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Kevin Smith

Sportingbet Ends Speculation - It's Not for Sale

16 July 2003

Officials with U.K.-based Internet gaming and wagering company Sportingbet announced Monday that takeover talks with bidders have been terminated and that a new agreement has been reached with to settle Sportingbet's earn-out obligations.

The announcement puts an end to months of speculation regarding the future of the company.

The group was obligated to tell shareholders that the stock could be sold for less than its value, but could not elaborate due to regulations governing companies traded on the London Exchange.

It was forced into takeover talks after acquiring Caribbean-based online sports book in 2001 for the initial cost of £36 million.

As part of the deal, Sportingbet agreed that if certain earn-out levels were reached from, which at the time had nearly 350,000 accounts, Sportingbet would pay up to £93.7 million over the course of seven years. then outperformed Sportingbet's expectations, and consequently, paying out the initial sum in the earn-out would have put Sportingbet in a financial pinch.

The group considered numerous options, including one for 30 pence-per share in cash, and eventually hammered out the deal with the former owners of

The sides reached a £70.1 million settlement that includes a £39 million non-interest bearing loan to officials, a £22.9 million convertible note and an increased stake in Sportingbet, which will give the original owners a total of 19.9 percent of Sportingbet's share capital.

In a press release, Sportingbet chief executive Nigel Payne said the rescheduling and settlement will enable the company to get back on track.

"We are pleased that we have been able to agree practical arrangements with the sports book and Australian vendors in line with the terms of the original agreements," Payne explained. "With these arrangements in place, management will now be able to focus its attention on exploiting the significant growth opportunities for the business."

The board also announced Monday a settlement with the former owners of Australia-based Number One Betting Shop, which Sportingbet acquired last year.

The agreement reduces the final cash earn-out payment by £1.3 million to £0.7 million and reduces the number of shares to be issued to 9,503,286 to take account potential liabilities arising from ongoing litigation in Australia. (Officials with an Australian-based trucking company are suing Sportingbet after one of its managers gambled away more than £1 million of money he had embezzled from his employer. The trucking company feels Sportingbet should pay them back the money because it was stolen. The case isn't expected to concluded until late 2004.

If the court rules in favor of Sportingbet, the company would pay the former owners of Number One an additional £1.3 million in cash and 11,216,636 ordinary shares. Then £1.0 million would be recoverable from the Australian courts.

Sportingbet Ends Speculation - It's Not for Sale is republished from
Kevin Smith
Kevin Smith