and the
Original Nine Vendor
''Ordinary Shares'' ordinary shares of 25p each in the capital of the Company
"Original EH Vendors" the various vendors from whom the Company acquired the "English
Harbour" online casino operations
"Original Nine Vendor" the vendor from whom the Company acquired the "Nine.com" online
sports betting and gaming operations
"Original VIP Vendors" the various vendors from whom the Company acquired the "VIP" online
sports betting and gaming operations
''Resolutions'' the resolutions to be proposed at the EGM and "Resolution" shall mean
any of them
"SAFE Port Act" the SAFE Port Act of 2006 (including the Unlawful Internet Gambling
Enforcement Act of 2006 attached thereto as a rider), passed as a
bill by the US Congress on 30 September 2006 and signed into US law
by US President Bush on 13 October 2006
"Sale" the disposal of the Sale Companies pursuant to the terms of the Sale
Agreement
"Sale Agreement" the agreement dated 13 October 2006 between the Company and Stockdale
"Sale Companies" Bon Bini, ECom ServCorp, English Harbour, Nine.com and VIP
''Shareholder'' a holder of Ordinary Shares
''Stockdale'' Stockdale Investment Ltd, a company established by Alistair Assheton
incorporated and existing under the laws of Anguilla, British West
Indies
''UK'' the United Kingdom of Great Britain and Northern Ireland
''United States'' or ''US'' the United States of America, its territories and possessions and the
District of Columbia
''VIP'' VIP Management Services NV
"VIP Acquisition Agreement" the agreement dated 1 June 2005 between the Company and the Original
VIP Vendors relating to the acquisition by the Company of the VIP
online sports betting and gaming operations
"VIP Waiver" the conditional agreement of today's date between the Company and the
Original VIP Vendors
''$'' US dollars
This information is provided by RNS
The company news service from the London Stock Exchange
END
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