Shareholder Approval Sought for Financing
Applied Gaming Solutions of Canada Inc. is seeking shareholder approval for a C$17.3 million financing package from Trinity Capital. Under terms of the deal, Trinity Capital will subscribe for a five year convertible debenture to a maximum of C$17.3 million at 13 percent interest over five years. The principal amount of debenture may be converted into units of AGS for $.50 per unit, each unit consisting of one common share and one common share purchase warrant. The share warrant will entitle its holder to purchase one common share at an exercise price of $.65 per common share, with an expiration date to exercise the purchase warrants ending 24 months from the financing deal's closing. Further, shareholders are being asked to approve a consolidation of AGC shares at no more than one new share for every five common shares outstanding. If approved, the consolidation will include the proposed Trinity debenture, all common and preferred shares, warrants and options. "This financing, if approved, will provide the Corporation with the resources necessary to aggressively implement the expansion of the online lottery and sports betting program into the Ho Chi Minh City region," said David Aftergood, AGS CEO and president.
GTECH Evaluates Business; Numerous Changes Proposed
Following a thorough value assessment of its business operations, GTECH officials last week announced a series of changes to the company's business focus and its business units. The series of changes include:
- UWin!, GTECH's Internet-gaming subsidiary, will continue to aggressively pursue Internet-based lottery applications in government authorized jurisdictions. The growth of this division remains a priority.
- Dreamport, GTECH's gaming and entertainment subsidiary, will concentrate its efforts towards assisting lotteries to expand their offerings in the area of video-machine gaming and central systems. Activities and assets peripheral to GTECH's core lottery business will be consolidated and/or divested. Dreamport's operations will be relocated from Florida to Rhode Island.
- GameScape and other marketing-based organizations within GTECH will be consolidated and singularly focused on driving value for customers' retail network optimization, game development and research, and management of new product initiatives into the lottery industry.
- The company will continue product development with core product offerings including PC-based terminal architecture, central system software, and other point-of-sale devices designed to enhance retail sales. The majority of GTECH's products and services will be available for sale and delivery, however, the development of some peripheral products will be reassessed.
- GTECH will reduce its workforce by four percent, affecting 175 employees worldwide.
- Further, GTECH officials have decided to close and consolidate two offices associated with the adjustments being made to the impacted businesses; dispose of corporate aircraft and related facilities; and terminate several consulting agreements.
As a result of the value assessment, GTECH will record a special charge of $40 million ($24.4 million after-tax), or $0.71 per basic share in its second quarter ended August 26, 2000. Officials also plan to take further charges in the amount of $5.2 million ($3.1 million after- tax, or $0.09 per basic share) for costs principally associated with the company's recently implemented restricted stock plan. Second quarter results will be announced September 20, 2000.
The special charge will consist principally of $11.6 million for contractual obligations to William Y. O'Connor, the company's former chairman of the board of directors and chief executive officer, and Steven P. Nowick, the company's former president and chief operating officer. In addition, the charge will include $10.4 million for resizing costs; $8.4 million for legal expenses and costs; and $10.6 million for facility closures. The charges will be offset $1 million from selling the company aircraft.
Tender Offer Pricing Determined
The pricing for Autotote Corporation's tender offer for all outstanding 10-7/8 percent Series B senior notes due 2004 has been determined. The total consideration for each $1000 principal amount note will be $1,094.95, Autotote officials said, and was calculated based on the present value of the notes using the redemption price of the notes on August 1, 2001 on the basis of a tender offer yield of 6.880 percent. This is the sum of the yield determined at 2:00 p.m., New York City time, on August 28, 2000 for the 5 1/2 percent U.S. treasury note due July 31, 2001 plus 50 basis points, plus accrued and unpaid interest up to, but not including, the date of payment for the notes.
pogo.com Acquired by Excite@Home
Excite@Home last week bought pogo.com, the online games company, for an undisclosed amount. According to the purchase agreement, Excite@Home will acquire pogo.com and operate it as a subsidiary. Pogo.com will continue to provide and distribute co-branded online games services to other companies. Previously, Excite@Home had a co-branded content partnership with pogo.com, along with a ten percent equity investment in the company. The transaction is slotted to close during fourth quarter 2000.
Company Suffers from Press Release Hoax
Officials at one company have learned about the power of the media. Computer networking company Emulex' stock dived 60 percent after a false press release was issued on Internet Wire. The fake release announced the resignation of Paul Folino, the company's CEO. Additionally, the release falsely said that the company's 1998 and 1999 earnings had been restated, while fourth quarter figures were changed to a loss from a gain. Internet Wire ran the release during the morning on August 25, which was picked up by other news services and caused numerous investors to sell off their shares before Nasdaq officials halted trading. Fortunately for Emulex, the company's stock prices recovered by the afternoon, closing five percent down. Officials at Internet Wire said they believed the news release came from a public relations company, and apologized to Emulex officials for running the press release. Folino denounced the press release saying, "The negative statements in this fictious press release are categorically false." Emulex requested both the Securities and Exchange Commission (SEC) and Nasdaq officials to investigate the matter.