REG - Sportech PLC - Proposed De-lisiting

SportechAnnouncement

11/09/2023 07:15

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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 & 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.

 

 

 

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 £450,000 in the year ended 31 December
 2022; (b) contributed to the Sportech group's pre-tax loss of £934,000 in
 that period to a material extent; and (c) represented approximately 28 per
 cent. of the Sportech group's adjusted EBITDA of £1.6 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 £450,000 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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