WagerShare Returns To The 'Private Ownership' Fold

18 November 2006

Newspaper

7 November 2006
Fairground Gaming Holdings plc (“Fairground Gaming” or the “Company”) proposed DISPOSAL of The spin palace group, PROPOSED CESSATION of trading on aim AND PROPOSED MEMBERS’ VOLUNTARY WINDING-UP

Following the termination by the Company and its subsidiaries of participation by US-based customers in its casino and poker activities, the Board of Fairground Gaming (“Board”) has focused on finding ways of maximising shareholder value and in doing so has considered a wide range of alternative strategies.

The Board has now unanimously agreed that the optimal course of action is to dispose of its gaming operations and infrastructure (“The Spin Palace Group”) and has entered into an agreement, conditional on shareholder approval, to dispose of The Spin Palace Group in its entirety (the “Disposal”) to Seahouses Holdings Limited (“Seahouses”), the original vendor of the business, and a major shareholder in the Company.

The main features of the proposed transaction are:
§ The total estimated consideration payable for The Spin Palace Group is £11,095,000 which is to be satisfied by:

  • a cash payment of £5,090,000;
  • the reclassification of Seahouses’ 9,100,100 ordinary shares in Fairground Gaming into Deferred Shares which will have no voting and only notional economic rights;
  • the cancellation of Seahouses’ 27,294,707 warrants to subscribe for 27,294,707 new ordinary shares in Fairground Gaming;

The value attributed to such ordinary shares reclassified into Deferred Shares and cancellation of warrants is approximately £6,005,000 on the basis of 16.5p being the market price per ordinary share in the Company on 16 November 2006, being the latest practicable date prior to the date of this announcement.

§ As the Disposal is a sale of shares, Seahouses will acquire The Spin Palace Group with all the liabilities of The Spin Palace Group including player balances and all leases and will take over all employees;
§ The Executive Directors of Fairground Gaming will not remain with the operations which are being disposed of;
§ Seahouses has advised the Company that it has no intention to operate the business of the Spin Palace Group in the United States;
§ The Disposal is subject to approval by the shareholders of Fairground Gaming of resolutions (“Resolutions”) to be proposed at an Extraordinary General Meeting to be held on 11 December 2006 (the “EGM”);
§ At the date of this announcement, the Board has received irrevocable undertakings to vote in favour of the Resolutions from shareholders representing approximately 9.7% of shareholders eligible to vote;
§ Full documentation concerning this transaction follows this announcement, and a circular will be posted to shareholders on 17 November 2006. Copies of the circular will be available from the offices of Fairground Gaming’s Nominated Adviser: Daniel Stewart & Company Plc, Becket House, 36 Old Jewry, London EC2R 8DD.

The Board intends to liquidate Fairground Gaming and to distribute the cash balance to the remaining non-Seahouses shareholders, who in aggregate will hold 28,626,324 ordinary shares in the Company, as a return of capital. Subsequent to the Disposal, the Company expects that it will be left with approximately £6,160,000 in cash after providing for winding-up costs and fees related to the Disposal. It is estimated that this will yield approximately 21.5p per ordinary share in the Company and it is expected that this liquidation distribution will take place by the end of February 2007. This payment would represent a premium of approximately 68% to the average weighted price of an ordinary share in the Company from the period of 13 October 2006 when the Unlawful Internet Gambling Enforcement Act was signed into law to 16 November 2006 being the latest practicable date prior to the date of this announcement.