disposal of gaming ops, page-2

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BETCORP LIMITED
(“Betcorp” or “the Company”)
DISPOSAL OF GAMING OPERATIONS
Betcorp announces that the Company has entered into an agreement, conditional only on the approval of
Shareholders, to sell the Group’s gaming operations and operating infrastructure in Antigua and Toronto
in their entirety (“the Gaming Operations”) to Bodog Entertainment Group SA.
The consideration payable to Betcorp in respect of the Disposal comprises a maximum cash consideration
of US$9 million payable in five instalments. US$3 million is payable on completion and the balance of
US$6 million in four equal quarterly instalments during the 12 months following completion. In addition, the
Purchaser will be assuming the net current liabilities of the Gaming Operations of US$2 million, implying
an enterprise value of US$11 million.
The cash consideration will be reduced by the extent to which the net current liabilities of the Gaming
Operations at completion exceed $2 million. Currently, these are expected to be approximately US$3
million. The final amount will be dependent, inter alia, on the trading performance of the Gaming
Operations during the period through to the completion date.
Had the Group’s Gaming Operations been closed down, the Board estimates that the cost of severance
and closure would have been approximately US$6 million.
Reasons for the disposal
In the United States, the passing into law of the Unlawful Internet Gambling Enforcement Act on 13
October 2006, means that the receipt of funds from US residents by online entertainment companies
located in any other country of the world in connection with internet gambling, has become a Federal
offence.
The Board received legal advice and representations from its lawyers, bankers and other advisors and
concluded, in common with many other listed companies in the sector, that it is no longer possible for the
Group to provide its services to United States residents. The two key issues which led to this conclusion
are the possibility of the extra-jurisdictional application of United States legislation and the restrictions on
financial transaction processing which are following from the Act. As a result, the Group suspended the
accounts of United States residents on 13 October 2006.
Over the last 18 months, the Group has made good progress in increasing the level of business from
countries other than the United States, principally in Europe. This has been achieved by a number of
initiatives including the introduction of European facing brands and the development of a proprietary multi-currency
operating platform. Despite this progress, however, the US market still represented over 85% of
the Group’s revenues in the period from 3 July 2006 to 13 October 2006.
The Board has considered whether its non-US business could be profitable on the basis of a substantially
reduced cost base, but has determined that this would not be possible without a major increase in trading
volume. In the current environment, such expansion would require substantial investment in marketing
and brand development, or the acquisition of existing non-US facing operators. The Group does not have
access to the funds required to adopt either of these strategies and accordingly, the Board has concluded
that it is in the best interests of shareholders to dispose of the Group’s entire gaming operations and
infrastructure.ഊThe Board has considered approaches from a number of interested parties and has concluded that the
terms agreed with the Purchaser represent the best available to the Group. In addition to the cash
consideration receivable of up to US$9 million, the Purchaser is also assuming the net current liabilities of
the Gaming Operations and has undertaken to honour the existing employment rights of employees and
the Group’s obligations to its customers.
The Purchaser has stated that it intends to invest in developing its own brand into the European and Asian
markets utilising the multi-currency shared purse operating platform developed by the Group. The
Purchaser has also undertaken not to use any URL, trade mark, brand name or other intellectual property
acquired from the Group to provide services to United States residents, following its purchase of the
Gaming Operations.
Use of Proceeds and Post Disposal Strategy
The Group will have exited its gaming interests in their entirety, immediately following the Disposal. As a
result, the net assets of Betcorp will comprise cash, the deferred consideration payable by the Purchaser
and creditors. The Board believes that shareholders’ best interests will be served by the return of funds to
them and the Board’s plans for this will be announced as soon as possible. Shares traded on AIM and
currently listed on ASX will rank pari passu in any future dividend or distribution, both before and after the
de-listing of the Company’s shares from ASX.
Extraordinary General Meeting
Completion of the Disposal is subject to the prior approval of Shareholders at an EGM expected to take
place within the next four weeks. A notice of EGM and an explanatory memorandum will be sent to
shareholders shortly.
Commenting on the acquisition, Colin Walker, Chief Executive Officer said:
“I am pleased that we have secured the sale of our operating subsidiaries to the Bodog Entertainment
Group, one of the leading companies in the digital entertainment sector. In very difficult circumstances we
have achieved a satisfactory outcome for shareholders and have been able to safeguard the interests of
our customers and employees.”
Enquiries:
CPR Communications, Sydney (Investor Relations/Media - Australia)
Martin Cole [email protected]
Tel: +61 2 8213 3082
College Hill Associates, London (Investor Relations/Media - UK)
Matthew Smallwood/Jamie Ramsay [email protected]
Tel: + 44 20 7457 2020
Information on Betcorp
Betcorp is an online gaming group offering customers a comprehensive range of betting and gaming
products. The Group’s trading operation is headquartered in Antigua, West Indies and its IT and marketing
divisions are based in Toronto, Canada. Betcorp is incorporated in Australia and holds a gaming licence in
Antigua and a bookmaker’s permit in the UK. With effect from 13 October the Group ceased to trade with
United States residents but has continued to trade with residents in the rest of the world.
The Company’s shares are traded on the AIM market of the London Stock Exchange under the symbol
“BCL”. They have also been listed on the Australian Stock Exchange but that listing will be cancelled with
effect from 31 October 2006. Further details can be found at the Company's website www.betcorp.com.au
or www.betcorpplc.com.
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