Chariot Fails to Meet Sales Projections; Shares Plummet
After only four weeks of running the British Internet lottery called Monday, Chariot (UK) Plc (CRT.L) on Friday issued an alert to inform the market that its "levels of ticket sales have fallen short of the board's expectations," and that "the income generated has been significantly less than projected and cannot sustain the company's original business plan." The company had expected to sell 5 million tickets a week and required at least 2 million a week to break even, but after four weeks it has sold only 1.68 million total tickets. The company also revealed Friday that a team of independent experts has completed a review of the business, and as a result, Chariot has decided to revise its business plan to increase income and reduce overheads, although it did not state how it intends to achieve this. Chariot also announced Friday that it would seek to raise additional funds to carry out its revised business plan through the placing of new ordinary shares at 5p each, a price that is 77 percent lower than the closing price of 21.5 p on Thursday.
Chariot--whose intent was to compete with the British National Lottery by donating a higher percentage of funds to a wider range of charities and by offering better odds but lower payouts to customers--floated shares on London's Alternative Investment Market in February at 115p. The share price immediately soared and reached a peak of 210p on April 25 during the first week of ticket sales. Following the company's alert on Friday the share price fell to 8p.
Articles in the British media have criticized Chariot for giving its directors large share packages. Founder Suzanne Counsell, for example, was awarded a 12.8 percent stake (2 million shares) in the company, which has incidentally lost £2.2 million (US$4.1 million) in value and is now worth about £163,200 ($306,000).
Centrebet Issues Prospecuts ahead of ASX Listing
Australian bookmaking firm Centrebet issued its prospectus last week in preparation for a July 12 float on the Australian Stock Exchange. Members of the owning Kafataris family (excluding brothers Con and George, who will serve on the board of directors) will sell about 12.5 million shares at a price of about A$2.0 per share, which would raise about A$70 million (US$52 million) and give the company a valuation of A$174 million ($130 million). Centrebet reportedly intends to use most of the money raised through the public offering to pay off debt acquired in 2003 when the Kafatarises, who then operated bookmaking firm SportOdds, purchased Centrebet from Jupiters Casino for A$46.5 million ($34.8 million).
Centrebet's prospectus indicates that the company should generate revenues of about A$56.5 million ($42.3 million) in 2006-07, an improvement of A$10 million ($7.4 million) over forecasts for the current year. The company also anticipates earnings before interest and taxes of A$14.6 million ($10.9 million) in 2006-07.
Betting on horse racing accounts for about 30 percent of Centrebet's turnover while sports betting accounts for most of the rest of the balance. Centrebet's fledgling online gaming business is licensed in Curacao and offers casino games and poker to customers outside of Australia. Half of the company's forecasted A$1 billion ($748 million) in turnover for 2006-07 will come from outside of Australia, primarily from Scandinavian countries where it has established a stronghold. Centrebet intends to offer services in five new European countries in the next few years and will soon begin offering a white label version of its services to other operators. Centrebet mobile phone services are expected to be operational by the first half of 2007.
32Red Purchases Bet Direct from Sportech
Internet casino and poker operator 32Red Plc (TTR.L) has agreed to acquire the Bet Direct brand from Sportech Plc (SPO.L) for an initial consideration of 11 million (US$20.6 million). Bet Direct offers sports betting, fixed odds games, casino, and poker products via telephone, Internet, and television. Bet Direct recorded an operating loss in 2005 of £4.8 million ($9 million).
32Red CEO Ed Ware stated, "The acquisition of Bet Direct fits the strategic objectives of 32Red extremely well, providing a much enlarged customer database and the ability to offer the full portfolio of betting and gaming products through a variety of distribution channels. Our combined U.K. focus has enabled both management teams to identify areas of marketing cross-over, area for review and customer recruitment and retention opportunities."
Sportech intends to use the proceeds of the sale to reduce higher cost mezzanine bank debt, thereby lowering the overall borrowing costs payable by the company. The decision to sell the Bet Direct brand follows the company's announcement at the end of March stating that it was strategically reviewing its options with regard to the loss making brand. In January Sportech terminated its other loss making venture, a contract with broadcaster ITV to provide gaming services behind the ITV digital channel. Sportech says it now plans to focus on the strengths and qualities of its football gaming business, Littlewoods casino, poker, bingo and associated brands and games.
HSBC Identified as Probable Adviser to Pokerstars Float
Britain's The Times reports that Pokerstars is close to appointing HSBC to advise it on an initial public offering that is potentially worth up to £1.6 billion (US$3 billion). The Times believes that PokerStars will name HSBC as the sole global coordinator and sponsor or a listing on the London Stock Exchange, and that Dresdner Kleinwort Wasserstein would serve as joint bookrunner. The Scheinberg family of Israel owns 75 percent of Pokerstars, which is the world's second largest Internet poker site. Founder Isai Scheinberg and his son, as well as CFO Rick Liotta, are expected to become directors of the company.