The four founders of PartyGaming--Ruth Parasol, Russ DeLeon, Anurag Dikshit and Vikrant Bhagarva--on Wednesday sold a combined 200 million shares (5 percent of the company's total issued share capital) at 116p, raising a total of £232 million (US$431 million). Reports indicate that the founders had planned to sell 350 million shares in the 119-120p price range, but market conditions at the time of the sale were apparently less than ideal for the company's stock.
Market observers have expected a significant sale of PartyGaming shares since Operations Director Dikshit and Marketing Director Bhargava announced their resignations from the company's board of directors on May 23, but such a sale was not foreseen this early because the founders were understood to be locked into their shareholdings until June 30. According to a source of Forbes.com, however, PartyGaming's broker, Dresdner Kleinwort Wasserstein (DrKW), worked around the restriction so that shares could be sold ahead of the deadline.
A statement issued by PartyGaming on Wednesday reads, "The company has been informed that [the founder shareholders] have agreed to extend their existing lock-up which expires on June 30, 2006; they have undertaken not to dispose of any further shares prior to the date of publication of the company's interim results (expected on September 5, 2006) and not to dispose of any further shares, without the prior consent of DrKW, from the publication of the company's interim results until December 31, 2006, other than, inter alia, in accepting a takeover bid for the company or to connected persons who are themselves locked up."
PartyGaming's shares, like those of virtually every other publicly listed online gambling company, have risen and fallen in accordance with U.S. legislative happenings; shares plummeted after prohibition bill hearings before House committees but rose after the American Gaming Association announced its support of a Congressional research study into online gambling. With the Goodlatte and Leach bills expected to appear before the full House of Representatives within the next two weeks, it is speculated that PartyGaming's founders may have been motivated to sell the shares ahead of the June 30 deadline in anticipation of another decline in share price after the hearing.
Parasol and DeLeon, who are husband and wife, each sold 33.3 million shares, or 0.83 percent of PartyGaming's total issued share capital, and each retains a 14.87 percent holding in the company. Dikshit sold 56.7 million shares, or 1.42 percent of the total issued share capital, and retains a 28.95 percent holding in the company, while Vikrant Bhagarva sold 66.7 million shares, or 1.67 percent of the total issued share capital, and retains a 6.96 percent holding in the company. A fifth shareholder, Nitin Jain, is also reported to have sold PartyGaming shares Wednesday.
The four founder shareholders now hold, in aggregate, approximately 65.7 percent of the company's issued share capital. The founders must maintain a majority holding until 2010 for the company to maintain its headquarters in Gibraltar.
PartyGaming' shares suffered the biggest decline in value among London-listed blue chip companies Wednesday, falling 4.5 percent to 117.5p.