TrackPower Inc. has revised the terms of its interactive race wagering agreement with Penn National Gaming inc. and eBet Limited to create an entity, "The New TrackPower," under which TrackPower will consolidate various operations.
The agreement follows the expiration and formal termination of the previously announced joint-venture agreement between the three companies.
Under the revised terms, TrackPower will acquire eBet's U.S. subsidiary, eBet Racing USA Inc., in exchange for the issuance of 12 million fully paid ordinary shares and 5 million warrants (exercisable at US$1.00) in the capital of TrackPower. Further consideration of US$2 million will be payable in cash
or stock at TrackPower's discretion.
eBet will also grant TrackPower an exclusive 10-year license to utilize its interactive wagering technology in Canada for race wagering applications in exchange for 2 million paid ordinary shares.
The New TrackPower will contract with eBet for Interactive and Web-based development services to a minimum of US$500,000 over the next 12 months. The development will focus on emerging distribution platforms for TrackPower's products such as Palm Pilots, WAP devices and interactive television.
Under the ownership of The New TrackPower, eBet Racing USA Inc. will establish an interactive wagering service, eBet USA, for U.S. racing in conjunction with Penn. The service will be operated under the terms of an agreement between Penn and eBet announced in August 1999.
eBet has completed the development of its interactive Internet and Web-TV based interface to Penn's tote and telephone account systems. The service is currently undergoing beta testing on live wagering, with a commercial launch expected in the near future. eBet Racing USA will be entitled to receive from Penn a license fee of US$500,000 and ongoing royalty payments of between 2 percent and 4.75 percent of all monies wagered via the service.
The parties anticipate the completion of long form documentation, which is subject to due diligence and the obtaining of necessary approvals and contractual consents, by late July 2000.
The New TrackPower will retain the above mentioned royalty payments, as well as existing revenue sharing arrangements between TrackPower and Penn with respect to all telephone, Internet and other interactive betting turnover generated by it. The new group is also exploring financial alternatives with a focus on its core business as well as multiple acquisition opportunities. Management expects the financing to be complete this summer.
Management is also pursuing a full NASDAQ listing.
TrackPower will not be issuing shares or warrants to Penn under the revised terms. Further, the New TrackPower will not be required to pay any ongoing license fees to Penn with respect to its telephone
betting operations and Penn will remain responsible for the costs associated with those operations.
"We believe the revised terms of the agreement create a better structure for shareholders without sacrificing quality and service to the consumer," TrackPower CEO John G. Simmonds said. "The financial terms are far less dilutive and our longer term growth prospects are enhanced by lower expenses and most likely, increased cash flow. ... The combination of these two companies creates an international growth platform that marries broadcast and Internet technologies with the great sport of racing. Assets and management have been acquired rather than built, and in our view customer databases can be maintained or acquired at rates that are far less expensive than our competitors. Ultimately, the shareholders of both companies stand to benefit as we execute our business plan and look at other forms of revenue streams to incorporate into our long term strategy."
eBet Managing Director Keith Cullen said the New TrackPower "will emerge in an ideal position to build and market a significant, integrated satellite broadcasting and race betting service in the US market as the industry is poised for further consolidation and growth in at-home betting.
Cullen continued, "eBet is delighted with the revised terms of its joint-venture with TrackPower and believes it represents an excellent result for both groups of shareholders.'
TrackPower, Inc. operates a free, two-channel live horseracing video service that is available in over 500,000 homes throughout the United States on the Dish NetworkTM. Viewers of the video service can wager on the races through TelebetTM/Dial-a-BetTM, a licensed telephone wagering service operated by Penn.