22nd Dec 2005 14:00
betinternet.com PLC22 December 2005 betinternet.com plc Placing & Notice of EGM Placing with Burnbrae Limited ('Burnbrae') of 40,000,000 new ordinary shares at4p per share and amendment of a loan including accrued interest to beconvertible into 6,442,577 new ordinary shares at 4p per share Approval of waiver of obligations under Rule 9 of the City Code to be granted bythe Panel on Takeovers and Mergers, increase in authorised share capital andNotice of Extraordinary General Meeting Introduction The board of betinternet.com plc ("betinternet" or "the Company") the globalon-line gaming group announced on 30 November 2005 within its preliminaryannouncement for the year ended 29 May 2005, that further financing is being putin place in order to provide additional resources for the Company. The financing package comprises a placing of 40,000,000 new ordinary shares withBurnbrae, a major existing shareholder in betinternet, to raise £1.6 million,before the costs of the placing. Betinternet will use the proceeds of theplacing to repay a working capital facility of £615,000 due to Burnbrae, and toprovide a further £985,000 to fund the next stage of the Company's growth. At the same time, Burnbrae's existing loan (comprising £250,000 of principal and£7,703.08 of accrued interest) will be amended and restated to provide thatBurnbrae will be entitled to convert that aggregate amount at the rate of oneordinary share for every 4p of such amount converted. At this rate, Burnbraewill be entitled to an additional 6,442,577 new ordinary shares. Background to the placing and convertible loan note On 29 December 2004, a placing and loan note conversion of £1 million withBurnbrae was approved by the independent shareholders of the Company. Theproceeds of that transaction allowed betinternet to continue to fund itsoperations. Early in 2005, as set out in an announcement made on 18 March 2005,the investigation of the International Players' Association ("IPA") in the USand betinternet's consequent suspension of its business with IPA had a negativeimpact on the group's income for the year. In addition, on 13 April 2005,betinternet completed a £250,000 investment in Global Coresports Limited, aprivate company specialising in virtual reality gaming software. Theconsideration for this investment was provided by Burnbrae, by way of a loanfacility to betinternet. In mid 2005, the board undertook a detailed review ofthe group's operations, funding situation and strategy. The conclusion of thisreview was a recommendation to increase the level of investment in the group'sbusiness in order to finance future developments and growth. A proposal wasmade to raise a further tranche of new money from Burnbrae in order to resolvethe group's immediate funding requirements and enable the financial statementsfor the 52 weeks ended 29 May 2005 to be signed off on a going concern basis,and also to start the first phase of an increased level of investment in thesportsbook business. The board has taken a decision to take wagers from US customers in thesportsbook business. This strategic move will involve a relocation of theCompany sportsbook servers to a different jurisdiction, Curacao, whichencourages the acceptance of wagers from the US. The majority of the Company'ssportsbook staff and European Wagering Services will continue to operate fromthe Isle of Man, which the Board continues to believe provides a supportiveenvironment for the majority of the Company's activities. Significant progresshas been made in developing an improved software platform with a more completesports offering and a comprehensive suite of both casino and 'fun' games for theCompany's customers. The directors are confident of seeing a significant boostto performance within the sportsbook during the current financial year. The board is of the opinion that the future success of the group's businesseswill be dependent on an increased level of investment and it is anticipated thata further fund raising will be carried out in the first half of 2006. Details of the placing and convertible loan note The proposed placing and conversion of the loan note in full will increase theholding of Burnbrae and its connected parties to 50.28 per cent. of the issuedordinary share capital. Accordingly, before the proposed placing andrestatement and amendment of the loan note can proceed, a waiver of Rule 9 ofthe City Code on Takeovers and Mergers ('the City Code') must be obtained fromthe Panel on Takeovers and Mergers ('the Panel') in respect of the increase inBurnbrae's holding in the Company from 34.72 per cent. That waiver has beenagreed by the Panel subject to approval, at an extraordinary general meeting, ofthe shareholders who are deemed independent of the proposed arrangement. It is therefore proposed that an extraordinary general meeting of the Company beheld at 11.00am on 11 January 2006 to consider a resolution seeking the approvalof the waiver by the Panel of any requirement under the City Code for Burnbraeand its connected parties to make a general offer under Rule 9 of the City Codeand a resolution to increase the authorised share capital of the Company by thecreation of an additional 215,000 Ordinary Shares in order to create sufficientshare capital for this placing and any future placings. The independent director considers, having been so advised by Williams de Broe,that the placing and the convertible loan note is in the best interests ofshareholders as a whole and that the terms of the placing and the convertibleloan note are fair and reasonable insofar as shareholders are concerned. Theindependent director also considers, having been so advised by Williams de Broe,that it is in the best interests of shareholders as a whole that a waiver of therequirements of Rule 9 of the City Code be granted to Burnbrae such thatBurnbrae would not be required to make a mandatory general offer toshareholders. In advising the independent director, Williams de Broe has takeninto account the commercial assessment of the independent director. The directors consider, having been so advised by Williams de Broe, that theproposal to increase the Company's authorised share capital by the creation ofan additional 215,000,000 ordinary shares in order to create sufficient sharecapital for the placing and any future placings is in the best interests of theCompany. In advising the directors, Williams de Broe has taken into account thecommercial assessment of the directors. A circular detailing the terms of the proposed placing and convertible loan noteis being sent to shareholders today. For further information: betinternet.com plc Tel: 01624 698141Paul Doona, Managing Director Williams de Broe plc Tel: 0113 243 1619Joanne Lake Britton Financial PR Tel: 020 7251 2544Tim Blackstone This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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