SHAREHOLDERS MAY GIVE PLAYTECH A ROUGH RIDE ON GBP 100 MILL PLACING
27th November, 2011 at 02:13:41
Billionaire businessman Sagi stands to benefit substantially, says analyst.
The successful placing of Playtech shares to raise £ 100 million in additional capital for acquisitions (see previous reports) could come under fire from shareholders, opined the business editor of the Telegraph on Sunday.
The newspaper reported extensively on the recommendation of leading City analyst Ivor Jones of Numis Securities that shareholders vote down the agreement, which would give billionaire founder Teddy Sagi more control in the company.
Playtech needs the money to fund "acquisition opportunities" of up to £ 40 million and "new joint ventures", using the marketing expertise of PT Turnkey Services (PTTS), which the company bought from Sagi last year for up to Euro 280 million, including a Euro 140 million earn-out.
Institutional shareholders committed to £ 39 million of the placing, with Sagi putting up the rest after his Brickington investment vehicle underwrote the fundraising, thus increasing his hold in the company to 43.7 percent.
But the placing is subject to the approval of more than 50% of shareholders, Numis is advising against it...and due to his involvement Sagi apparently cannot vote his shares.
The situation makes for keen interest in the vote, which will be taken at an extraordinary meeting of the company on the Isle of Man on December 19.
The investors have been offered a sweetener in Playtech's plan to reinstate a dividend something it deferred at August's half-year results paying a higher level of 40% of profits.
That has raised another question, with Jones asking why the company is reinstating dividend payments, given the apparent need for new capital, and estimating that the cost of the dividend would result in a payout of more than £ 40 million in the first half of next year.
Sagi could prosper handsomely from such a dividend, Jones observed: "It does, of course, suit the principal shareholder, which having subscribed for 61% of the new equity, will get the 2011 interim and full year dividends combined within just a few months."
The analyst was also perturbed at the lack of shareholder information on the acquisitions for which Playtech raised the capital, pointing out that this could boost share prices that are currently at a "multi-year low."
Jones suggests that Playtech defer the PTTS earnout payment to Sagi, asking whether it was "appropriate for Playtech to pay at least Euro 140 million to the principal shareholder to buy PTTS....and then have the same shareholder buy shares in Playtech its value in theory enhanced by the acquisition of PTTS on a five times ebitda multiple".
The Telegraph reports that Sagi has taken more than £ 500 million cash out of Playtech since he floated it in 2006. The company is currently valued at £ 552 million.
Asked for comment, Playtech chairman Roger Withers referred questions to his PR adviser maintaining "that is the professional way to deal with it".
A spokesman said: "The deals are on the table now. We talked about raising debt but concluded that equity was cheaper. Some of our shareholders are income funds and we listened to them over the dividend".
James Hollins of Evolution was more supportive of Playtech, telling the Telegraph that the placing is short-term dilutive, but that the investments will ultimately prove to be enhancing.
The market appeared content with the placing - Playtech shares rose 12.25 to 227.75p.
DDoS DISRUPTION AT TOPGAME CONTINUES
Mixed bag of site availability over the weekend
Last week's very public DDoS row between Affactive and TopGame (see previous reports) continued to cause problems into the weekend, with Top Game spokesmen claiming that the company had enlisted the aid of lawyers and law enforcement in its as yet unproved allegations against Affactive, and Affactive claiming that Top Game has hired bots to wage war on its sites.
Meanwhile, as one forum poster succinctly put it, the casino licensees and players were sandwiched between the warring factions as a diversity of online casino websites
appeared to be intermittently unavailable.
On Saturday, a Rome Casino representative claimed: "I would just like to make it known that Rome Casino, Diceland and other TG casinos have been back to regular activity for the past 48 hours with no hitches or damage to software. The attack only affected communications, and everything has been back online for the last 2 days. All players are welcome."
However, players continued to report availability problems, prompting him to return and advise: "I've notified TG of this and they are checking it out, will update you shortly, they believe it to be a problem with a certain version of the program, following the ddos attack communication protocols changed, and so the error message, they're confident it will be rectified very soon."
Affactive appeared to have taken the fight off the message boards, and its present situation is not known.
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