REG - Sportech PLC - Share Restructure, Distribution and GM

SportechAnnouncement

26/06/2023 07:00

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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 £3.5 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 £250,000 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 £100 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 £5 (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 £1.70
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
£5 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 £3.5 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 & Broker)        Tel: +44 (0) 20 7418 8900

 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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