Corporate Raider Enlarges Stake in Woebegone Inspired

22 October 2008

Evolution Securities yesterday brokered sale of 11.8 percent of Inspired Gaming Group's ordinary shares, and while the party behind the sale has yet to be confirmed, market rumor has that it is Stodir h.f., the troubled Icelandic investment company.

As of Inspired's 2007 results, Stodir, formerly known as FL Group h.f., held an 18.9 percent stake in the server-based gaming specialist, though recently filed for bankruptcy protection in a Reykjavik court. Stodir made headlines in late 2007 when its 385-pence-per share bid approach for Inspired was called off.

Ivor Jones, an analyst with Evolution in London, declined comment on whether yesterday's seller was Stodir.

In all, 8.51 million shares were sold Tuesday -- 8.48 million of them, however, were picked up at a fire sale 2 pence per share by Guinness Peat Group, the London-based activist investment company.

Guinness Peat, according to the London Stock Exchange's Regulatory News Service, built its stake in Inspired's issued ordinary shares to 2.75 percent last June. With yesterday's purchase, the company now owns 14.4 percent of those shares.

In July, Guinness Peat took 5 million convertible preference shares -- or 1.31% -- issued in a placing that raised £40 million for Inspired. (The convertible preference shares, quoted as INGC.L, trade separately from Inspired's ordinary shares.)

Guinness Peat, which Sir Ronald A. Brierley's company Brierley Investments Ltd. acquired in 1990, holds 10.13 percent of Inspired's total voting rights. Sir Ron, 70, is a corporate raider of some renown, according to published reports.

Alarmingly, since Oct. 23, 2007, Inspired's share price has fallen 99 percent and is currently trading at a historic low of 3.38 pence.

"I would have thought Inspired would be attractive at this price to anyone in the slot manufacture business," Warwick Bartlett, the owner of Global Betting & Gaming Consultants, told IGamingNews by e-mail. "They would be acquiring the customer base of 24,000 venues for peanuts."

On Inspired's interim results in July, it said it had received preliminary expressions of interest for certain of its divisions and for the whole of its operation. While the company's market capitalization stands at £2.46 million, it carries net debt of approximately £77 million.

Sir Ron's Brierly Investments Ltd., which trades now as GuocoLeisure Ltd., has a market capitalization of around £1 billion -- aside from building its stake, however, the company has not made its interest in Inspired public. The company could not be reached for comment by press time.

Should Stodir have sold the majority of its stake, Guinness Peat would rank among the top shareholders in Inspired, which include J O Hambro Capital Management Group Ltd. as well as Apollo Management, which took Harrah's Entertainment Inc. private last year.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.