TTR.L Regulatory News (TTR)

2 Jun 2006 07:30

Sportech PLC02 June 2006 2 June 2006 Sportech PLC ("Sportech" or "the Group") - Disposal of Bet Direct Highlights - Sportech disposes of Bet Direct to 32Red plc for £12.5 million in cash - Disposal follows strategic review of options by the Board to restructure and reposition the Group - Proceeds of sale to be used to reduce bank debt - Group now focused on core, profitable business streams Sportech announces that it has today agreed to dispose of Bet Direct for a totalconsideration of £12.5 million in cash (the "Disposal") to 32Red plc ("32Red").The consideration of £12.5 million will be settled by a cash payment ofapproximately £11 million and the assumption of the liability in respect ofcustomer balances, which on the date of completion, is expected to beapproximately £1.5 million. The profit before tax on the disposal is expected toexceed £10.5 million. The sale proceeds will be used to reduce higher costmezzanine bank debt, thereby lowering the overall borrowing costs payable bySportech going forward. Bet Direct offers sports betting, fixed-odds games, casino and poker productsvia the direct channels of telephone, internet and television. For the yearended 31 December 2005, Bet Direct made an operating loss of £4.8 million. Asat 31 December 2005 Bet Direct had net liabilities of £1.7 million whichcomprised £2.2 million of gross assets and £3.9 million of current liabilities(including £1.6 million of customer balances). The disposal of Bet Direct will involve the sale of the whole of the issuedshare capitals of Bet Direct NV and Bet Direct Limited together with certainfixed assets, book debts and business intellectual property relating to the BetDirect business owned by other subsidiaries of Sportech. The Disposal isconditional, inter alia, on the admission to trading on AIM of new ordinaryshares in the share capital of 32Red ("Admission") which are being placed withinstitutional investors to raise £6 million ("the Placing"). The Placing isunderwritten and Admission is expected on 7 June 2006. On 30 March 2006, Sportech announced that the Board was strategically reviewingits options in respect of Bet Direct. This followed the Board's decision inJanuary 2006 to withdraw from its interactive sports betting service with ITV,which had incurred operating losses of £4.1 million in 2005 and exposed theGroup to further losses of up to £30 million over the remaining life of thecontract. The elimination of the ITV contract and the sale of Bet Direct, two loss makingactivities which together incurred an operating loss of £8.9 million in 2005,enhanced further by the reduction in debt following the sale, will conclude theinitial strategic objectives to restructure and reposition Sportech, providing afirm foundation for future growth. The Group now intends to focus on the strengths and qualities of its footballgaming business, Littlewoods casino, poker, bingo and associated brands andgames. By diversifying both its product range and its methods of distribution,the Group intends to attract a wider customer base and make its games moreaccessible and easier to play in order to re-establish its position in themarket. Ian Penrose, Chief Executive of Sportech said: "The sale of Bet Direct is another milestone in the strategic review of theGroup and its future development. Proceeds will allow the Company to reducedebt, strengthen the Group's balance sheet and focus on its core profitablebusinesses. "Since the start of 2006, Sportech has terminated the Group's loss makingcontract with ITV, launched Goal Rush, an exciting new product in the FootballPools portfolio, secured new distribution channels and, now, disposed of BetDirect. These measures position the Group to take advantage of futureopportunities." Enquiries: Sportech PLCIan Penrose, Chief Executive Officer 0151 288 3561 Investec Investment BankingJames Grace / Stefan Borson 020 7597 5970 Bell Pottinger Corporate & FinancialDavid Rydell / Zoe Sanders 020 7861 3887 Notes to Editors Sportech PLC Drawing on over 80 years of experience, Sportech PLC, through its variousbusinesses, including Littlewoods Football Pools, has developed a wide-ranginggaming product portfolio which includes football pools and football games,on-line casino, poker and entertainment games including bingo. Sportech has over600,000 customers, 500,000 of whom play the football pools on a weekly basis,making the football pools business the second most popular weekly gamingactivity in the UK. Sportech is continually developing access to its gaming products through anetwork of channels to include the internet, mobile phones, telephone, post anda UK network of collectors who visit customers at their homes. Sportech PLC is listed on the London Stock Exchange (SPO). For more information,visit www.sportech-plc.co.uk This information is provided by RNS The company news service from the London Stock Exchange