TIDMSPO
RNS Number : 9365L
Sportech PLC
11 September 2023
11 September 2023
Sportech PLC
("Sportech" or the "Company")
Proposed cancellation of admission of Ordinary Shares to trading
on AIM
Sportech (AIM:SPO) announces the proposed cancellation of
admission of its ordinary shares of 10p each ("Ordinary Shares") to
trading on AIM ("Cancellation"), re-registration as a private
limited company ("Re-registration") and adoption of new articles of
association ("New Articles").
The Board has undertaken a review to evaluate the benefits and
drawbacks to the Company and its shareholders of its admission to
trading on AIM. This review has acknowledged the significant
burdens (financial and non-financial) associated with its status as
a publicly traded company, particularly given the scale of the
Sportech group's business. For this reason, the Board has concluded
that Cancellation and Re-registration are in the best interests of
the Company and its shareholders as a whole. A detailed explanation
of these reasons is set out in the Appendix to this
announcement.
A circular will be sent to shareholders setting out the
background to and reasons for the proposed Cancellation,
Re-registration and associated adoption of the New Articles
("Circular"). The Circular will also contain a notice convening a
general meeting ("General Meeting") at which shareholders will be
invited to consider and, if thought fit, approve the proposed
Cancellation, Re-registration and associated adoption of the New
Articles. The Circular is expected to be posted to shareholders in
the second half of September.
To be passed, the resolution approving the Cancellation
requires, pursuant to Rule 41 of the AIM Rules, the approval of not
less than 75 per cent. of the votes cast by shareholders at the
General Meeting. The resolution to approve the Re-registration and
the associated adoption of New Articles also requires the approval
of not less than 75 per cent. of the votes cast by shareholders at
the General Meeting.
Should the Cancellation be approved by shareholders at the
General Meeting, the Company intends to implement a matched bargain
facility with a third party matched bargain facility provider. This
will facilitate shareholders buying and selling Ordinary Shares on
a matched bargain basis following the Cancellation.
Further details of the proposed Cancellation, Re-registration
and associated adoption of New Articles will be set out in the
Circular which, as noted above, is expected to be posted to
shareholders in the second half of September.
For further information, please contact:
Sportech PLC enquiries@sportechplc.com
Richard McGuire, 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.
APPENDIX
Background to and reasons for the Cancellation and Re-registration
As shareholders will be aware, the Company undertook a share consolidation
and subdivision and capital distribution in July 2023 (the "Share Capital
Reorganisation"). Following the Share Capital Reorganisation becoming effective,
the Board undertook a thorough review of the corporate costs being borne
by the Company as a result of its status as a publicly traded company.
Following that review, the Board has concluded that the Company's continued
status as a publicly traded company is not appropriate given the scale of
its business and, accordingly, the Cancellation and Re-registration are
in the best interests of the Company and its shareholders as a whole for
reasons including those set out below.
* Costs and regulatory burden : The considerable cost
and management time and the legal and regulatory
burden associated with maintaining the Company's
admission to trading on AIM is, in the Board's
opinion, disproportionate to the benefits of the
Company's continued admission to trading on AIM.
These costs: (a) amounted to approximately GBP450,000
in the year ended 31 December 2022; (b) contributed
to the Sportech group's pre-tax loss of GBP934,000 in
that period to a material extent; and (c) represented
approximately 28 per cent. of the Sportech group's
adjusted EBITDA of GBP1.6 million in that period.
Given the lower costs associated with private limited
company status, it is estimated that the Cancellation
and Re-registration will materially reduce the
Company's recurring administrative and adviser costs
by approximately GBP450,000 per annum, which the
Board believes can be better spent supporting and
investing in the Sportech group's business.
* Lack of liquidity : Notwithstanding the Share Capital
Reorganisation, there continues to be limited
liquidity in the Ordinary Shares. As a result, the
Board believes that shareholders are not provided
with the opportunities to trade in meaningful volumes
or with frequency in an active market in Ordinary
Shares.
* Market volatility : As a result of the limited
liquidity in Ordinary Shares described above, small
trades in Ordinary Shares can have a significant
impact on price and therefore market valuation, which,
the Board believes, in turn has a materially adverse
impact on: (a) the Company's status within its
industry; (b) the perception of the Company amongst
its customers, suppliers and other partners; (c)
staff morale; and (d) the Company's ability to seek
appropriate financing or realise an appropriate value
for any material future disposal(s).
* Challenges related to the Company's position as a
micro-cap stock : Growing the Company, a UK micro-cap
stock, comes with a range of challenges, which, in
the Board's view, stem from the Company's small
market valuation, limited resources, and the dynamic
nature of the market. These challenges include, but
are not limited to: (a) access to capital; (b) a lack
of visibility among analysts, media and potential
investors; (c) increased volatility in Company
valuation unrelated to company performance leading to
higher risk perception; and (d) an aversion from
potential investors, seeking stability and a
valuation that aligns with Company performance.
* Strategic flexibility : The Board believes that a
private limited company can take and implement
strategic decisions more quickly than a company which
is publicly traded as a result of the more flexible
regulatory regime that is applicable to a private
company.
Therefore, following careful consideration, the Board believes that it is
in the best interests of the Company and shareholders to seek the proposed
Cancellation, Re-registration and associated adoption of New Articles.
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END
MSCNKKBPFBKDPCD
(END) Dow Jones Newswires
September 11, 2023 02:01 ET (06:01 GMT)
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