TIDMSPO
RNS Number : 8124D
Sportech PLC
26 June 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO
SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS
OF THAT JURISDICTION. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 AS IT FORMS
PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018
FOR IMMEDIATE RELEASE
26 June 2023
SPORTECH PLC
('Sportech' or the 'Company')
Share Capital Restructure, Distribution and Notice of General
Meeting
Sportech, an international betting and technology business,
today announces a proposed rationalisation of its capital structure
through a 10,000 to one share consolidation (the "Share
Consolidation") immediately followed by a one for 1,000 share
sub-division (the "Share Sub-division" and, together with the Share
Consolidation, the "Share Capital Restructure"). Further, following
and subject to the Share Capital Restructure taking place, the
Company intends to declare a special interim distribution of 35
pence per New Ordinary Share in issue at the relevant record date
(equivalent to 3.5 pence per Existing Ordinary Share subject to
fractional entitlements), which will represent a return of, in
aggregate, approximately GBP3.5 million to shareholders remaining
following the Share Capital Restructure (the "Distribution").
Background
The Company's directors (the "Directors") have, for some time,
been considering ways to reduce the Company's ongoing cost base and
rationalise its capital structure whilst, simultaneously, being
mindful of opportunities to return value to its shareholders. After
a period of review, the Directors have concluded that the Share
Capital Restructure, followed by the Distribution to holders of New
Ordinary Shares, is in the best interests of the Company's
shareholders as a whole for the following reasons:
-- Efficient exit for minority shareholders: The Company has
been a publicly traded company for over 25 years, and during this
time, has witnessed a significant increase in the number of small
shareholders on its register. This may be attributed to various
factors, including historical corporate activities. In particular,
as at 23 June 2023 (being the latest practicable date prior to the
publication of this announcement), of the Company's approximate
3,760 holders of Existing Ordinary Shares (as defined below)
("Existing Shareholders"), 20 per cent. held less than 100 Existing
Ordinary Shares, 81 per cent. held less than 1,000 Existing
Ordinary Shares and 97 per cent. held less than 10,000 Existing
Ordinary Shares, with the 97 per cent. representing approximately
2.5 per cent. of the Company's total issued share capital. It has
come to the attention of the Directors that a considerable number
of these Existing Shareholders with small shareholdings face
challenges when attempting to sell their Existing Ordinary Shares
in the market. In many cases, the costs associated with such
transactions are expected to surpass the actual value of those
shares or otherwise be uneconomical. Furthermore, Existing
Shareholders with smaller holdings are likely to be
disproportionately impacted by the lack of market liquidity being
experienced in the Existing Ordinary Shares. In light of these
factors, the Directors consider the Share Consolidation to
represent an efficient exit for minority shareholders holding less
than 10,000 Existing Ordinary Shares.
-- Efficient return of funds to shareholders: The Directors
expect to declare the Distribution by way of an interim dividend.
The Directors believe that the declaration of the Distribution
allows the Company to make this return in a flexible, efficient and
cost-effective manner when compared to, for example, an on-market
buyback programme, which could take a number of months to effect
and may be constrained by daily trading limits, or a tender offer,
which would be more costly.
-- Company ongoing administration costs: The number of Existing
Shareholders which the Company has determines certain of the
ongoing administration costs the Company incurs. For example, the
costs incurred by the Company with its Registrar and the Company's
costs in connection with producing and circulating shareholder
documentation such as the annual report and accounts and notice of
annual general meeting are directly related to the number of
shareholders. The Company estimates that the number of Existing
Shareholders will reduce by approximately 97 per cent., from
approximately 3,760 Existing Shareholders to approximately 120
shareholders, as a result of the Share Capital Restructure. A
reduction in the number of shareholders in the Company is expected
to reduce the Company's ongoing administrative costs by
approximately GBP250,000 over the next five years.
-- Improvement in marketability: The Directors are proposing to
carry out the Share Sub-division subject to, and immediately
following, the Share Consolidation in the expectation that the
Share Sub-division will improve the marketability of the Company's
issued shares.
The Share Capital Restructure and certain related matters will
be subject to the approval of Existing Shareholders at a general
meeting. The Company expects to post a circular, by no later than
30 June 2023, to its shareholders (the "Circular") setting out full
details of the Share Capital Restructure and Distribution
(including associated resolutions), the expected timetable and a
notice of the general meeting at which the relevant resolutions
will be proposed (the "General Meeting").
Share Capital Restructure
The Company currently has 100,000,000 ordinary shares of one
pence each ("Existing Ordinary Shares") in issue. Immediately
following the Share Capital Restructure, the Company expects to
have 10,000,000 new ordinary shares of 10 pence each ("New Ordinary
Shares") in issue (although this will reduce as a result of the
repurchase by the Company of New Ordinary Shares representing
aggregate fractional entitlements (as described below) in the
period shortly following the Share Capital Restructure). The New
Ordinary Shares will be equivalent in all respects to the Existing
Ordinary Shares, including their dividend, voting and other
rights.
Existing Shareholders' percentage holdings in the issued share
capital of the Company will, save for changes connected to
fractional entitlements, remain broadly unchanged following the
Share Capital Restructure.
Share Consolidation
To effect the Share Consolidation, the Company will issue one
ordinary share of GBP100 each ("Post-Consolidation Ordinary
Shares") for every 10,000 Existing Ordinary Shares. As the Company
cannot issue fractions of shares, no Existing Shareholder will be
entitled to a fraction of a Post-Consolidation Ordinary Share.
Instead, their entitlement will be rounded down to the nearest
whole number of Post-Consolidation Ordinary Shares. As a result,
Existing Shareholders who hold fewer than 10,000 Existing Ordinary
Shares at the record date will not be entitled to any
Post-Consolidation Ordinary Shares in connection with the Share
Consolidation and will, therefore, cease to be a shareholder of the
Company following the Share Consolidation.
All fractional entitlements will, however, be aggregated and the
shares representing such aggregate fractional entitlements will be
sold on behalf of all relevant Existing Shareholders. The proceeds
of such sales will be distributed to the relevant Existing
Shareholders in due proportion subject to a minimum payment of GBP5
(described in more detail below).
Share Sub-division
To effect the Share Sub-division, the Company will issue 1,000
New Ordinary Shares for every one Post-Consolidation Ordinary
Share. The Share Sub-division is subject to, and conditional on,
the Share Consolidation taking place and will take place
immediately following the Share Consolidation.
Fractional entitlements
Fractional entitlements arising from the Share Consolidation
will be aggregated and sold on behalf of the relevant Existing
Shareholders. At the point of sale, the Share Sub-division will
have taken place and, as a result, such fractional entitlements
will be represented by New Ordinary Shares (not Post-Consolidation
Ordinary Shares).
The Company will carry out an on-market buy back of the New
Ordinary Shares which represent fractional entitlements,
immediately following admission of the New Ordinary Shares to
trading on AIM ("Admission"), at a price of GBP1.70 per relevant
New Ordinary Share. This price has been calculated by reference to
the Company's recent share price performance, adjusted for the
proposed Share Capital Restructure.
Settlement will be made in due proportion to the relevant
Existing Shareholders, save that where any one Existing
Shareholder's entitlement is GBP5 or less, such Existing
Shareholder's entitlement will be donated to WellChild, a national
UK children's charity.
Distribution
Following and subject to the Share Capital Restructure taking
place, the Company intends to declare a special interim
distribution of 35 pence per New Ordinary Share in issue at the
relevant record date (equivalent to 3.5 pence per Existing Ordinary
Share subject to fractional entitlements), which will represent a
return of, in aggregate, approximately GBP3.5 million to
shareholders remaining following the Share Capital Restructure.
Whilst the Distribution is not subject to shareholder approval
at the General Meeting, the Directors do not expect to declare it
unless: (a) shareholder approval is given for the Share Capital
Restructure at the General Meeting; and (b) Admission takes place
by or as soon as practicable following a date shortly following the
General Meeting. The Distribution timetable will be set out in more
detail in the Circular.
Recommendation to Shareholders
The Directors consider that each of the proposals outlined in
this announcement is in the best interests of the Company and its
shareholders as a whole. Accordingly, the Directors unanimously
recommend that Existing Shareholders vote in favour of the
resolutions to be proposed at the General Meeting (which will be
set out in full in the Circular) as Richard McGuire and Clive
Whiley (being the Directors who are interested in Existing Ordinary
Shares) intend to do in respect of their own beneficial holdings,
insofar as they are able to control or direct the exercise of the
voting rights attaching to the relevant Existing Ordinary
Shares.
Contacts:
Sportech PLC enquiries@sportechplc.com
Richard McGuire, Non-Executive
Chairman
Clive Whiley, Senior Independent
Director
Peel Hunt (Nominated Adviser Tel: +44 (0) 20 7418 8900
& Broker)
George Sellar
Andrew Clark
Lalit Bose
Notes to Editors:
About Sportech
Sportech operates in the gaming market and has two main
businesses. Firstly, it runs Sports Bars and other betting venues
in Connecticut, USA, where it has an exclusive license to offer
pari-mutuel wagering, it also has a distribution agreement with the
Connecticut Lottery Corporation to provide retail sports betting.
Secondly, Sportech provides online gaming through two separate
lines of business. Mywinners.com operates under an exclusive
license to offer pari-mutuel betting online in Connecticut, while
123bet.com offers pari-mutuel betting online across the wider
USA.
Important notices:
Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated
in the United Kingdom by the FCA, is acting as Corporate Broker to
Sportech and no one else in connection with the matters described
in this Announcement and will not be responsible to anyone other
than Sportech for providing the protections afforded to clients of
Peel Hunt, or for providing advice in connection with the matters
referred to herein. Neither Peel Hunt nor any of its group
undertakings or affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Peel Hunt in connection with this Announcement or
any matter referred to herein.
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END
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June 26, 2023 02:00 ET (06:00 GMT)
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