Acquisition of SGR and propos

RNS Number : 1746G

Sportech PLC

27 January 2010

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA, OR ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO

Sportech plc 

("Sportech" or the "Company")

Acquisition of SGR, the pari-mutuel and venue management business division of Scientific Games Corporation, for up to $83 million 

Proposed Firm Placing and Placing and Open Offer to raise
approximately £29.2 million

Amended Financing Arrangements

The Board of Sportech is pleased to announce that the Company has entered into an agreement to acquire SGR, a leading provider of pari-mutuel wagering services and systems worldwide, for a total consideration of up to US$83 million (approximately £51.4 million), which will comprise an initial consideration of US$65 million payable at Completion, deferred consideration of US$10 million payable on 30 September 2013 and further deferred consideration of up to US$8 million which will become payable in the event that SGR meets certain performance targets over the next three years. 

The initial consideration will be satisfied by (i) an issue to the vendor, Scientific Games Corporation ("Scientific Games"), of 39,742,179 Consideration Shares (representing 19.99 per cent. of the Enlarged Issued Share Capital) at an Issue Price of 50 pence per Consideration Share and (ii) a payment of approximately US$32.9 million in cash (approximately £20.4 million). The deferred consideration will be satisfied by a payment of US$10 million in cash and the further deferred consideration will be satisfied by a further payment of up to US$8 million in cash. 

The Board of Sportech is also pleased to announce that the Company intends to raise £29.2 million (approximately £22.4 million net of all Acquisition and Capital Raising costs and expenses) in a Capital Raising by way of a Firm Placing and a Placing and Open Offer consisting of the issue of 58,415,520 New Ordinary Shares at an Issue Price of 50 pence per New Ordinary Share, which will be underwritten in full by Investec (other than those New Ordinary Shares which are the subject of the Placing Undertakings). The net proceeds of the Capital Raising will be used to finance the cash consideration payable on Completion of the Acquisition, unless the Acquisition fails to complete, in which case the net proceeds of the Capital Raising will be applied to reduce the Group's liabilities under its Debt Facilities. The Capital Raising is not conditional on Completion of the Acquisition.  

On Completion of the Acquisition, the Board of Sportech will appoint Brooks Pierce, President of SGR, to the Board as an Executive Director, and A. Lorne Weil, Chairman of Scientific Games Corporation as a Non-Executive Director (in his individual capacity and not as a representative of Scientific Games).

Playtech Limited ("Playtech"), the AIM-listed international designer, developer and licensor of software to the online, mobile and land-based gaming industry, has agreed to subscribe for 19,881,020 of the Firm Placed Shares, representing 9.99 per cent. of the Enlarged Issued Share Capital and will have the right to nominate one Non-Executive Director to the Board of Sportech.

Newby Manor Limited has given an irrevocable undertaking to take up the whole of its entitlement under the Open Offer amounting to 5,753,910  New Ordinary Shares and to take up an additional 2,594,548 New Ordinary Shares under the Firm Placing. Newby Manor Limited has also undertaken to vote in favour of all the Resolutions at the General Meeting.

Bank of Scotland plc has also undertaken to vote in favour of all the Resolutions at the General Meeting.

Highlights

• Ownership of SGR is expected to enable the Combined Group to become one of the leading pari-mutuel systems providers in Europe, North America and South America, and to pursue rapidly growing markets in the rest of the world.

• The Combined Group will offer multi-sport pool-based betting platforms across SGR's existing main markets of Europe, North America and South America offering services in both football and horseracing - two of the world's most popular betting sports.

• The Combined Group will be able to utilise effectively the relationships it has in international markets with its scale and product offering.

• The strength of the Combined Group's services and systems and its global reach will provide significant opportunities for additional long-term synergies and growth.

• The Combined Group will continue to focus on growing the New Football Pools and its e-gaming offering by expanding content and distribution.

• Significant opportunity to expand SGR's venue management operations, currently holding exclusive licences in the State of Connecticut and in the Netherlands.

• Scientific Games to become 19.99 per cent. owner of the enlarged equity of the Combined Group.

• A. Lorne Weil, Chairman of Scientific Games (in his individual capacity and not as a representative of Scientific Games) and Brooks Pierce, President of SGR, to be appointed to the Board of Sportech following completion, both of whom are subscribing personally for New Ordinary Shares as part of the Firm Placing arrangements.

• Playtech has agreed to subscribe for 19,881,020 of the Firm Placed Shares, representing 9.99 per cent. of the Enlarged Issued Share Capital and will have the right to nominate one Non-Executive Director to the Board of Sportech.

• Playtech and Sportech have entered into a letter of intent whereby Playtech will provide e-gaming products and services to the SGR business. The companies will seek further opportunities to complement each others' businesses. 

• The Capital Raising and the Acquisition are subject to Shareholders' approval at a General Meeting.

• A Prospectus will shortly be posted to Shareholders comprising a combined Prospectus and Shareholder circular containing details of the Acquisition and Capital Raising and notice of a General Meeting of the Company.

• Close Brothers Corporate Finance Limited is acting as Joint Sponsor and Financial Adviser. Investec Investment Banking, a division of Investec Bank plc, is acting as Joint Sponsor and Broker.

• Copies of the Prospectus will be submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility.

Commenting on the transaction, Piers Pottinger, Chairman of Sportech, said: 

"This is a transformational transaction for Sportech. It catapults the business onto the international stage. I am delighted to welcome two new cornerstone investors - both international gaming and strategic partners for Sportech - into the enlarged group. Their support is testament to the great potential of the Sportech business."

Commenting on the transaction, Ian Penrose, Chief Executive of Sportech, said:

 "We are delighted to announce this significant acquisition for Sportech. It combines two strong businesses to create a unique and integrated platform for the global distribution of pool-based gaming products focused on two of the world's most popular betting sports: football and horseracing.  The combined business will have global reach and will be one of the leading pari-mutuel product and systems providers.  As well as significant growth potential in those markets the Combined Group will have the scale and capability to compete in the rapidly growing gaming markets in the rest of the world. The acquisition creates a significant international business with strong growth prospects."

Commenting on the transaction, Scientific Games CEO and President, Michael Chambrello, said:

"The transaction with Sportech will enable us to participate in future opportunities for the combined business, which we expect to emerge as a global, leading provider in the pari-mutuel wagering industry. We believe there are significant opportunities for value creation by combining these businesses, and we are looking forward to realising that potential value creation as a shareholder in Sportech."

There will be an analysts' conference call at 09.30 a.m. today, 27 January 2010, hosted by Ian Penrose, Chief Executive of Sportech, and Steve Cunliffe, Finance Director of Sportech. The dial in details are [phone].

Enquiries

Sportech	Tel: [phone]
Ian Penrose (Chief Executive) / Steve Cunliffe (Finance Director)
Close Brothers (joint sponsor and financial adviser to Sportech)	Tel: [phone]
Richard Madden / Henry Wells / Guy Gillett
Investec (joint sponsor and broker to Sportech)	Tel: [phone]
Patrick Robb / Martin Smith
All PR enquiries to Pelham Bell Pottinger	Tel: [phone]
David Rydell / Rosanne Perry / Emma Kent

This summary should be read in conjunction with the attached Announcement.  Appendix I contains an expected timetable of key events. Appendix II contains the definitions of certain terms used in this Announcement.

The Announcement is not intended to and does not constitute an offer or invitation to purchase, or the solicitation of any offer to sell, any securities.

The Announcement does not constitute a prospectus. Further details relating to the Acquisition and the Capital Raising will be contained in the Prospectus to be dated on or around 27 January 2010. After that date, copies of the Prospectus will be available for inspection at the London office of the Company at 101 Wigmore Street, London W1U 1QU and at the offices of Freshfields Bruckhaus Deringer LLP at 65 Fleet Street, London, EC4Y 1HS on any weekday (Saturdays, Sundays and public holidays excluded) during normal business hours.  Copies will also be available for download from the Company's corporate website, www.sportechplc.com. Copies of the Prospectus, the Notice of General Meeting and the proxy form for the General Meeting will also be available for inspection at the UK Listing Authority's Document Viewing Facility situated at the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

This summary and the Announcement have been prepared for the purposes of complying with English law and the Listing Rules and information disclosed may not be the same as that which would have been disclosed if this summary and the Announcement had been prepared in accordance with the laws of jurisdictions outside England. The Acquisition and the Capital Raising will be subject to the applicable rules and regulations of the Financial Services Authority, the London Stock Exchange and the Panel.

Civil liability attaches to those persons who are responsible for this summary, including any translation of this summary, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of the Announcement. If a claim relating to information contained in the summary or the Announcement is brought by an investor before a court in a member state of the European Economic Area, a plaintiff investor might, under the national legislation of the member state where the claim is brought, be required to bear the costs of translating this document before legal proceedings are initiated.  

Close Brothers is authorised and regulated in the United Kingdom by the Financial Services Authority for the conduct of UK business. Close Brothers is acting exclusively for Sportech and no one else as financial adviser and joint sponsor in connection with the Acquisition and the Capital Raising and Close Brothers will not be responsible to anyone other than Sportech for providing the protections afforded to customers of Close Brothers or for advising any other person on the transactions and arrangements described in this document nor for providing advice in relation to the Acquisition and the Capital Raising, the content of this summary and the Announcement or any other matter or arrangement referred to herein.

Investec is authorised and regulated in the United Kingdom by the Financial Services Authority for the conduct of UK business. Investec is acting exclusively for Sportech and no one else as broker and joint sponsor in connection with the Acquisition and the Capital Raising and Investec will not be responsible to anyone other than Sportech for providing the protections afforded to customers of Investec or for advising any other person on the transactions and arrangements described in this document nor for providing advice in relation to the Acquisition and the Capital Raising, the content of this summary and the Announcement or any other matter or arrangement referred to herein.

Overseas Jurisdictions

The release, publication or distribution of the Announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession the Announcement comes should inform themselves about, and observe, any applicable restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in or into the United States, Australia, Canada, Japan, and South Africa or any other jurisdiction where it would be unlawful to do so.

The New Ordinary Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. 

There will be no public offer of the New Ordinary Shares in the United States. The New Ordinary Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of the Application Form or this document. Any representation to the contrary is a criminal offence in the US.

The New Ordinary Shares have not been and will not be registered under the relevant laws of any state, province or territory of any of the Restricted Territories and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Restricted Territory except pursuant to an applicable exemption from registration requirements. There will be no public offer of New Ordinary Shares in the United States, Canada, Australia, Japan or South Africa, or any jurisdiction where it is unlawful to do so.

This Announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any of New Ordinary Shares. In particular, this Announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.

Forward Looking Statements

The Announcement, including any information included or incorporated by reference in the Announcement, may contain statements which are, or maybe deemed to be, "forward-looking statements" concerning Sportech and SGR which are prospective in nature. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements. The forward-looking statements are based on current expectations and projections about future events and are therefore subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements. 

Neither of Sportech or SGR, nor any of their associates or directors, officers or advisers, provide any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in the Announcement will actually occur. You are cautioned not to place undue reliance on these forward-looking statements.

Other than in accordance with its legal or regulatory obligations (including under the Listing Rules and the Disclosure and Transparency Rules), neither of Sportech nor SGR are under any obligation and expressly disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Not a profit forecast

Nothing in the following Announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per Ordinary Share for the current or future financial years, or those of the Combined Group, will necessarily match or exceed the historical published earnings per Ordinary Share.

General

The Announcement has been issued by, and is the sole responsibility of, the Company. No person has been authorised to give any information or to make any representations other than those contained in this Announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company, Close Brothers or Investec. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this Announcement or that the information contained in it is correct at any subsequent date.

This summary and the Announcement should not be considered a recommendation by the Company, Close Brothers, Investec or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for the New Ordinary Shares. Price and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. You are advised to read this document and, once available, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Group and the Combined Group's future performance and the industry in which it operates. Persons needing advice should consult an independent financial adviser.

Neither Scientific Games nor Scientific Games' Affiliates accept any responsibility whatsoever for, nor make any representation or warranty, express or implied, in relation to, the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Acquisition, SGR, the Capital Raising and the New Ordinary Shares. Scientific Games and Scientific Games' Affiliates accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this document or any such statement.

THIS SUMMARY AND THE ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN AND SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.

THIS SUMMARY AND THE ANNOUNCEMENT ARE ADVERTISEMENTS. THEY ARE NOT PROSPECTUSES. INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SHARES EXCEPT SOLELY ON THE BASIS OF INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY SPORTECH PLC IN CONNECTION WITH THE ACQUISITION AND CAPITAL RAISING. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE COMPANY'S REGISTERED OFFICE AND, OTHER THAN IN CERTAIN JURISDICTIONS, ON ITS CORPORATE WEBSITE AT WWW.SPORTECHPLC.COM.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN, OR ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO

Sportech plc 

("Sportech" or the "Company")

Acquisition of SGR, the pari-mutuel wagering and venue management business division of Scientific Games Corporation, for up to $83 million 

Proposed Firm Placing and Placing and Open Offer to raise 
approximately £29.2 million

Amended Financing Arrangements

1.    Introduction

The Board of Sportech is pleased to announce that the Company has entered into an agreement to acquire SGR for a total consideration of up to US$83 million (approximately £51.4 million) which will comprise an initial consideration of US$65 million payable at Completion, deferred consideration of US$10 million payable on 30 September 2013 and further deferred consideration of up to US$8 million which will become payable in the event that SGR meets certain performance targets. 

The initial consideration will be satisfied by (i) an issue to Scientific Games of 39,742,179 Consideration Shares (representing 19.99 per cent. of the Enlarged Issued Share Capital) at an Issue Price of 50 pence per Consideration Share and (ii) a payment of approximately US$32.9 million in cash. The deferred consideration will be satisfied by a payment of US$10 million in cash and the further deferred consideration will be satisfied by a payment of up to US$8 million in cash. 

The Board of Sportech is also pleased to announce that the Company intends to raise £29.2 million (approximately £22.4 million net of all Acquisition and Capital Raising costs and expenses) in a Capital Raising by way of a Firm Placing and a Placing and Open Offer consisting of the issue of 58,415,520 New Ordinary Shares at an Issue Price of 50 pence per New Ordinary Share, which will be underwritten in full by Investec (other than those New Ordinary Shares the subject of the Placing Undertakings). The net proceeds of the Capital Raising will be used to finance the cash consideration payable on Completion of the Acquisition, unless the Acquisition fails to complete, in which case the net proceeds of the Capital Raising will be applied to reduce the Group's liabilities under its Debt Facilities. The Capital Raising is not conditional on Completion of the Acquisition.  

Due to the size of the Acquisition, the Acquisition requires, pursuant to the Listing Rules, the approval of the Shareholders at the General Meeting. Shareholders will also be asked to approve the Resolution to approve the Capital Raising. The General Meeting will be convened for 11.00 a.m. on or around 12 February 2010 at Freshfields Bruckhaus Deringer LLP, 65 Fleet Street, London EC4Y 1HS. Details of the Resolutions are set out in paragraph 15.

The Board considers that the Acquisition and the Capital Raising and each of the Resolutions, are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends Shareholders to vote in favour of each of the Resolutions, as they intend to do in respect of their own beneficial shareholdings held at the time of the General Meeting, amounting to 485,000 Ordinary Shares in aggregate as at 25 January 2010, being the latest practicable date prior to the date of this announcement (representing approximately 0.48 per cent. of the Company's existing issued share capital).

The Board has received financial advice from Close Brothers in relation to the Acquisition and the Capital Raising. In providing its financial advice to the Board, Close Brothers has taken into account the Board's assessment of the commercial merits of the Acquisition and the Capital Raising.

2.    Background to and reasons for the Acquisition and the Capital Raising 

Sportech's strategy is to create market leading positions in its chosen markets in order to provide long-term growth and success. In line with this, the Board, which has an extensive knowledge of, and experience in, the sports, leisure and gaming marketplace, has been evaluating a number of opportunities to deliver additional shareholder value.

The Directors and the Proposed Directors believe that the Combined Group will be one of the leading pari-mutuel systems providers in Europe, North America and South America. Furthermore, they believe that there is not only significant growth potential in those markets but also that the Combined Group will have the scale and capability to compete in the rapidly growing gaming markets in the rest of the world.

The combination of Sportech and SGR will create a unique and integrated technology platform enabling the global distribution of pari-mutuel gaming products primarily based on two of the world's most popular betting sports, horseracing and football. The strength of the Combined Group's technology and its global reach provides it with significant potential for further organic and acquisitive growth and additional long-term synergies. 

The net proceeds of the Capital Raising will be used to finance the cash consideration payable on completion of the Acquisition, unless the Acquisition fails to complete, in which case the net proceeds of the Capital Raising will be applied to reduce the Group's liabilities under its Debt Facilities (and related Amendment Agreements). 

Key areas of focus for the Combined Group will be: 

The New Football Pools and e-gaming

The Company intends to continue to modernise and grow both its New Football Pools and its e-gaming offering by focussing on expanding its suite of products, and using technology integrations and partnerships to facilitate enhanced distribution both in the UK and overseas.

Capitalise on multi-sport, multi-channel distribution platform

The Board of the Combined Group intends to capitalise on the integrated, multi-sport platform both within its current distribution network and through future expansion of the network. In supplying the existing customers with a broader and international sports product range, racetrack customers and end users alike will benefit from a broader product variety and larger betting pools.

The Company believes that SGR also possesses the opportunity to expand into additional US states through off-track, remote telephone or Internet wagering. As the majority of SGR's current US tote revenues are already derived from inter-state, off-track betting within the US states it currently serves, developing a presence in a number of new US states presents a significant opportunity for market expansion.

Expand profitable Connecticut operations

SGR owns and has the right to operate substantially all off-track pari-mutuel wagering in the state of Connecticut in perpetuity (subject to compliance with certain licensing arrangements). SGR currently operates 12 OTBs, including the 50,000 square foot Sports Haven facility in New Haven. These facilities attract in-state visitors as well as visitors from a number of neighbouring states, including New York. The Directors and the Proposed Directors believe that (subject to certain regulatory approvals) the opportunity exists to increase the number of OTBs from 12 to 18, the maximum permitted under Connecticut law. Each incremental outlet requires limited capital expenditure and is expected to be cash generative within the first year of operation.

Reinforce European distribution with the combined scale benefits

The Directors and the Proposed Directors intend to build on SGR's significant presence in Europe, particularly in the Netherlands, Germany, Ireland, Sweden and Turkey. In these five territories alone, the business currently supports over 13,000 terminals and 23,000 races annually. In the Netherlands, SGR has an exclusive licence until June 2013 to provide and operate tote systems at the country's four racetracks. It also operates 20 OTBs and provides services including racetrack point-of-sale locations and through the Internet. The Directors and the Proposed Directors believe that there is significant potential to increase the number of point-of-sale terminals in operation. In both Germany and Ireland, the improved platform will better leverage existing resources. In Turkey, SGR is mandated to supply all the country's tote systems and terminals through the Turkish Jockey Klub.

In addition to these primary markets, SGR provides tote hardware, software and maintenance throughout the European continent. The Directors and the Proposed Directors believe that there will be continued sales opportunities in a number of different European countries. 

Pursue rapidly growing territories outside of Europe and the Americas

SGR and Sportech separately have relationships in international markets that the Combined Group will be able to utilise effectively with its scale and product offering. The Directors and the Proposed Directors believe that these relationships, which are particularly strong in China and Asia, will begin to monetise once the expected trend towards deregulation materialises. 

3.    Information on SGR

SGR operates as a distinct business division of Scientific Games, a provider of technology-based products, systems and services to gaming markets worldwide which is headquartered in New York and listed on NASDAQ. SGR is a leading provider of pari-mutuel wagering systems, equipment and services worldwide, including automated, computerised off-track and on-track betting systems for betting on horse races, greyhound racing and jai-alai.

SGR's business comprises two principal business units, being the provision of pari-mutuel wagering technology to licensed pari-mutuel operators; and venue management gaming operations in Connecticut, Maine and the Netherlands. SGR operates wagering systems, terminals and ancillary services in 40 jurisdictions including the US, Canada and Puerto Rico, with over 120 customers and an installed base of approximately 25,000 wagering terminals.

SGR's venue management business centres around its ownership of the right to operate substantially all off-track pari-mutuel wagering in the state of Connecticut in perpetuity (subject to compliance with certain licensing arrangements). These operations currently consist of 12 OTBs, with video simulcasting at all locations, and telephone account wagering. SGR also owns and operates an OTB in Maine. Outside the US, SGR is the exclusive licensed operator for all pari-mutuel wagering in the Netherlands until June 2013.

The key individuals employed by SGR consist of Brooks Pierce, President of SGR, and, in respect of day to day operation of the business, Andrew Gaughan, as Managing Director of SGR Europe, Dave Haslett, as Senior Vice President of Operations and Louis Skelton, as Vice President, Technical Services. 

In the results of its financial year ended 31 December 2008, the Group had revenues of US$121,625,000, an operating loss of US$2,593,000, and loss for the year of US$2,224,000 (as compared to revenues of US$129,207,000, operating profit of US$10,487,000, and retained profits for the year of US$5,372,000 as at 31 December 2007).

4.    Information on Sportech

Sportech is one of the UK's leading gaming companies, providing pool (pari-mutuel) games and games of skill through both traditional offline channels and its new online platform to approximately 590,000 paying customers each week. The Company is the UK's largest and one of the world's oldest football pools business, comprising Littlewoods Pools, founded in 1923, Zetters Pools, founded in 1933, and Vernons Pools, founded in 1925. With effect from the start of the new football season in August 2008 the three football pool brands were rebranded "The New Football Pools".

The Company also operates a suite of e-gaming products, including casino, poker, bingo and instant win games.

Beyond its own network, The New Football Pools has entered into partnerships to enable its products to be distributed amongst a number of third party groups including Ladbrokes' licensed betting offices, 888's poker network and some of the UK's leading newspapers, including The Daily Telegraph, The Daily Mail, the Daily Mirror and the Metro.

In the results of its financial year ended 31 December 2008, the Group had gross win revenues of £71.8 million, operating profit* of £22.6 million, profit before tax* of £16.8 million, retained profits of £5.1 million and net debt of £83.2 million (as compared to gross win revenues of £59.6 million, operating profit* of £18.8 million, profit before tax* of £12.1 million, retained profits of £8.1 million and net debt of £86.5 million as at 31 December 2007). In the results for the six months to 30 June 2009, the Group had gross win revenues of £32.4 million, operating profit* of £9.4 million, profit before tax* of £6.9 million, retained profits of £3.7 million and net debt of £80.5 million.

* Adjusted profit figures stated pre exceptional costs, amortisation of acquired intangibles and other non-cash interest.

5.    Principal terms of the Acquisition

Under the terms of the Purchase Agreement, the Company will acquire SGR from Scientific Games for a total consideration of up to US$83 million (subject to certain post-completion adjustments), of which approximately US$32.1 million will be satisfied by the issue of the Consideration Shares to Scientific Games and approximately US$32.9 million will be paid in cash to Scientific Games by Sportech at Completion. In addition to the consideration payable at Completion, the Company has agreed to pay to Scientific Games, on 30 September 2013, an amount in cash equal to the sum of: (i) US$10 million; plus (ii) the sum of US$10 million multiplied by the quotient obtained by dividing a specified average daily bank rate plus 1 per cent. by 365, for each day from and including Completion, to but excluding 30 September 2013. The Company will make further cash payments of either: (i) US$5 million in the event that over a period of three years commencing at the end of the first quarter after Completion no relevant US business is acquired and the average annual EBITDA of the SGR business equals or exceeds US$20 million but does not exceed US$21 million; or (ii) US$8 million in the event that over a period of three years commencing at the end of the first quarter after Completion no relevant US business is acquired and the average annual EBITDA of the SGR business equals or exceeds US$21 million; or (iii) US$8 million in the event that any relevant US business is acquired during a period of three years commencing at the end of the first quarter after Completion and the annual EBITDA of the enlarged SGR business calculated in accordance with the terms of the Purchase Agreement (less 15 per cent. of the purchase price for the relevant US business) equals or exceeds US$25 million.

The Acquisition will be effected by the acquisition of SGR by Sportech Holdco 1 and Sportech Holdco 2, both of which are wholly owned subsidiaries of the Company. On Completion, Sportech Holdco 1 will acquire all of the SGR entities incorporated in the European jurisdictions and Turkey and Sportech Holdco 2 (and its subsidiaries) will acquire all SGR entities incorporated in all other jurisdictions. Immediately prior to Completion, Sportech Holdco 2 will separately acquire certain software assets owned by SGR.

The implementation of the Acquisition is conditional, amongst other things, upon:

• the approval of Resolution 1 and Resolution 2, inter alia, to implement the Acquisition and the Capital Raising by the Shareholders at the General Meeting;

• the Placing Agreement becoming unconditional in all respects;

• the Admission of the Consideration Shares;

• receipt of the Governmental Approvals; and

• the satisfaction or waiver of the certain other conditions, which are considered to be customary for a transaction of this nature.

If these Conditions are not fulfilled by the date 240 days following the date of the Purchase Agreement (or such later date as the parties may agree), the Purchase Agreement will terminate and none of the parties will have any further rights or obligations under it.  

The Consideration Shares received by Scientific Games pursuant to the terms of the Acquisition will be fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever and together with all rights now and hereafter attaching to them, including, without limitation, the right to receive in full and retain all dividends and other distributions (if any) declared, made or paid in respect of the Consideration Shares on or after Completion. The Consideration Shares will not be registered under any of the relevant securities laws of the US or any Restricted Territory. Accordingly, the Consideration Shares may not be offered, sold or delivered, directly or indirectly, in or into the US or any Restricted Territory or to any person from the US or any Restricted Territory, except pursuant to exemptions from applicable requirements of any such jurisdiction.

Scientific Games has given customary undertakings, representations and warranties, indemnities and covenants in respect of SGR in the Purchase Agreement. Scientific Games has given restrictive covenants that it will not compete with the tote systems business of SGR for three years following Completion (subject to certain exceptions). If it enters into any pools business within such period other than certain business for certain lottery customers, it must promptly sell its shares in Sportech upon notice by Sportech. Sportech has given customary undertakings, representations and warranties, indemnities and covenants in respect of itself in the Purchase Agreement.

The Capital Raising will precede the completion of the Acquisition, as the Governmental Approvals are not expected to be received until the end of March 2010, at which point the Purchase Agreement will become unconditional. It is expected that the Acquisition will complete on or around 6 April 2010 and Admission of the Consideration Shares is expected to take place on or around 8.00 a.m. on or around 6 April 2010.

Ancillary Agreements

The Company and Scientific Games will, upon Completion, enter into the Lock-Up Agreement in respect of Scientific Games' holding of Consideration Shares pursuant to which Scientific Games may not sell such shares for a period up to and including the third anniversary of Completion. The Lock-Up Agreement is subject to certain exceptions including where the Company or certain of its affiliated persons is in violation of law or where the Company engages in certain types of lottery business.

The Company will also enter into the Transition Services Agreement, the Supply Agreement, the Right of First Offer Agreement and the Software Licence Agreement on completion of the Acquisition. SGR LLC will enter into the Patent Licence Agreement on completion of the Acquisition.

Under the terms of the Transition Services Agreement, Scientific Games will agree to provide, or cause to be provided, to the companies and subsidiaries within the SGR business, for a limited period of time, certain transitional services, including storage, warehousing and office space services, repair and maintenance services, finance services, software services and payroll services.

Under the terms of the Right of First Offer Agreement, Sportech and Scientific Games will agree to enter into discussions with a view to agreeing sales commission agreements in relation to certain categories of customers of SGR LLC and/or its Affiliates who may have an interest in purchasing, leasing, licensing or otherwise obtaining video gaming terminals. In the event that SGR LLC or any of its Affiliates wish to make video gaming terminals available at venues owned or operated by SGR LLC or its Affiliates, Sportech and Scientific Games shall enter into discussions regarding an agreement for the provision by Scientific Games of such video gaming terminals. SGR LLC or one of its Affiliates shall also continue to provide for a period of six months certain services it currently provides to Scientific Games or its Affiliates in Puerto Rico.

Under the terms of the Supply Agreement, Scientific Games shall supply, or procure the supply by its Affiliates, to SGR LLC of certain terminals and paper supplies, and shall also introduce Sportech or SGR LLC to the third party manufacturer of certain terminals. Scientific Games will have the right to use certain terminals, the intellectual property rights to which are owned by SGR.

Under the terms of the Software Licence Agreement, SGR LLC grants to Scientific Games certain rights including the right to use and develop selected SGR LLC software, including TrackPlay and BetJet terminal software, in certain defined fields of use, and Scientific Games grants to SGR LLC certain rights including the right to use and develop selected Scientific Games software, including Wave and Extrema terminal software in certain defined fields of use. SGR LLC also grants to Scientific Games certain rights in software used in certain totalisator systems with lottery functionality for certain types of lottery business. The granted rights are exclusive, royalty free and subject to certain termination provisions.

Under the terms of the Patent Licence Agreement, Scientific Games International, Inc. and Scientific Games Holdings Limited grant to SGR LLC a royalty free licence under certain patent applications and resulting patents in various countries in a certain defined field of use. The Patent Licence Agreement terminates on the last to expire licensed patent or patent issuing from a licensed application, subject to certain related provisions.

6.    Amendments to the Debt Facilities 

The Debt Facilities

On 31 December 2009, the Company agreed new terms for its Debt Facilities with BoS (a subsidiary of LBG) and as part of these discussions, continued negotiations on the terms of the SFA Amendment Agreement (and related Restated Facility Agreement) and the Working Capital Amendment Letter. As of 31 December 2009, the total term facilities under the Senior Facility Agreement were £86 million. The key terms of the amended and restated Senior Facility Agreement of 31 December 2009 are as follows:

• the facilities limit is £86 million. The existing limit on the Working Capital Facility Agreement of
  £3 million will remain in place;

• the maturity date of the Senior Facility Agreement is 30 June 2013 and the maturity date of the Working Capital Facility Agreement is 30 December 2010;

• the key financial covenants of the Senior Facility Agreement and Working Capital Agreement (as applicable) comprise:

(a)   cash flow cover (ratio of operating cashflow to debt service) to be 1:1 during the life of the Senior Facility Agreement;

(b)   interest cover (ratio of EBITDA to charges under the Debt Facilities) ranging from 2.9:1 to 3.8:1 for the life of the Senior Facility Agreement; and

(c)   leverage (ratio of net debt to EBITDA) reducing on a six monthly basis from 4.0:1 to 2.9:1 for the life of the Senior Facility Agreement; and

• the margin over LIBOR in respect of the Senior Facility Agreement will be 3.5 per cent. per annum until expiry.

The SFA Amendment Agreement and Restated Facility Agreement

On 27 January 2010, the Company entered into the SFA Amendment Agreement with BoS (a subsidiary of LBG).

The SFA Amendment Agreement covers the following scenarios:

•  if the Capital Raising does not complete (and consequently the Acquisition cannot complete either), the Senior Facility Agreement will not be amended and the existing terms agreed on 31 December 2009 will remain in place;

• with effect from the date of completion of the Capital Raising, the Senior Facility Agreement shall be amended and restated in the form set out in the schedule to the SFA Amendment Agreement (being the Restated Facility Agreement) (Full Completion); and
  
•  if the Capital Raising completes but the Acquisition has not completed on or before the date falling 240 days after the date of the SFA Amendment Agreement (or such earlier date notified by the Company to BoS), then on such date: (i) the Company must make a prepayment of £19 million towards reducing the facilities; and (ii) certain terms that are already set out in a schedule to the Restated Facility Agreement will automatically become effective. Such amendments are only in relation to the margin, the leverage and interest covenants and the amortisation schedule (Partial Completion).

The key differences between the terms of the Restated Facility Agreement on a Full Completion and Partial Completion basis, are as follows:

• the facilities limit is £86 million on Full Completion terms but will be reduced to £67 million on Partial Completion terms;

• the maturity date of the Restated Facility Agreement is unchanged, i.e. 30 June 2013;

• the key financial covenants of the Restated Facility Agreement comprise:

  (a)    in respect of both Full Completion and Partial Completion terms, cash flow cover (ratio
          of operating cashflow to debt service) to be 1:1 during the life of the Restated Facility
          Agreement;

  (b)    interest cover (ratio of EBITDA to charges under the Restated Facility Agreement and
          Working Capital Facility Agreement Amendment Letter) ranging from (i) 4.0:1 to 5.8:1 on Full
           Completion; and (ii) 4.2:1 to 4.5:1 on Partial Completion, in each case for the life of the
           Restated Facility Agreement;

  (c)     leverage (ratio of net debt to EBITDA) reducing on a six monthly basis from (i) 3.50:1
           to 1.60:1 on Full Completion; and (ii) 2.65:1 to 1.65:1 on Partial Completion, in each case
           for the life of the Restated Facility Agreement;

• the margin over LIBOR in respect of the Restated Facility Agreement on (i) Full Completion will be 3 per cent. per annum until expiry; and (ii) will be 2.5 per cent. per annum on Partial Completion until expiry.

If the Acquisition completes, the Restated Facility Agreement requires that immediately after completion of the Acquisition Sportech Holdco 1, Sportech Holdco 2, Autotote Enterprises, Inc., Scientific Games Racing LLC, Trackplay LLC and Scientific Games Racing Limited accede to the Restated Facility Agreement as guarantors. Share pledges will be granted over the shares in Sportech Holdco 1, Sportech Holdco 2, Autotote Enterprises, Inc., Scientific Games Racing LLC, Trackplay LLC and Scientific Games Racing Limited. Certain of these companies will also grant security over their assets.

As a consequence of agreeing the amendments to the Debt Facilities on 31 December 2009 the Company has agreed to pay an arrangement fee of £890,000. No fees are payable in respect of entry into the SFA Amendment Agreement and the Working Capital Amendment Letter, but the SFA Amendment Agreement provides that the fee agreed on 31 December 2009 will be reduced to £700,000 in the event that the Capital Raising completes but the Acquisition does not.

Working Capital Amendment Letter

On 27 January 2010, the Company entered into the Working Capital Amendment Letter with BoS. The Working Capital Amendment Letter states that the terms of the Working Capital Facility Agreement will remain in place except to the extent that the Capital Raising completes but the Acquisition does not, in which case the margin will be reduced from 3 per cent. to 2.5 per cent.

7.    Principal Terms of the Capital Raising

The Company is proposing to raise approximately £22.4 million (net of all Acquisition and Capital Raising costs and expenses) by way of a Capital Raising which will consist of:

• a Firm Placing of 38,285,000 Firm Placed Shares at 50 pence per Firm Placed Share, raising gross proceeds of approximately £19.1 million;

• a Placing and Open Offer, pursuant to which Qualifying Shareholders are being invited to apply to acquire in aggregate 20,130,520 Open Offer Shares at 50 pence per Open Offer Share, raising gross proceeds of approximately £10.1 million.

The net proceeds of £22.4 million arising from the Capital Raising will be used to finance the cash consideration payable on completion of the Acquisition, or in the event that the Acquisition fails to complete, to reduce the Group's liabilities under its Debt Facilities (and related Amendment Agreements).  

Implementation of the Capital Raising is conditional, amongst other things, on Shareholder approval, which will be sought at a General Meeting to be convened for 11.00 a.m. on or around 12 February 2010. The implementation of the Capital Raising is independent of, and not conditional upon, completion of the Acquisition.

The Issue Price represents a discount of approximately 10.71 per cent. to the Closing Price on 25 January 2010 (being the latest practical date prior to the date of this announcement). In setting the Issue Price, the Board has considered the price at which the New Ordinary Shares need to be offered to investors to ensure the success of the Capital Raising and raise significant equity compared with the current market capitalisation of the Company. The Board believes that both the Issue Price and the discount are appropriate.

Given that the Issue Price represents a discount of more than 10 per cent. to the Closing Price of 56.0 pence on 25 January 2010 (being the latest practical date prior to the date of this announcement), the Company is required, under the Listing Rules, to seek approval of its Shareholders for the issue of the Capital Raising Shares at that discount. Accordingly, the General Meeting will consider, amongst other things, the approval of the amount of the discount.

Upon completion of the Acquisition and the Capital Raising, the New Ordinary Shares will represent approximately 97.52 per cent. of the Company's Existing Issued Share Capital and approximately 49.37 per cent. of the Company's Enlarged Issued Share Capital. New Ordinary Shares issued through the Placing and Open Offer and New Ordinary Shares issued through the Firm Placing will account for approximately 34.46 per cent. and 65.54 per cent. respectively of the total New Ordinary Shares to be issued pursuant to the Capital Raising.

Following the issue of the New Ordinary Shares to be allotted pursuant to the Capital Raising and the issue of the Consideration Shares pursuant to the Acquisition, Qualifying Shareholders who take up their full entitlements in respect of the Open Offer will experience a dilution of 39.25 per cent. of their interests in the Company as a result of the Firm Placing and the Acquisition. Qualifying Shareholders who are not eligible to or do not take up any of their entitlements in respect of the Open Offer will experience a greater dilution of approximately 49.37 per cent. of their interests in the Company as a result of the Firm Placing, the Acquisition and the Open Offer.

Qualifying Shareholders should note that the Open Offer is not a rights issue. In the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market on behalf of, or placed for the benefit of, Qualifying Shareholders who are not eligible to or do not apply under the Open Offer, but will be issued to the Conditional Placees for the benefit of the Company.

Principal Terms of the Firm Placing

The Company is proposing to issue 38,285,000 Firm Placed Shares pursuant to the Firm Placing. The Firm Placing is fully underwritten by Investec (other than those New Ordinary Shares the subject of the Placing Undertakings) pursuant to the Placing Agreement and is expected to raise £19.1 million before costs and expenses.

Investec, as agent for the Company, has made arrangements to conditionally place the Firm Placed Shares (other than those New Ordinary Shares the subject of the Placing Undertakings) with the Firm Placees at the Issue Price. The Firm Placed Shares are not subject to clawback and do not form part of the Open Offer. The Firm Placing is subject to the same conditions and termination rights that apply to the Placing and Open Offer.

The Firm Placed Shares will be acquired pursuant to the Firm Placing fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever and together with all rights now and hereafter attaching to them, including, without limitation, the right to receive in full and retain all dividends and other distributions (if any) declared, made or paid in respect of the Firm Placed Shares on or after Admission.

Application will be made to the UK Listing Authority for the Firm Placed Shares to be admitted to the Official List and for the Firm Placed Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission of the Firmed Placed Shares will become effective and that dealings in the Firm Placed Shares will commence at 8.00 a.m. on or around 15 February 2010.

Principal Terms of the Placing and Open Offer

Under the terms of the Placing and Open Offer, Qualifying Shareholders will be given the opportunity to apply for the Open Offer Shares at the Issue Price, pro rata to their holdings of Existing Shares on the Record Date, on the basis of:

1 Open Offer Share for every 5 Existing Shares

The Placing and Open Offer is fully underwritten by Investec (other than those New Ordinary Shares and Open Offer Shares the subject of the Placing Undertakings) pursuant to the Placing Agreement and is expected to raise approximately £10.1 million before expenses. The Record Date is 5.00 p.m. on 25 January 2010.

Investec, as agent for the Company, has made arrangements to conditionally place the Open Offer Shares (other than those New Ordinary Shares the subject of the Placing Undertakings) with the Conditional Placees at the Issue Price, subject to clawback in respect of valid applications being made by Qualifying Shareholders under the Open Offer. 

Under the rules of the Sportech Share Schemes, outstanding awards and options may be adjusted to take account of the Firm Placing and the Placing and Open Offer in such manner as the remuneration committee of the Board may determine to be appropriate. Any such adjustment will be subject to the prior approval of HMRC where required under the rules of the relevant plan. Shareholder approval is not required for any adjustments. Participants in the Sportech Share Schemes will be contacted separately with further information on any adjustment to their awards and options. It is currently anticipated that an adjustment will be made to take account of the Open Offer but not the Firm Placing.

Entitlements to Open Offer Shares will be rounded down to the nearest whole number and fractional entitlements will not be offered to persons pursuant to the Open Offer but will be aggregated and placed ultimately for the benefit of the Company.

Application Forms are expected to be despatched to Qualifying Non-Crest Shareholders (other than, subject to certain exceptions, Shareholders with registered addresses in, or to residents of, the US or any Restricted Territory) on or around 27 January 2010. Qualifying CREST Shareholders are expected to receive a credit to their appropriate stock accounts in CREST in respect of their Open Offer Entitlements as soon as possible after 8.00 a.m. on or around 28 January 2010. Qualifying Shareholders with holdings of Existing Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their entitlements under the Open Offer, as will Qualifying Shareholders with holdings under different designations or in different accounts.

Qualifying Shareholders may apply for any whole number of Open Offer Shares up to their maximum entitlement, which in the case of Qualifying Non-CREST Shareholders, is equal to the number of Open Offer Entitlements as shown in Box 2 on their Application Form, or, in the case of Qualifying CREST Shareholders, is equal to the number of Open Offer Entitlements standing to the credit of their stock accounts in CREST.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on or around 28 January 2010. The Open Offer Entitlements will also be enabled for settlement in CREST at 8.00 a.m. on 28 January 2010. Applications through the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim..

If Admission of the Open Offer Shares does not take place on or before 8.00 a.m. on or around 15 February 2010 (or such later time and/or date as the Company and Investec may determine), the Open Offer will lapse, any Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest as soon as practicable thereafter. In these circumstances, the Placing to the Conditional Placees will not proceed.

Any Qualifying Shareholder who has sold or transferred all or part of his or her registered holding(s) of Ordinary Shares prior to the Ex-entitlement Date is advised to consult his or her stockbroker, bank or other agent through or to whom the sale or transfer was effected as soon as possible since the invitation to apply for Open Offer Shares may be a benefit which may be claimed from him or her by the purchasers under the rules of the London Stock Exchange.

The Open Offer Shares will be acquired pursuant to the Capital Raising fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever and together with all rights now and hereafter attaching to them, including, without limitation, the right to receive in full and retain all dividends and other distributions (if any) declared, made or paid in respect of the Open Offer Shares on or after Completion.

Application will be made to the UKLA for the Open Offer Shares to be admitted to the Official List and for the Open Offer Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission of the Open Offer Shares will become effective and that dealings for normal settlement in the Open Offer Shares will commence at 8.00 a.m. on or around 15 February 2010.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, will be set out in the Prospectus and, where relevant, on the applicable Application Form.

8.    Use of Proceeds

It is the intention of the Board that the net proceeds of the Capital Raising will be applied to finance the cash consideration element of the Acquisition. It is anticipated that the Capital Raising will be completed on or around 15 February 2010 and that the Acquisition will complete on or around 6 April 2010. In the event that the Acquisition does not complete, the Group will apply the net proceeds to reduce its liabilities under its Debt Facilities (and related Amendment Agreements), which will provide the Group with additional financial flexibility and assist its growth plans going forward. 

9.    Financial Impact of the Acquisition and the Capital Raising

On a pro-forma basis and assuming the Acquisition and Capital Raising had become effective on 30 June 2009, the Combined Group would have had net assets of £178.0 million at that date (based on the net assets of the Group as at 30 June 2009 and the net assets of SGR as at 31 December 2008 but before any acquisition accounting adjustment).

The Directors believe that the Acquisition will diversify the revenue stream of the Combined Group, both as a result of increased geographies served and products offered. The Directors also expect that the Acquisition will make a positive contribution to total earnings for the Combined Group in the financial year ending 31 December 2010, as a result of the earnings of SGR being consolidated with those of Sportech. Additionally, the SGR earnings stream is expected to reduce the financial leverage of the Combined Group. However, the Directors expect that the increased number of Ordinary Shares in issue following the issue of New Ordinary Shares pursuant to the Acquisition and the Capital Raising will have a negative effect on the Combined Group's reported earnings per share for the year ending 31 December 2010.

* Nothing in this document should be construed as a profit forecast or be interpreted to mean that the future earnings per share, profits, margins or cash flows of the Company will necessarily be greater or less than the historic published figures.

10.    Board, Management and Employees of the Combined Group

From Completion of the Acquisition, the Combined Group will be operated and managed by the Company's and SGR's existing management teams. The management teams will work together to further develop their combined businesses. The Board recognises the valuable contributions of the respective management and employees of both the Company and SGR in delivering a successful business and shares the view that both teams will be critical to the success of the Combined Group. As a result, the Board and management of the Company intend to support and incentivise SGR's existing management in executing its growth strategy and harnessing the benefits of the expanded gaming offering.

On Completion, A. Lorne Weil, Chairman of Scientific Games (in his individual capacity and not as a representative of Scientific Games) will be appointed to the Board of Sportech as a Non-Executive Director, and Brooks Pierce, President of SGR, will be appointed to the Board  of Sportech as an Executive Director.

The Board believes that the prospects of the employees of both SGR and the Group generally will be enhanced as a result of the strengthened competitive position and growth prospects of the Combined Group.

The Combined Group will be committed to policies and practices which are expected to provide enhanced opportunities for employees generally to learn and grow through experience and training.

11.    Share Incentive Awards

It is anticipated that certain senior employees of Sportech and SGR will receive performance related share incentive awards under the Sportech Performance Share Plan.

It is also intended that an incentive award will be made to A. Lorne Weil, Chairman of Scientific Games upon his appointment as a Non-Executive Director (in his individual capacity and not as a representative of Scientific Games). Given the unique experience and skills that he has accumulated in relation to the global betting, technology and, specifically, the pari-mutuel systems business, an incentive award is felt appropriate to enhance the Combined Group's ability to successfully grow the existing business and to establish operations in new and emerging markets.  

It is proposed that such award will be conditional upon A. Lorne Weil personally acquiring New Ordinary Shares under the Firm Placing with a market value of £1 million, and retaining such New Ordinary Shares until the award vests. The proposed award will be awarded under a one off share award agreement that will provide that the award will be subject to substantially the same terms and targets as the proposed awards noted above for senior employees of Sportech (i.e. as if it were an award under the Sportech Performance Share Plan, subject to the relevant targets). In light of the quantum of the proposed award to A. Lorne Weil and his proposed non-executive role, shareholder approval is being sought for the award (specifically, Resolution 3 to be tabled at the General Meeting seeks such authority).

The award proposed for A. Lorne Weil will be over Ordinary Shares with a value at the time of the award equal to £500,000.

12.    Dividend Policy

No dividend was proposed in 2009 (as in previous years) as the Board believes that it is currently appropriate to invest in opportunities for growth and to further reduce debt. The Board intends to commence a progressive dividend policy when it is appropriate to do so taking into account the availability of sufficient distributable reserves, cash and the Combined Group's working capital and investment requirements.

13.    Current Trading, Trends and Prospects

The Company issued an interim management statement on 19 November 2009 which noted that:

"In line with its interim statement of 4 August 2009, the Board is pleased to report that the Group continues to build upon the strategic initiatives put in place to develop the business. The Board has maintained the Group's commitment to investing in new products, improving its technological capabilities and expanding distribution. 

The Board continues to focus on cash generation and aims to deliver significant further reductions in overall net debt by the end of the financial year. Despite the challenging economic trading conditions facing the Group and the wider gambling industry, the Group expects to trade ahead of last year, albeit not at the growth rates previously anticipated."

As the board announced on 4 August 2009, the Directors have been disappointed with the operational and financial performance of certain aspects of the e-gaming division following an initially difficult customer migration period at the end of 2008. The Directors are in continuing discussions with 888 Holdings Plc regarding the commercial and joint operational terms of the relationship for both the year ended 31 December 2009 and on an ongoing basis. There is a risk that a positive outcome may not be reached, which could have a negative impact on the contribution of the 888 Strategic Partnership Agreement of up to around £2 million.

SGR

Potential growth opportunities for SGR reflect the division's strategy of geographical and technical diversity and include expansion in the business-to-consumer segment under its Dutch and Connecticut licences. Growth in these areas includes the further extension of telephone and Internet wagering to jurisdictions where these activities are permitted by law; the expansion of the Connecticut network from the current 12 OTBs to the 18 OTBs permitted under Connecticut law (subject to certain regulatory approvals); a revamping of the Dutch model to increase emphasis on efficient and distributed sales agents; and the implementation of a rewards scheme for Dutch players.

Elsewhere in North America, the key industry trends are in the areas of wagering distribution, particularly over the Internet, and alternative forms of gaming. While the expansion of distribution through traditional bricks and mortar wagering venues is growing at a slower pace than Internet or phone wagering, there do exist opportunities to expand into non-traditional venues such as bars and card rooms. For example, there is an opportunity to establish as many as 45 new "mini-satellite" wagering facilities in the state of California under a recently enacted law to expand the number of outlets for pari-mutuel wagering in the state.

Alongside a number of consumer facing industries in the United States, SGR's trading has been affected by the economic downturn. Racing handle declined in 2008, and this has continued during 2009 with US thoroughbred horseracing handle for the 12 months ended 31 December 2009 showing an industry wide decline of 9.9 per cent. A significant proportion of SGR revenues are dependant on horseracing handle and during this period, SGR revenues have moved in line with the industry.

14.    Settlement, Listing and Dealings

Applications will be made to the UKLA and to the London Stock Exchange, respectively, for the New Ordinary Shares to be admitted to the listing on the Official List and to trading on the London Stock Exchange's main market for listed securities.

Subject to the conditions to the Capital Raising having been satisfied (or, if applicable, waived) it is expected that Admission of the Capital Raising Shares will occur at 8.00 a.m. on or around 15 February 2010.

Subject to the Conditions to the Acquisition having been satisfied (or, if applicable, waived) it is expected that Admission of the Consideration Shares will occur at 8.00 a.m. on or around 6 April 2010.

Existing Shares are already admitted to the Official List, the London Stock Exchange's main market for listed securities and to CREST. It is expected that the New Ordinary Shares, when allotted and issued, credited as fully paid, will be capable of being held and transferred by means of CREST. It is expected that the New Ordinary Shares will trade under UK ISIN code GB00B28ZPV64.

The Company will announce the number of New Ordinary Shares admitted to listing and admitted to trading via a Regulatory Information Service by no later than 8.00 a.m. on the Business Day following the date of Admission of each of the Capital Raising Shares and the Consideration Shares.

15.    General Meeting

A General Meeting of the Company will be held at Freshfields Bruckhaus Deringer LLP, 65 Fleet Street, London EC4Y 1HS at 11.00 a.m. on or around 12 February 2010. This General Meeting is being held for the purpose of considering and, if thought fit, passing the Resolutions to, inter alia, approve the Acquisition, the Capital Raising and certain matters in connection with the Capital Raising. These Resolutions are as follows:

Resolution 1

Resolution 1 will be proposed as an ordinary resolution requiring a simple majority of votes in favour. This resolution proposes that:

(a)    the Acquisition be approved and the Directors be authorised to implement the Acquisition, such
        resolution being required as the Acquisition constitutes a class 1 transaction for the Company for the
        purposes of the Listing Rules; and

(b)    the Directors be authorised to allot shares to a level sufficient to enable the Directors to allot the
        Consideration Shares pursuant to the Acquisition, in accordance with section 551 of the Companies Act
        2006.

Resolution 2

Resolution 2 will be proposed as a special resolution requiring at least 75 per cent. of votes in favour. This resolution proposes:

(a)    that the terms of the Capital Raising be approved generally and gives the Directors the power to
        implement it, included for the purposes of the Listing Rules because the Issue Price represents a
        discount of greater than 10 per cent. to the middle-market price of the Existing Shares;

(b)    the amended Articles of Association be adopted which will (i) remove the limitation on the Company's
        authorised share capital in light of the implementation on 1 October 2009 of the relevant provisions of 
        the Companies Act 2006, which removes the concept of authorised share capital from UK company
        law; and (ii) make certain other amendments to the Articles of Association pursuant to the
        implementation of the Companies Act 2006 on 1 October 2009;

(c)    the increase of the Directors' general authority to allot shares to a level sufficient to enable the
        Directors to (i) allot the New Ordinary Shares (save for the Consideration Shares) up to a maximum
        nominal value of £29,207,760 in connection with the Capital Raising; and (ii) increase the
        Directors' general authority to allot Ordinary Shares up to a maximum nominal value of £26,511,353
        until the conclusion of the next annual general meeting of the Company. This resolution is required in
       order to (A) grant the Board authority to allot the New Ordinary Shares (save for the Consideration
       Shares) for the purpose of the Capital Raising; and (B) grant the Board authority to allot Ordinary
       Shares in substitution for the authority granted at the Company's annual general meeting on 14 May
       2009 in light of the increase in the issued share capital of the Company pursuant to the Capital Raising.
       The Directors have no specific plans to allot Ordinary Shares pursuant to this authority other than in
       connection with the Capital Raising; however, the authority gives the Directors flexibility to take
       advantage of business opportunities as they may arise; and

(d)    the empowerment of the Directors' to allot Ordinary Shares for cash as if section 561(1) Companies
        Act did not apply to them, (i) pursuant to the authority granted in Resolution 2(c)(i) in connection with
        the Capital Raising; and (ii) generally pursuant to Resolution 2(c)(ii), provided that such allotment is
        limited to (A) pre-emptive offers and (B) the allotment of Ordinary Shares up to a maximum nominal
        value of £3,976,703 and shall expire upon the expiry of the general authority conferred by Resolution 2
        (c)(ii).  This Resolution is required in order to (i) grant the Board authority to disapply statutory pre-
        emption rights for the purpose of the allotment of New Ordinary Shares in connection with the Firm
        Placing element of the Capital Raising; and (ii) grant the Board authority to disapply statutory pre-
        emption rights in substitution for the authority granted at the Company's annual general meeting on 14
        May 2009 in light of the increase in the issued share capital of the Company pursuant to the Capital
        Raising.  The Directors have no specific plans to allot Ordinary Shares pursuant to this authority,
        however, the authority gives the Directors flexibility to take advantage of business opportunities as they
        may arise.  

Resolution 3

Resolution 3 will be proposed as an ordinary resolution requiring a simple majority of votes in favour. This resolution seeks the general approval by Shareholders of the proposed share award agreement for A. Lorne Weil, which the Board feels is appropriate given the quantum of the proposed award.

Resolution 1 will be conditional on Resolution 2 being passed and Resolution 3 will be conditional on Resolutions 1 and 2 being passed.  If Resolution 2 is not passed by the requisite majority, the Capital Raising will not proceed. If Resolutions 1 and 2 are not passed by the requisite majority, the Acquisition will not proceed.

16.    Undertakings 

New strategic investor

Playtech has agreed to subscribe for 19,881,020 of the Firm Placed Shares, representing 9.99 per cent. of the Enlarged Issued Share Capital and will have the right to nominate one non-executive director to the Board of Sportech.

Major Shareholders

(a)    Newby Manor Limited has given an irrevocable undertaking to take up the whole of its entitlement
        under the Open Offer amounting to 5,753,910 New Ordinary Shares and to take up an
        additional 2,594,548 New Ordinary Shares under the Firm Placing. Newby Manor Limited has also
        undertaken to vote in favour of all the Resolutions at the General Meeting.

(b)    BoS has given an irrevocable undertaking to vote in favour of all the Resolutions at the General
        Meeting.

Directors

Ian Penrose, Steve Cunliffe and Jon Holmes have given irrevocable undertakings to take up New Ordinary Shares under the Capital Raising, amounting in aggregate to 155,000 New Ordinary Shares, representing approximately 0.27 per cent. of the total number of New Ordinary Shares issued under the Capital Raising.

SGR

The Proposed Directors and Andrew Gaughan, Managing Director of SGR Europe, have committed to take up New Ordinary Shares under the Firm Placing element of the Capital Raising, amounting in aggregate to 2,800,000 New Ordinary Shares, representing approximately 4.79 per cent. of the total number of New Ordinary Shares.

17.    Further information

Further details relating to the Acquisition and the Capital Raising will be contained in the Prospectus to be dated on or around 27 January 2010. After that date, copies of the Prospectus and all the documents incorporated by reference therein will be available for inspection at the London office of the Company at 101 Wigmore Street, London W1U 1QU and at the offices of Freshfields Bruckhaus Deringer LLP at 65 Fleet Street, London, EC4Y 1HS on any weekday (Saturdays, Sundays and public holidays excluded) during normal business hours.  Copies will also be available for download from the Company's corporate website, www.sportechplc.com. 

Copies of the Prospectus, the Notice of General Meeting and the proxy form for the General Meeting will also be available for inspection at the UK Listing Authority's Document Viewing Facility situated at the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

Appendix I

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

The following is the expected timetable of principal events in relation to the Acquisition and the Capital Raising:

Record Date for entitlements under the Open Offer	5.00 p.m. on 25 January 2010
Announcement of the Acquisition and the Capital Raising	7:00 a.m. on 27 January 2010
Despatch of the Prospectus, Application Forms and Forms of Proxy	on or around 27 January 2010
Ex-entitlement date for the Open Offer	8.00 a.m. on 27 January 2010
Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders in CREST	as soon as possible after 8.00 a.m. on 28 January 2010
Recommended last time and date for withdrawing Open Offer Entitlements from CREST	4.30 p.m. on or around 5 February 2010
Latest time and date for depositing Open Offer Entitlements into CREST	3.00 p.m. on or around 8 February 2010
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on or around 9 February 2010
Latest time and date for receipt of Forms of Proxy and receipt of electronic proxy appointments via the CREST system	11.00 a.m. on or around 10 February 2010
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on or around 11 February 2010
General Meeting	11.00 a.m. on or around 12 February 2010
Expected date of announcement of results of the General Meeting and the Capital Raising through a Regulatory Information Service	on or around 12 February 2010
Expected date of Admission and commencement of dealings in New Ordinary Shares pursuant to the Capital Raising on the London Stock Exchange and New Ordinary Shares pursuant to the Capital Raising credited to CREST stock accounts (uncertificated holders only)	8.00 a.m. on or around 15 February 2010
Expected date of despatch of definitive share certificates for New Ordinary Shares (to Qualifying non-CREST Shareholders only)	no later than 28 February 2010
Expected latest date for receipt of all Governmental Approvals	end of March 2010
Expected date of Completion of the Acquisition	on or around 6 April 2010
Admission and commencement of dealings in New Ordinary Shares pursuant to the Acquisition on the London Stock Exchange and New Ordinary Shares pursuant to the Acquisition credited to CREST stock accounts (uncertificated holders only)	8.00 a.m. on or around 6 April 2010
Expected date of despatch of definitive share certificates for New Ordinary Shares (to Qualifying non-CREST Shareholders only)	on or around 21 April 2010

________________
Note:

(1)    References to times in this document are to London time unless otherwise stated.

(2)    CREST Shareholders should inform themselves of CREST's requirements in relation to electronic
        proxy appointments.

(3)    Subject to certain restrictions relating to Shareholders with a registered address outside the UK, 
        details of which are set out in the Prospectus.

The times and dates set out in the expected timetable of principal events above and mentioned throughout this Announcement are indicative only and subject to change. If any of the times and/or dates change, the revised times and/or dates will be notified by announcement through a Regulatory Information Service.

  Appendix II

DEfinitions

The following definitions apply throughout this Announcement unless the context requires otherwise.

"Acquisition"	the proposed Acquisition of SGR subject to the terms and conditions of the Purchase Agreement
"Admission"	one or more admissions of New Ordinary Shares to the Official List and to trading on the London Stock Exchange's Main Market for listed securities in accordance with the Admission and Disclosure Standards
"Admission and Disclosure Standards"	the requirements contained in the publication "Admission and Disclosure Standards" dated July 2005 (as amended from time to time) containing, amongst other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's Main Market for listed securities
"Amendment Agreements"	SFA Amendment Agreement and the Working Capital Amendment Letter
"Announcement"	this announcement by the Company of, inter alia, the Acquisition and the Capital Raising, dated 27 January 2010
"Application Form"	the application form on which Qualifying Non-CREST Shareholders (other than Qualifying Non-CREST Shareholders with, subject to certain exceptions, a registered address in the United States or any Restricted Territories) who are registered on the register of members of the Company may apply for Open Offer Shares under the Open Offer
"Articles" or "Articles of Association"	the articles of association of the Company
"Australia"	the Commonwealth of Australia, its possessions and territories and all areas subject to its jurisdiction or any political subdivision thereof
"Board"	the board of directors of the Company as constituted from time to time
"BoS"	Bank of Scotland plc
"Broker"	Investec Investment Banking, a division of Investec Bank plc
"Business Day"	any day (other than a Saturday or Sunday or public holiday) on which banks are open for business in London
"Canada"	Canada, its possessions and territories and all areas subject to its jurisdiction or any political subdivision thereof
"Capital Raising"	the Firm Placing and the Placing and Open Offer
"Capital Raising Shares"	the Firm Placed Shares and the Open Offer Shares
"certificated" or "in certificated form"	where a share or other security is not in uncertificated form (that is, not in CREST)
"Close Brothers"	Close Brothers Corporate Finance Limited
"Closing Price"	the closing middle market quotation of an Ordinary Share as derived from the Daily Official List
"Combined Group"	the Group as enlarged by the Acquisition
"Companies Act 2006"	the Companies Act 2006 (as amended)
"Completion"	completion of the Acquisition under the Purchase Agreement, in accordance with its terms
"Conditional Placees"	any persons who have agreed or shall agree to subscribe for Open Offer Shares pursuant to the Placing subject to clawback to satisfy valid applications by Qualifying Shareholders pursuant to the Open Offer
"Conditions"	the conditions to the implementation of the Acquisition which are summarised at paragraph 5 of this Announcement
"Consideration Shares"	the new Ordinary Shares proposed to be issued and credited as fully paid to Scientific Games pursuant to the Acquisition
"CREST"	the relevant system, as defined in the CREST Regulations (in respect of which Euroclear is the operator as defined in the CREST Regulations)
"CREST Regulations" or "Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001 No. 01/378), as amended
"Daily Official List"	the daily official list of the London Stock Exchange
"Debt Facilities"	the Senior Facility Agreement and the Working Capital Facility Agreement
"Directors"	Piers Pottinger, Ian Penrose, Steve Cunliffe, John Barnes, Kathryn Revitt and Jon Holmes, and "Director" means any one of them
"Disclosure and Transparency Rules"	the Disclosure Rules and Transparency Rules published by the FSA
"EBITDA"	earnings before interest, taxes, depreciation and amortisation
"Enlarged Issued Share Capital"	the issued share capital of the Company as enlarged by the issue of the New Ordinary Shares at Completion
"Euroclear"	Euroclear UK and Ireland Limited, a company incorporated under the laws of England and Wales under number 2872738, which operates CREST
"Executive Directors"	Ian Penrose and Steve Cunliffe, being the executive directors of the Company
"Ex-entitlement Date"	8.00 a.m. on or around 27 January 2010
"Existing Issued Share Capital"	the Ordinary Shares in issue at the date of this document
"Existing Shares"	the ordinary shares of 50 pence each in the capital of the Company in issue at the date of this document and "Existing Share" means any one of them
"Financial Services Authority" or "FSA"	the Financial Services Authority of the United Kingdom
"financial year"	for a particular year, the financial year of the Company ending on 31 December in such year and in respect of which audited accounts have been prepared or, in the case of SGR, the financial year of SGR ending on 31 December in such year and in respect of which audited accounts have been prepared
"Firm Placed Shares"	the 38,250,000 Firm Placed Shares which the Company intends to issue to Firm Placees in the Firm Placing
"Firm Placees"	any persons who have agreed or shall agree to subscribe for Firm Placed Shares pursuant to the Firm Placing
"Firm Placing"	the subscription by the Firm Placees for the Firm Placed Shares
"FSMA"	the Financial Services and Markets Act 2000 (as amended)
"General Meeting"	the general meeting of the Company to be held at Freshfields Bruckhaus Deringer LLP, 65 Fleet Street, London EC4Y 1HS at 11.00 a.m. on or around 12 February 2010, notice of which is set out at the end of this document
"Governmental Approvals"	the regulatory approvals to be received by the Company prior to Completion pursuant to the terms of the Purchase Agreement
"group"	in relation to any person, means that person and any companies which are holding companies, subsidiaries or subsidiary undertakings of it or of any such holding company
"Group" or "Sportech Group"	the Company, its subsidiaries and subsidiary undertakings, and "member of the Group" shall be construed accordingly
"HMRC"	Her Majesty's Revenue & Customs and, where relevant, any predecessor body which carried out part of its functions and references to any approval by HMRC shall, where appropriate, include approval by any officer of Her Majesty's Revenue & Customs
"Investec"	Investec Investment Banking, a division of Investec Bank plc
"Issue Price"	50 pence for each New Ordinary Share
"Japan"	Japan, its possessions and territories and all areas subject to its jurisdiction or any political subdivision thereof
"Joint Sponsors"	Close Brothers and Investec
"LBG" or "Lloyds Banking Group"	Lloyds Banking Group plc
"Listing Rules"	the listing rules and regulations of the UK Listing Authority (as amended)
"Lock-Up Agreement"	a lock-up agreement between the Company and Scientific Games in respect of the New Ordinary Shares to be entered on Completion
"London Stock Exchange"	London Stock Exchange plc, together with any successors thereto
"New Ordinary Shares"	the Consideration Shares, the Firm Placed Shares and/or the Open Offer Shares, as the context requires
"Non-CREST Shareholder"	a Shareholder who does not hold their Ordinary Shares in CREST
"Non-Executive Directors"	John Barnes, Kathryn Revitt and Jon Holmes, being the non executive directors of the Company
"Notice of General Meeting"	the notice of the General Meeting
"Official List"	the official list of the UK Listing Authority
"Open Offer"	the invitation by the Company to Qualifying Shareholders to apply for Open Offer Shares, on the term and conditions set out in the Prospectus, and in the case of Qualifying Non-CREST shareholders, in the Application Form
"Open Offer Entitlement"	the entitlement of a Qualifying Shareholder to apply for 1 Open Offer Share for every 5 Existing Shares held on the Record Date
"Open Offer Shares"	the 20,130,520 Ordinary Shares being offered to Qualifying Shareholders pursuant to the Open Offer and "Open Offer Share" means any one of them
"Ordinary Share"	an ordinary shares of 50 pence each in the capital of the Company
"OTB"	off-track betting facility
"Patent Licence Agreement"	a patent licence agreement between SGR International, Inc., Scientific Games Holdings Limited and SGR LLC in respect of the grant of a royalty free licence by SGR LLC to Scientific Games International, Inc., and Scientific Games Holdings Limited to be entered into on Completion
"Placing"	the conditional placing of the Open Offer Shares with the Conditional Placees at the Issue Price subject to clawback in respect of valid applications made by Qualifying Shareholders under the Open Offer
"Placing Agreement"	the sponsors, placing and underwriting agreement entered into by the Company, Close Brothers and Investec 27 January 2010 in connection with the Capital Raising
"Placing Undertakings"	(i) the irrevocable undertaking given by Newby Manor Limited to take up 8,348,458 of the New Ordinary Shares under the Capital Raising; (ii) the irrevocable commitments given by (a) A. Lorne Weil to subscribe for 2,000,000 New Ordinary Shares under the Firm Placing; (b) Brooks Pierce to subscribe for 500,000 New Ordinary Shares under the Firm Placing; and (b) Andrew Gaughan to subscribe for 300,000 New Ordinary Shares under the Firm Placing; and (iii) the undertaking given by Playtech Limited to subscribe for 19,881,020 New Ordinary Shares under the Firm Placing
"pounds" or "£"	UK pounds sterling
"Proposed Directors"	Brooks Pierce and A. Lorne Weil (in his individual capacity and not as a representative of Scientific Games)
"Prospectus"	document to be dated on or around 27 January 2010 comprising a combined prospectus and class 1 circular relating, inter alia, to the Acquisition and the Capital Raising
"Prospectus Rules"	the rules for the purposes of Part VI of FSMA in relation to offers for securities to the public and the admission of securities to trading on a regulated market
"Purchase Agreement"	the agreement entered into by the Company and Scientific Games, amongst others, on 27 January 2010 under which the Company has agreed to acquire SGR
"Qualifying CREST Share"	Qualifying Shareholders holding Ordinary Shares in uncertificated form in CREST
"Qualifying Non-CREST Shareholders"	Qualifying Shareholders holding Ordinary Shares in certificated form
"Qualifying Shareholders"	holders of Ordinary Shares on the register of member of the Company at the Record Date
"Record Date"	5.00p.m. on 25 January 2010
"Regulatory Information Service"	one of the regulatory information services authorised by the Financial Services Authority to receive, process and disseminate regulatory information in respect of listed companies
"South Africa"	the Republic of South Africa, its possessions and territories and all areas subject to its jurisdictions or any political subdivision thereof
"Resolutions"	the resolutions to be proposed at the General Meeting, as set out in the Notice of General Meeting
"Restated Facility Agreement"	the Senior Facility Agreement in the form it will be amended and restated pursuant to the SFA Amendment Agreement
"Restricted Territories"	Canada, Australia, Japan and the Republic of South Africa, and any other jurisdiction where the extension or availability of the Open Offer (and any other transaction contemplated thereby) would breach any applicable laws
"Right of First Offer Agreement"	a right of First Offer Agreement between the Company and Scientific Games pursuant to which the parties will agree certain sales commission agreements to be entered into on Completion
"Scientific Games"	Scientific Games Corporation, a corporation incorporated on 2 July 1984 in the State of Delaware with its registered address at 750 Lexington Avenue, 25th Floor, New York, 10022
"Securities Act"	the US Securities Act of 1933, as amended, and the rules and regulations promulgated under such Act
"Senior Facility Agreement"	the senior facilities agreement between, among others, the Company and BoS, dated 7 November 2007, as amended from time to time
"SFA Amendment Agreement"	the amendment agreement pursuant to which the Senior Facility Agreement is intended to be amended and restated as the Restated Facility Agreement, dated 27 January 2010 entered into between the Company and others and BoS
"SGR"	the racing and venue management business division of Scientific Games
"Sportech Share Schemes"	the Sportech Performance Share Plan and the Sportech Share Option Scheme (in both HMRC approved and unapproved form)
"Shareholders"	holders of Ordinary Shares or New Ordinary Shares (as the context requires)
"Software Licence Agreement"	a software licence agreement between the Company, SGR LLC and Scientific Games in respect of the grant of certain rights by SGR LLC to Scientific Games to be entered into on Completion
"Sportech" or "Company"	Sportech plc (registered number SC69140) of 249 West George Street, Glasgow G2 4RB
"Sportech Holdco 1"	Sportech Holdco 1 Limited, a company incorporated in England and Wales on 8 January 2010 with its registered office at Walton House, Charnock Road, Liverpool L67 1AA
"Sportech Holdco 2"	Sportech Holdco 2 Limited, a company incorporated in England and Wales on 8 January 2010 with its registered office at Walton House, Charnock Road, Liverpool L67 1AA
"subsidiary" or "subsidiary undertaking" or "undertaking"	each have the meanings given by the Companies Act 2006
"Supply Agreement"	a supply agreement between the Company, Scientific Games and SGR LLC in respect of the supply by Scientific Games, or its affiliates, of certain terminals and paper supplies to be entered into on Completion
"Transition Services Agreement"	a transition services agreement between Scientific Games and Sportech, to be entered into on Completion
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority" or "UKLA"	the FSA acting in its capacity as competent authority for the purposes of FSMA
"uncertificated" or "in uncertificated form"	recorded on the register of members of Sportech or SGR as being held in uncertificated form in CREST and title may be transferred by means of CREST
"US" or "United States"	the United States of America, its territories and possessions, any State of the United States and the District of Columbia and all other areas subject to its jurisdiction
"Working Capital Amendment Letter"	the amendment letter to the Working Capital Facility Agreement dated 27 January 2010 and entered into between the Company and BoS
"Working Capital Facility Agreement"	the working capital facility agreement entered into by the Company and BoS dated 7 November 2007 and as amended from time to time

All references to legislation in this document are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment, modification, re-enactment or extension thereof.

Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.

References to "£", "Sterling", "p", "penny" and "pence" are to the lawful currency of the United Kingdom.

References to time are to London time.

Important Notice

This Announcement should be read in conjunction with Appendix I, which contains an expected timetable of key events and Appendix II, which contains the definitions of certain terms used in this Announcement.

This Announcement is not intended to and does not constitute an offer or invitation to purchase, or the solicitation of any offer to sell, any securities.

This Announcement does not constitute a prospectus. Further details relating to the Acquisition and the Capital Raising will be contained in the Prospectus to be dated on or around 27 January 2010. After that date, copies of the Prospectus will be available for inspection at the London office of the Company at 101 Wigmore Street, London W1U 1QU during normal business hours. Copies will also be available for download from the Company's corporate website, www.sportechplc.com. and at the offices of Freshfields Bruckhaus Deringer LLP at 65 Fleet Street, London, EC4Y 1HS on any weekday (Saturdays, Sundays and public holidays excluded). Copies of the Prospectus, the Notice of General Meeting and the proxy form for the General Meeting will also be available for inspection at the UK Listing Authority's Document Viewing Facility situated at the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

This Announcement has been prepared for the purposes of complying with English law and the Listing Rules and information disclosed may not be the same as that which would have been disclosed if this summary and the Announcement had been prepared in accordance with the laws of jurisdictions outside England. The Acquisition and the Capital Raising will be subject to the applicable rules and regulations of the Financial Services Authority, the London Stock Exchange and the Panel.

Civil liability attaches to those persons who are responsible for this summary, including any translation of this summary, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of the Announcement. If a claim relating to information contained in the summary or the Announcement is brought by an investor before a court in a member state of the European Economic Area, a plaintiff investor might, under the national legislation of the member state where the claim is brought, be required to bear the costs of translating this document before legal proceedings are initiated.  

Close Brothers is authorised and regulated in the United Kingdom by the Financial Services Authority for the conduct of UK business. Close Brothers is acting exclusively for Sportech and no one else as financial adviser and joint sponsor in connection with the Acquisition and the Capital Raising and Close Brothers will not be responsible to anyone other than Sportech for providing the protections afforded to customers of Close Brothers or for advising any other person on the transactions and arrangements described in this document nor for providing advice in relation to the Acquisition and the Capital Raising, the content of this summary and the Announcement or any other matter or arrangement referred to herein.

Investec is authorised and regulated in the United Kingdom by the Financial Services Authority for the conduct of UK business. Investec is acting exclusively for Sportech and no one else as broker and joint sponsor in connection with the Acquisition and the Capital Raising and Investee will not be responsible to anyone other than Sportech for providing the protections afforded to customers of Investec or for advising any other person on the transactions and arrangements described in this document nor for providing advice in relation to the Acquisition and the Capital Raising, the content of this summary and the Announcement or any other matter or arrangement referred to herein.

Overseas Jurisdictions

The release, publication or distribution of the Announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession the Announcement comes should inform themselves about, and observe, any applicable restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in or into the United States, Australia, Canada, Japan, and South Africa or any other jurisdiction where it would be unlawful to do so.

The New Ordinary Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. 

There will be no public offer of the New Ordinary Shares in the United States. The New Ordinary Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of the Application Form or this document. Any representation to the contrary is a criminal offence in the US.

The New Ordinary Shares have not been and will not be registered under the relevant laws of any state, province or territory of any of the Restricted Territories and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Restricted Territory except pursuant to an applicable exemption from registration requirements. There will be no public offer of New Ordinary Shares in the United States, Canada, Australia, Japan or South Africa, or any jurisdiction where it is unlawful to do so.

This Announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any of New Ordinary Shares. In particular, this Announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.

Forward Looking Statements

This Announcement, including any information included or incorporated by reference in the Announcement, may contain statements which are, or maybe deemed to be, "forward-looking statements" concerning Sportech and SGR which are prospective in nature. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements. The forward-looking statements are based on current expectations and projections about future events and are therefore subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements. 

Neither of Sportech or SGR, nor any of their associates or directors, officers or advisers, provide any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in the Announcement will actually occur. You are cautioned not to place undue reliance on these forward-looking statements.

Other than in accordance with its legal or regulatory obligations (including under the Listing Rules and the Disclosure and Transparency Rules), neither of Sportech nor SGR are under any obligation and expressly disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Not a profit forecast

Nothing in this Announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per Ordinary Share for the current or future financial years, or those of the Combined Group, will necessarily match or exceed the historical published earnings per Ordinary Share.

General

This Announcement has been issued by, and is the sole responsibility of, the Company. No person has been authorised to give any information or to make any representations other than those contained in this Announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company, Close Brothers or Investec. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this Announcement or that the information contained in it is correct at any subsequent date.

This Announcement should not be considered a recommendation by the Company, Close Brothers, Investec or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for the New Ordinary Shares. Price and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. You are advised to read this document and, once available, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Group and the Combined Group's future performance and the industry in which it operates. Persons needing advice should consult an independent financial adviser.

Neither Scientific Games nor Scientific Games's Affiliates accept any responsibility whatsoever for, nor make any representation or warranty, express or implied, in relation to, the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Acquisition, SGR, the Capital Raising and the New Ordinary Shares. Scientific Games and Scientific Games's Affiliates accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this document or any such statement.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN AND SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT. IT IS NOT A PROSPECTUS. INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SHARES EXCEPT SOLELY ON THE BASIS OF INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY SPORTECH PLC IN CONNECTION WITH THE ACQUISITION AND CAPITAL RAISING. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE COMPANY'S REGISTERED OFFICE AND, OTHER THAN IN CERTAIN JURISDICTIONS, ON ITS CORPORATE WEBSITE AT WWW.SPORTECHPLC.COM.

 

END

 

 

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