Livermore Regulatory News (LIV)

29 Dec 2006 07:00

PartyGaming Plc29 December 2006 29 December 2006 PartyGaming Plc ("PartyGaming" or the "Company" and, together with its subsidiaries, the "Group") Acquisition of certain businesses and assets from both Empire Online Limited ("EOL") and Intercontinental Online Gaming Limited ("Intercontinental") Highlights O Acquisition of several leading online gaming websites and certain assets from EOL and Intercontinental O Clean EBITDA (Note 1) of at least $8.5 million expected to be generated by the acquisitions in 2007 O Total consideration of 115,193,842 new PartyGaming shares to be issued on completion O Transactions are expected to be earnings enhancing in 2007 (Note 2) PartyGaming, the world's leading listed online gaming company, today announcestwo deals that will expand its casino and poker operations and also strengthenboth the Company's management and marketing teams. PartyGaming is acquiring theassets, players and gaming related contracts associated with Empire Online'sgaming business and all of Intercontinental Online Gaming's business and assets.Neither EOL nor Intercontinental accept bets from customers in the UnitedStates. The consideration for both acquisitions is to be satisfied upon completion bythe issue of 115,193,842 new PartyGaming shares. PartyGaming expects thebusinesses and assets being acquired to generate Clean EBITDA of at least $8.5million, comprising $6.0 million from EOL and $2.5 million fromIntercontinental, and to be earnings enhancing in 20071. Online gaming websites operated by EOL and Intercontinental that are beingacquired by PartyGaming include: NoblePoker.com, Clubdicecasino.com,EnterCasino.com, MissBingo.com, FairPoker.com, and MagicBoxCasino.com. Subjectto completion a software licensing agreement will also be entered into withPlaytech, which is one of the world's leading companies in its field and hoststhe sites being acquired from EOL and Intercontinental. Mitch Garber, Chief Executive Officer of PartyGaming, said today: "These acquisitions represent excellent value for our shareholders and areconsistent with our strategy. They bring incremental EBITDA and strongmanagement with excellent marketing skills that will help us to accelerate ourpromotional plans for each of our individual products, particularly in casinowhich will continue to be spearheaded by PartyCasino. The addition of a numberof well known secondary brands, supported by the agreement with Playtech, willprovide opportunities for cross-promotion, increasing customer choice andsatisfaction and maximising the long term value of current and future players." Acquisition Terms PartyGaming has reached agreement with EOL to acquire certain assets, playersand gaming related contracts associated with its online gaming business (the "EOL Assets") through the acquisition of a newly formed subsidiary of EOL forconsideration of 83,325,934 new ordinary shares in PartyGaming ("ConsiderationShares"). PartyGaming has also agreed with Intercontinental to acquire all ofits assets (the "Intercontinental Assets") through the acquisition of a newlyformed subsidiary of Intercontinental for a consideration of 31,867,908Consideration Shares. Based upon an average price of 29.32p over the last 15days, the aggregate 115,193,842 Consideration Shares payable to EOL andIntercontinental represented a total consideration of approximately US$66.3million. A total of 17,374,637 Consideration Shares due to EOL and 5,212,391Consideration Shares due to Intercontinental, which are valued at approximately$13 million in aggregate, is being retained in escrow and will be released ininstalments over an 18-month period subject to certain conditions. The agreement with EOL is conditional, inter alia, upon the approval of EOLshareholders and the execution of certain assignments and licences with PlaytechLimited and associated companies, which provide software and support to the EOLAssets and the Intercontinental Assets. EOL has received irrevocableundertakings from certain EOL shareholders, including the Directors who holdordinary shares, to the effect that their votes will be cast in favour of thenecessary resolution at an extraordinary general meeting in respect of a totalof 169,720,837 EOL ordinary shares, representing approximately 57.97 per cent ofthe issued share capital of EOL. This transaction is expected to be completedon or around 19 January 2007. Completion of the acquisition of theIntercontinental Assets is conditional upon, and is expected to take placeimmediately following, completion of the acquisition of the EOL Assets andexecution of the assignments and licences referred to above. Background on EOL's online gaming business The EOL Assets comprise a substantial number of their gaming websites including,in particular, the poker website: NoblePoker.com and three online casinowebsites: EnterCasino.com, Clubdicecasino.com, and Carnivalcasino.com. In theyear ended 31 December 2005, the EOL Assets generated revenue and gross profitbefore administrative expenses of approximately $31.7 million and $16.1 millionrespectively (including US customers). It is expected that in the 12 months to31 December 2007, the EOL Assets will generate Clean EBITDA on a stand-alonebasis of not less than $6.0 million. Background on Intercontinental's online gaming business The Intercontinental Assets comprise several online gaming brands includingMagicBoxCasino.com, FairPoker.com and MissBingo.com. In the year ended 31December 2005, the revenue and net profit attributable to the IntercontinentalAssets (including US customers) was approximately $19.9 million and $3.0 millionrespectively. It is expected that in the 12 months to 31 December 2007, theIntercontinental Assets will generate Clean EBITDA on a stand-alone basis of notless than $2.5 million. Both the EOL Assets and the Intercontinental Assets operate using softwareprovided by Playtech Limited, one of the world's leading suppliers of onlinegaming software. Subject to completion, Playtech will continue to provide suchservices to PartyGaming. Following the signing into law of the SAFE Port Act on13 October 2006, the EOL Assets and Intercontinental Assets stopped acceptingbets from US-based customers. Contacts PartyGaming Plc +44 (0) 20 7337 0100Peter Reynolds, Director of Investor RelationsJohn Shepherd, Director of Corporate Communications Financial Dynamics +44 (0) 20 7831 3113Edward Bridges / Juliet Clarke Application will be made for 115,193,842 new ordinary shares in PartyGaming tobe admitted to the Official List of the Financial Services Authority and to beadmitted to trading by the London Stock Exchange on its market for listedsecurities. Notes: 1) EBITDA before stock option charges. 2) This statement should not beinterpreted as a profit forecast nor to mean that PartyGaming's future earningsper share will necessarily be greater than or equal to its historical earningsper share. This information is provided by RNS The company news service from the London Stock Exchange