Monday May 21, 2012 : EVEREST GAMING FACING TOUGH TIMES
Major online gambling group has been making significant losses
Disclosures in recent company financial reports show that the Everest Gaming online casino group, owned sixty percent by the Betclic Everest Group and 40 percent by the Asian company GigaMedia, may be in serious financial straits.
In addition, players have been reporting slow payments, always an ominous sign.
The Gibraltar-licensed company operates online casinos like Everest, Imperial, Casino Elegance, and Casino Lux, and is part of a wider group that comprises major companies like Betclic, Bet-At-Home and Expekt.
Among the reports commenting on the difficulties is a comment from the Gigamedia 2011 annual report, which notes:
"In 2010 and 2011, Everest Gaming recorded an operating loss of US$24.2 million and US$111.1 million, respectively. Everest Gaming has been incurring losses and may not be able to obtain financing from third parties on attractive terms or at all.
"Everest Gaming may have insufficient resources to cover its operating expenses in 2012. We and BetClic have provided a certain amount of shareholder loans to Everest Gaming in proportion to our respective shareholding percentage in 2011. However, none of us or BetClic is obligated to provide any additional financing pursuant to the shareholders agreement or under the French law.
"We cannot assure you that we will continue providing additional financing to meet Everest Gaming’s working capital needs, and we may lose our return on our investment in the Everest Gaming business which will adversely affect our business and results of operations."
Other confirmatory sources included GigaMedia`s Q1 livecast presentation from Taiwan Thursday, in which CEO John Stringer, commenting on Everest Gaming, noted that the company was struggling, with business and profit and loss weak.
He confirmed that GigaMedia had written down its Everest investment, and that he understood the company was trying to raise capital. GigaMedia's stake in the company had been reduced from 40 percent to 34 percent, he revealed.
The independent business publication Gaming Intelligence, commenting on the GigaMedia Q1 publicity, said that it has been claimed that Betclic Everest had not provided GigaMedia with financial results for the first quarter of 2012, but that Stringer had "offered little hope for optimism when questioned about the subject.”
Betclic Everest Group is jointly owned by the major Lov Group and La Société des Bains de Mer. Late last year the group's CEO, Nick Beraud, left the company, handing over to Ignicio Martos. A few months later, amid rumours of severe cost-cutting measures by the new CEO, his colleague and Betclic co-founder, Eric Moncada also left BEG, followed closely by group Chief Technical Officer Pierrick Petain and other senior managers.
Although Everest Betclic Group failed to respond to InfoPowa's invitation to comment on this story, a player acquisition manager from Everest Gaming, Itsik Akiva, did make an appearance on the Casinomeister message board with a lengthy post that attempted to explain the company's position:
"I can summarize our situation by saying that while the current environment is much more challenging than any in our 15 year history, and while our operational results did weaken in 2011 vs. 2010 (along with most of the industry, particularly the operators with significant presence in France) we have been able to reverse the trend and the company is now gradually improving its financial performance," he claimed.
Akiva noted that Everest Gaming has been the subject of ownership, organisational and market regulatory changes in recent times, and these changes were reflected in the financial reports being discussed.
"While we do not argue with the overall sentiment, i.e. that our 2011 financial performance weakened in comparison to prior years , please keep in mind that the information in those reports can easily be taken out of context," he suggested.
Akiva went on to attribute organisational changes, French tax and "the unnatural economic environment in France" to the company's difficulties.
More unusually, he attempted to lay a substantial part of the blame for the company's financial appearance to the 2011 writedown of [GigaMedia's] shareholder interest in Everest, which he claimed was responsible for almost 70 percent of the Everest losses reflected in 2011 financial reportage.
"This is an accounting adjustment which has absolutely nothing to do with Everest’s ability to continue….paying its players promptly," he wrote. "To claim that this 59M EUR accounting entry has any bearing on Everest’s overall financial fortitude….is misinformed information at best or disingenuous at worst."
However, Akiva then conceded that 2011 was not a profitable year, and that 2012 continues to be "a somewhat challenging environment." He assured players, however, that: "Everest continues to be a well-funded, shareholder-supported operator."
In trying to illustrate the optimism in the company, Akiva went on to sketch the broad details of improvements and new initiatives Everest has recently planned, suggesting: "…these are not the actions of a company that is on its way down, but rather of a company that is bouncing up again and is focusing on its long term vision."
In the wake of debacles like Purple Lounge and Full Tilt Poker, among more recent failures, players are unlikely to be reassured by Akiva's assertion that Everest's regulatory and auditing structures are solid.
He pointed out that his company is licensed in Gibraltar and by ARJEL in France, and that in both jurisdictions the segregation of player funds is mandatory.
"If there were any concerns for the safety of player funds we would have not been able to retain our licenses," he claimed. "Additionally as a subsidiary of BetClic Everest Group (formerly Mangas Gaming) our financial results are audited semi-annually and reviewed annually by licensed external auditors."
In concluding, Akiva confirmed that Everest Gaming properties include Everest Casino, Everest Poker, Casino Elegance, Imperial Casino, Casino Glamour, Casino Lux, Casino Treasure, Casino Fantasy, Home of Fun and Everest Affiliates.
"We have no involvement in nor influence over any brands operated by our sister companies, including Betclic, Expekt, Bet-at-Home, Monte Carlo Casino or their respective affiliate programs," he wrote.