Placing of Shares

RNS Number : 8593W

Playtech Limited

17 June 2008

 



17 June  2008

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA

Playtech Limited

Placing by Collins Stewart

 of up to 21,620,946  Placing Shares at 520p per share

Summary of the Placing

•	Playtech proposes to raise up to £112 million, before expenses, by way of a Placing of up to 21,620,946 new Ordinary Shares at a price of 520p per Placing Share
•	The Placing Price represents a discount of approximately 5% to the closing middle market price of an Ordinary Share on 16 June 2008
•	The Placing Shares represent approximately 9.9 per cent. of the Company's issued Ordinary Shares immediately prior to the Placing
•	The net proceeds of the Placing are to be utilised to finance acquisition opportunities

Reasons for the Placing

•	Future growth by acquisition to complement organic growth Playtech believes a material proportion of future growth can be generated organically, but the Board has also identified a number of acquisition opportunities, which, if completed would have the potential to accelerate the development of the Company and add significant value
•	Use of proceeds The Directors consider it prudent to strengthen the capital base of the Group and intends to apply the net proceeds of the Placing towards financing future acquisition opportunities.

Mor Weizer, Chief Executive Officer of Playtech Limited said:

'Playtech made strong progress in 2007 with all key performance indicators exceeding targets. This progress has continued into 2008 with the Company registering impressive month on month revenue growth. This performance has put the Group in an ideal position to continue its growth strategy both organically and by acquisition. We have demonstrated our ability to leverage acquisitions and believe this Placing will provide the Group with an extremely strong balance sheet that will allow it to take advantage of further opportunities that the current market offers.'

Further information

Playtech Limited  Mor Weizer, Chief Executive Officer c/o Bell Pottinger	Tel: [phone]
Collins Stewart Europe Limited Tim Mickley Piers Coombs (Syndicate)	Tel: [phone] Tel: [phone]
Bell Pottinger Corporate & Financial David Rydell	Tel: [phone]

Collins Stewart Europe Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as nominated adviser and broker to the Company in relation to the Placing and Admission and is not acting for any other persons in relation to the Placing and Admission. Collins Stewart Europe Limited will not be responsible to anyone other than the Company for providing the protections afforded to clients of Collins Stewart Europe Limited, or for providing advice in relation to the contents of this announcement or any matter referred to in it. 

This announcement does not constitute or form part of any offer to sell or issue or the solicitation of any offer to buy or subscribe for Ordinary Shares in any jurisdiction in which such offer or solicitation is unlawful. Accordingly, copies of this announcement are not being and must not be mailed or otherwise distributed or sent, directly or indirectly, in or into or from the United States, Canada, Australia, Japan, the Republic of Ireland or the Republic of South Africa and any person receiving this announcement (including custodians, nominees and trustees) must not distribute or send it in or into or from the United States, Canada, Australia, Japan or the Republic of Ireland or the Republic of South Africa. 

Neither the Existing Ordinary Shares nor the Placing Shares have been, or will be, registered under the United States Securities Act of 1933 (as amended) (the 'Securities Act'), or under the securities laws of any state of the United States and may not be offered or sold in the United States or to a U.S. person unless they are registered under the Securities Act or an exemption from such registration is available. The Company does not intend to register any portion of the Placing in the United States or to conduct a public offering of securities in the United States. In addition, the Company has not been and will not be registered as an investment company under the US Investment Company Act of 1940, as amended and investors will not be entitled to the benefits of such Act.

The Placing Shares will be offered and sold outside the United States in reliance on Regulation S and will be offered and sold within the United States in private placement transactions exempt from the registration requirements of the Securities Act and such laws. The Placing Shares will be subject to restrictions on transferability and resale in the United States and may not be transferred or resold except pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in accordance with all applicable state securities laws. 

The Placing Shares will be offered and sold in the United States only to 'Accredited Investors', as defined in Rule 501(A) under the Securities Act who are also ' qualified institutional buyers', as defined in Rule 144A (7) (a)(1) in private sales exempt from the registration requirements of the Securities Act and any other applicable securities laws.

Neither the Existing Ordinary Shares nor the Placing Shares have been, or will be, registered under the securities laws of any province or territory of Canada, Australia, Japan, the Republic of Ireland or the Republic of South Africa. Subject to certain exceptions, the Placing Shares may not, directly or indirectly, be offered, sold, taken up or delivered in or into or from the United States, Canada, Australia, Japan, the Republic of Ireland or the Republic of South Africa or their respective territories or possessions.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS
	2008
Admission of the Placing Shares to AIM	23 June
CREST stock accounts credited for Placing Shares	23 June
Definitive share certificates for Placing Shares despatched by (as applicable)	7 July
PLACING STATISTICS
Placing Price		520p
Number of Ordinary Shares in issue at the date of this document		216,574,914
Number of new Ordinary Shares the subject of the Placing		up to 21,620,946
Number of Ordinary Shares in issue following Admission		238,195,860*
Estimated gross proceeds of the Placing		£112m

* assuming the Placing is fully subscribed and no outstanding options over Ordinary Shares are issued prior to Admission  17 June 2008

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA

Placing by Collins Stewart

 of up to 21,620,946 Placing Shares at 520p per share

Introduction

Playtech announces today that it proposes, to raise up to £112 million, before expenses, by way of a Placing of up to 21,620,946 new Ordinary Shares at a price of 520p per Placing Share. Further details of the Placing are set out below.

The authorities necessary for the allotment of the Placing Shares pursuant to the Placing were granted at the Company's AGM held in May of this year.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. Subject to, inter alia, Admission, it is expected that dealings in the Placing Shares will commence on 23rd June 2008.

Recommendation

The Directors consider the Placing to be in the best interests of the Company and its Shareholders as a whole.

Background to and reasons for the Placing

Playtech develops unified software platforms for the online gambling industry, primarily targeting existing online operators wanting to upgrade their system; sportsbooks looking to diversify their product offering and land-based operators making their online debut. Playtech gaming applications - online Casino, Poker, Bingo, Mobile Gaming, Live Gaming and Fixed-Odds games - are fully intercompatible and can be freely incorporated as stand-alone applications, accessed and funded by players through the same user account and managed by the operator by means of a single powerful management interface. Founded in 1999, Playtech has over 700 personnel across various parts of the world, approximately 80 per cent. of whom are engaged in research and development of current and future gaming technologies. The Company floated on AIM in March 2006 with a market capitalisation of approximately £548 million.

In November 2006 the Group announced the acquisition of the non-US assets of Tribeca Tables Europe Limited ('Tribeca'), a poker network operator for a consideration of $59.75million. The successful completion of the migration and integration of this network into the Playtech network significantly increased the liquidity base and further strengthened Playtech's position as the leading software provider to the online gaming industry. As a result, the Group's iPoker network is now the world's largest poker network. The iPoker network continues to attract quality online poker operators who value a strong network supported by Playtech's cutting edge software. In December 2007, the iPoker network held the European Championship of Online Poker ('ECOOP'), in which over 44,000 players participated for an aggregate of $2.85 million in prize money. Following the success of the first ECOOP tournament, a second ECOOP tournament was held with an aggregate of more than $3.6 million in prize money and further tournaments are planned for 2008.

On 4 March 2008, the Company announced its preliminary results for the year ended 31 December 2007 reporting total revenues of $103.6million, representing an increase of 86% on the $55.6million in 2006 (excluding US derived revenues of $34.5 million). The adjusted net profit before tax (which excludes non cash items unrelated to the underlying cash trading performance), was US$70 million (68% of total revenues).  The Board also recommended a final dividend of 9.9 US cents per share resulting in shareholders receiving an aggregate dividend for the 2007 year of 16.0 cents per share or approximately $34.60 million, which is an amount of 50% of the adjusted net profit.

On 6 May 2008, the Company announced Q1 2008 Key Performance Indicators with total Group revenues growing in the first quarter to $39 million, a 97% increase over that achieved in the first quarter of 2007 and 19% above that achieved in the previous quarter. The Group's casino business continued to show strong growth, with revenues up 79% year-on-year to $27.2 million and up 19% from the previous quarter. Poker revenues grew by an impressive 161% to $11 million compared with the same quarter in 2007 and by 17% compared to the previous quarter.

The Group's growth in revenue during Q1 has continued into April with over 9% growth in revenues over the monthly average revenues in the first quarter of 2008. The licensee pipeline is also strong and the momentum of Q1 is continuing into Q2 with the signing of three new licensees bringing the total number of new licensees to nine so far in 2008. The Group expects to sign additional new licensees during the year, which should further strengthen its revenue generation in the future.

On 16 June 2008, the latest practicable date prior to the release of this announcement, Playtech's share price closed at 548p, giving Playtech a market capitalisation of approximately £1,190 million.

The Directors believe that the Group has a solid platform from which to achieve further growth. Whilst the Directors believe that significant growth can be generated organically the Board has identified a number of acquisition opportunities, including the potential exercise of existing options to acquire certain Affiliate Marketing companies (the 'Affiliates'), that could bring a number of benefits including:

1)     An enhanced revenue stream from existing and new licensees;

2)     Enhancements to the Group's products portfolio; and 

3)     The provision of additional services to the Group's licensees.

The Placing is not conditional on the acquisition of the Affiliates, and there are currently no late stage negotiations in respect of the alternative acquisition opportunities. Accordingly, there is no certainty that any of these opportunities will be consummated.

The Directors believe that acquisition opportunities would, if completed, strengthen the Group's product offering and would have the potential to add value in future months.

The Board is of the belief that the Placing is required in order to provide the Group with the cash resources to facilitate its acquisition strategy. The Directors intend that the Group will apply the net proceeds of the Placing towards financing the potential acquisition of the Affiliates or, alternatively, one or more other acquisition opportunities.

The Placing

Under the Placing, the Company is proposing to issue up to 21,620,946 new Ordinary Shares at the Placing Price. The Placing has been conducted by Collins Stewart. Assuming the Placing is fully subscribed, the Company will raise gross proceeds of approximately £112 million. The Placing Price represents a discount of approximately 5% per cent. to the closing middle market price of an Ordinary Share on 16 June 2008 (the latest practicable date prior to the release of this announcement).

The Placing Shares represent approximately 9.9 per cent. of the Company's issued Ordinary Shares immediately prior to the Placing. Following completion of the Placing, the issued Ordinary Shares will increase to up to 238,195,860 fully paid Ordinary Shares and the Placing Shares will represent approximately 9.1 per cent. of the Enlarged Share Capital.  

The Placing Shares have not been and will not be offered generally to Shareholders, whether on a pre-emptive basis or otherwise. Following the introduction of the Prospectus Rules on 1 July 2005 and the consequential increase in costs and the time required for AIM companies to raise new equity capital on a pre-emptive basis, the Directors believe that the Placing is the most cost effective and expeditious method of raising new equity capital.

The Placing Shares will, on Admission, rank in full for all dividends or other distributions declared, made or paid in respect of Ordinary Shares after Admission and will otherwise rank pari passu in all respects with the Existing Ordinary Shares.

The Placing, is conditional, inter alia, upon the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms and Admission.

License Wins

Throughout 2007, the Group continued to win new licensees, with 15 new licensees added. Eight of these were migrated from the Tribeca poker network and are now established on the iPoker network. All of these licensees are operators which cater to the European and Asian markets in line with the Group's geographical diversification strategy. The successful migration of the Tribeca poker licensees also led to Bet365, an existing casino software licensee, choosing to move its poker offering to the iPoker network. 

In line with Playtech's strategy to diversify geographically, focus on regulated markets and migrate licensees from competitors, the Group has added nine new licensees in 2008 and launched two licensees at the end of Q1. The new licensees include Betsson, one of the largest publicly traded online gambling operators to the European market and Vista Global Limited, the group behind the celebrity endorsed Hollywood Poker brand. This brings the total number of licensees to 59.

Regulatory Environment

The Board considers it prudent to monitor and be familiar with the regulatory environment in which the Group operates and from which it derives revenue. Accordingly the Group's in-house Legal and Regulatory Department undertakes this role on a regular basis and from time to time and, where necessary, also seeks external legal advice from leading experts in the industry.

Strategy

The Group will continue with its previous stated strategy of cross selling to new and existing products to existing licensees and acquiring new licensees in strategic geographic markets with a particular emphasis on regulated markets. The Board believes that regulation will be the avenue that many governments will take in relation to the online gaming industry and that Playtech is well positioned to take advantage of opportunities as they arise.

Given the Group's strong cash position, the Board will, if appropriate,  also look at the acquisition of complementary businesses. The successful completion of the Tribeca acquisition and the integration of Tribeca's Indian and Philippine development centres has demonstrated management's ability to complete and integrate deals of this type. Importantly, the Group will continue to actively seek further earnings-enhancing acquisitions.

Current Trading and Outlook

2008 has started strongly with first quarter total Group revenues showing 19% growth over that achieved in the fourth quarter of 2007. The momentum continued into April and May with 9% growth in revenues over the monthly average revenue in the first quarter of 2008. The Group has already signed 9 new licensees so far in 2008 in line with its strategy to diversify geographically, focus on regulated markets and migrate licensees from competitors. As a market leading software provider to the industry, the Group regularly receives enquiries from well established online and land-based operators in the industry and has a strong pipeline of potential additional licensees.

The Group will continue to support the organic growth of existing licensees through new products and new games that are in development, including the full launch of the Asian P2P platform , the launch of its flash poker product in Q3 and the launch of Mahjong in Q4. It is intended that such new products will also help to attract additional licensees.

Playtech has a track record as a rapidly growing profitable business. The Group's strategy is designed to ensure that this continues. Playtech's strong growth in recent years has been generated both organically and through acquisition and has been driven by strong demand for the Group's product offering.  The Directors believe that the Group's current pipeline of new licensees provides excellent visibility for short to medium term growth.  

The Directors intend to exploit demand for the Group's products and are confident of signing further significant licences in the future. From this stable platform and with the support of its key stakeholders, the Directors believe that Playtech is now also well positioned to make further acquisitions that fit within its strategic criteria.

The Directors have every reason to look forward to continuing growth in 2008 and beyond.  

During 2008, the Directors will also decide on the merits and, if relevant, timing of a move for the Company from AIM to the Official List of the London Stock Exchange.

Collins Stewart Europe Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as nominated adviser and broker to the Company in relation to the Placing and Admission and is not acting for any other persons in relation to the Placing and Admission. Collins Stewart Europe Limited will not be responsible to anyone other than the Company for providing the protections afforded to clients of Collins Stewart Europe Limited, or for providing advice in relation to the contents of this announcement or any matter referred to in it. 

This announcement does not constitute or form part of any offer to sell or issue or the solicitation of any offer to buy or subscribe for Ordinary Shares in any jurisdiction in which such offer or solicitation is unlawful. Accordingly, copies of this announcement are not being and must not be mailed or otherwise distributed or sent, directly or indirectly, in or into or from the United States, Canada, Australia, Japan, the Republic of Ireland or the Republic of South Africa and any person receiving this announcement (including custodians, nominees and trustees) must not distribute or send it in or into or from the United States, Canada, Australia, Japan or the Republic of Ireland or the Republic of South Africa. 

Neither the Existing Ordinary Shares nor the Placing Shares have been, or will be, registered under the United States Securities Act of 1933 (as amended) (the 'Securities Act'), or under the securities laws of any state of the United States and may not be offered or sold in the United States or to a U.S. person unless they are registered under the Securities Act or an exemption from such registration is available. The Company does not intend to register any portion of the Placing in the United States or to conduct a public offering of securities in the United States. In addition, the Company has not been and will not be registered as an investment company under the US Investment Company Act of 1940, as amended and investors will not be entitled to the benefits of such Act.

The Placing Shares will be offered and sold outside United States in reliance on Regulation S and will be offered and sold within the United States in private placement transactions exempt from the registration requirements of the Securities Act and such laws. The Placing Shares will be subject to restrictions on transferability and resale to or in the United States and may not be transferred or resold to or in the United States except pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in accordance with all applicable state securities laws. 

The Placing Shares will be offered and sold in the United States only to 'Accredited Investors', as defined in Rule 501(A) under the Securities Act who are also ' qualified institutional buyers', as defined in Rule 144A (7) (a)(1) in private sales exempt from the registration requirements of the Securities Act and any other applicable securities laws.

Neither the Existing Ordinary Shares nor the Placing Shares have been, or will be, registered under the securities laws of any province or territory of Canada, Australia, Japan, the Republic of Ireland or the Republic of South Africa. Subject to certain exceptions, the Placing Shares may not, directly or indirectly, be offered, sold, taken up or delivered in or into or from the United States, Canada, Australia, Japan, the Republic of Ireland or the Republic of South Africa or their respective territories or possessions. 

APPENDIX 1

DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise:

'Admission'	the admission to trading on AIM of the Placing Shares becoming effective in accordance with the AIM Rules for Companies
'AIM'	a market operated by the London Stock Exchange
'Board' or 'Directors'	the directors of the Company
'Collins Stewart'	Collins Stewart Europe Limited, the Company's nominated adviser, broker and placing agent
'Company' or 'Playtech'	Playtech Limited
'CREST'	the relevant system (as defined in the Uncertificated Securities Regulations 2001) in respect of which Euroclear UK & Ireland Limited is the operator (as defined in those regulations)
'Enlarged Share Capital'	the Existing Ordinary Shares and the Placing Shares
'Existing Ordinary Shares'	the 216,574,914 Ordinary Shares in issue at the date of this document
'Group'	Playtech Limited and its subsidiaries
'London Stock Exchange'	London Stock Exchange plc
'Ordinary Shares'	ordinary shares of no par value in the Company
'Placing Agreement'	the conditional agreement to be entered into onto the date herof between Collins Stewart and the Company relating to the Placing
'Placing'	the conditional placing by Collins Stewart of the Placing Shares pursuant to the Placing Agreement
'Placing Shares'	up to 21,620,946 new Ordinary Shares which are to be conditionally placed for cash in accordance with the terms of the Placing Agreement
'Placing Price'	520p per Placing Share
'Regulation S'	Means Regulation S promulgated under the US Securities Act
'Shareholders'	holders of Existing Ordinary Shares
'UK' or 'the United Kingdom'	the United Kingdom of Great Britain and Northern Ireland
'United States'	Has the meaning given to such term in Regulation S
'US Securities Act'	The United States Securities Act of 1933 (as amended)

 

END

 

 

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