Chartwell/Parlay Merger Called Off

30 October 2006

Online gaming software provider Chartwell and I-bingo solutions provider Parlay on Friday publicized their intention to terminate the merger proposal announced on Aug. 30, 2006, when the companies signed a binding letter of intent (LOI).

Market and regulatory concerns in the United States impelled the companies to nix their plans.

"The continuing market uncertainty for the online and remote gaming industry generated by recent legislative actions in the United States has forced Chartwell to conclude that it will be unable to obtain a fairness opinion which supports the business arrangement of the share-exchange ratio," the companies said in a joint press release.

According to the terms set out in the LOI, Chartwell was to acquire all of the issued and outstanding common shares of Parlay and would issue 0.75 common shares of Chartwell for each issued and outstanding share of Parlay. Assuming the transaction had been completed, Chartwell would have issued roughly 11.2 million common shares in exchange for the entirety of Parlay's issued and outstanding common shares, and it would have had an estimated 29.9 million issued and outstanding common shares at closing.

Additionally, Chartwell and Parlay had each agreed to pay a termination fee of CA$500,000 to the other party if the merger was not completed. And according to the release, Chartwell agreed to reimburse Parlay for a portion of its merger-related expenses.

On Thursday, Parlay shares slid CA$0.15 on the TSX Venture Exchange. Chartwell shares, by contrast, rose CA$0.65 on the Toronto Stock Exchange.