Gambling : Betshop sold to newco

The online and land betting group Leisure and Gaming plc has advised the stock exchange that it is seeking shareholder approval for the sale of subsidiary group Betshop to Newco, a company owned by Grupo Pefaco SL, a Spanish internet and land gambling group, for GBP 4.4 million (Euro 5.3 million).
 
The sale follows notifications in July that since trading in its shares on the London AIM was suspended in May, the company had been unable to secure sufficient funds to ensure its survival in its current form. The Board concluded that without a significant injection of funds, the best course available would be to sell its operating business for the highest price achievable.
 
Betshop is L&G's main trading subsidiary, and once the sale goes through the group will change its focus to that of an investing company.
 
The notification reveals that shareholders of Newco will include Gabriel Chaleplis who is also a director of Betshop. Accordingly, the deal constitutes a related party transaction for the purposes of the AIM Rules.
 
The heads of terms are conditional on the signing and delivery of a definitive share purchase agreement for Pefaco to purchase the entire issued share capital of Betshop and the completion of satisfactory due diligence. These processes are ongoing and are expected to take place during the notice period for the General Meeting.
 
Under the heads of terms, L&G will receive a minimum of Euro 3.4 million, being the initial consideration and the repayment of intercompany debt. The company has liabilities and termination costs of Euro 2 million. Further deferred consideration of up to Euro 3 million is dependent on performance criteria agreed by the two parties.
 
Following the sale, L&G will have around Euro 900 000 in cash, with another Euro 600 000 due in on December 2011, along with the deferred consideration of Euro 3 million from the Newco deal.
 
Company spokesmen said that without the Newco deal, L&G could not have survived beyond October this year.