27 June 2018
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Gaming Realms plc
("Gaming Realms" or the "Company" or, together with its subsidiaries, the "Group")
Proposed sale of UK Real Money Casino brands and business
Notice of General Meeting
Gaming Realms plc (GMR.L), the developer, publisher and licensor of mobile real money and social games, announces that the Company has entered into an agreement, conditional upon shareholder approval, to sell a 70% stake in most of its UK online casino B2C business to River UK Casino Limited ("River UK Casino", a subsidiary of River iGaming plc, a company listed on the Merkur Market of the Oslo Bors ("River iGaming")) for a total cash consideration of up to £23.1 million (the "Transaction").
· River UK Casino is a newly incorporated company, established by River iGaming plc to acquire
certain of the Company's UK online casino B2C brands, being Pocket Fruity, Spin Genie, Britain's Got Talent Games, X Factor Games and associated business (the "Business")
· Following the completion of the Transaction, River iGaming will hold 70% of the issued share capital of River UK Casino, with Gaming Realms holding the remaining 30%
· River UK Casino has entered into a five year B2B platform and content agreement with the Company on normal commercial terms, which Gaming Realms expects to generate approximately £1 million of annual revenue for the Group
· The total consideration payable in cash to the Company for 70% of the Business will be up to £23.1 million, comprising:
o a minimum payment of £8.4 million (of which £4.2 million is payable on completion and £4.2 million payable concurrently with the earnout payment); and
o a further maximum cash payment of £14.7 million on an earn-out basis , payable no later than 31 August 2019 (based on 70% of 5.5 times River UK Casino's EBIT for the 12 months to 30 June 2019 minus the £8.4 million minimum payment)
· For the year ended 31 December 2017, the Business delivered £13.9 million of net gaming revenue and adjusted profit before tax and interest (but after central costs) of £2.2 million, which the Company's directors (the "Directors" or the "Board") believe will be significantly higher for the 12 months to 30 June 2019. In order to deliver the maximum earn-out for Gaming Realms, the Business would need to generate EBIT of £6 million in the 12 months to 30 June 2019
· Gaming Realms' retained interest in River UK Casino is subject to a mutual put and call option arrangement which can be exercised no later than 31 October 2020 (based on an uncapped valuation of 5.5 times River UK Casino's EBIT for the 12 months to 30 June 2020)
· River iGaming and the Company will jointly provide a working capital loan facility of £3 million (£2.1 million from River iGaming and £0.9 million from the Company) to River UK Casino to fund investment in marketing for the Business until at least 30 June 2019 repayable no later than 30 June 2020
· The current management team of the Business will run River UK Casino until at least 30 June 2020
· The Group will retain Slingo.com and the Slingo brands
· The sale is in line with the Company's strategy of focusing its resources on international licensing and content development and will pivot the Group to a B2B business, with the revenue generated from River UK Casino becoming a significant source of income for the Group's B2B platform
· This decision to focus on licensing has shown early success and the Board believes this will provide the Company with longer term, consistent higher margin revenues. The recent agreements signed with major gaming and media companies illustrate the creativity of the Company's content
· Further, with the reduction in funding the B2C business (principally, staff and advertising costs), in the longer term this pivot to a B2B business is expected to result in improved margins
· The Board intends to use the first £4.2 million of sale proceeds for the continued development of new gaming content and platform enhancements, as well as providing a loan of £0.9 million to fund River UK Casino's marketing budget as set out above. The Board will be reviewing options for the balance of the proceeds above the first £4.2 million including returning cash to shareholders
Commenting on the proposed sale, Patrick Southon, CEO of Gaming Realms, said:
"We are delighted to announce this agreement with River iGaming. We believe that this sale will be transformational for Gaming Realms as it will enable us to focus more of our resources on international licensing and the development of new gaming content, placing us in a stronger position to drive further profitable growth in the future."
Notice of General Meeting
The sale is conditional on receiving certain third party consents and the passing of a resolution (the "Resolution") to be proposed at a general meeting to be held at 11.00 a.m. on Wednesday, 18 July 2018 at the offices of Memery Crystal LLP, 165 Fleet St, London EC4A 2DY (the "General Meeting").
A circular, which will provide further details of the proposed sale, will be sent to shareholders and be available on the Company's website on or before Monday, 2 July 2018.
Intentions to vote in favour
The Directors have irrevocably agreed to vote in favour of the resolution to be proposed at the General Meeting in respect of their own beneficial holdings. The Board has also received letters of intent or irrevocable commitments to vote in favour of the resolution from certain other Shareholders.
Details are as follows:
| || |
Number of Ordinary Shares
Percentage of Current Issued Share Capital
Letters of intent
Board Irrevocable commitments
Other Irrevocable commitments
As at 26 June 2018 (being the latest practicable date prior to the publication of this notice), 284,428,747 ordinary shares in the Company ("Ordinary Shares") were in issue (no Ordinary Shares were held in treasury). Accordingly, the total number of voting rights of the Company as at 26 June 2018 was 284,428,747.
Gaming Realms plc
0845 123 3773
Patrick Southon, CEO
Mark Segal, CFO
Akur Limited (Financial Adviser)
020 7493 3631
Peel Hunt LLP (Nominated Adviser and Broker)
020 7418 8900
Yellow Jersey (PR Adviser)
07747 788 221
About Gaming Realms
Gaming Realms creates and publishes innovative real money and social games for mobile, with operations in the UK, U.S. and Canada. Through its market leading mobile platform and unique IP and brands, Gaming Realms is bringing together media, entertainment and gaming assets in new game formats. The Gaming Realms management team includes accomplished entrepreneurs and experienced executives from a wide range of leading gaming and media companies.
The Transaction described in this document is conditional on receiving certain third party consents and the Resolution being passed by shareholders at the General Meeting to be held at 11.00 a.m. on Wednesday, 18 July 2018 at the offices of Memery Crystal LLP, 165 Fleet St, London EC4A 2DY for the purpose of considering and, if thought fit, passing the Resolution.
Akur Limited ("Akur"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority ("FCA"), is acting exclusively for the Company and for no-one else in connection with the matters set out in this announcement. Akur will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the Transaction and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Transaction or any transaction or arrangement referred to in this announcement.
Peel Hunt LLP (''Peel Hunt''), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and for no one else in relation to the matters set out in this announcement. Peel Hunt will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the Transaction and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing any advice in relation to the Transaction or any transaction or arrangement referred to in this announcement.
Apart from the responsibilities and liabilities, if any, which may be imposed on Akur or Peel Hunt by FSMA or the regulatory regime established thereunder, neither Akur nor Peel Hunt makes any representation express or implied in relation to, or accepts any responsibility whatsoever for, the contents of this announcement or any other statement made or purported to be made by it or on its behalf in connection with the Transaction. Both Akur and Peel Hunt (and their affiliates) accordingly, to the fullest extent permissible by law, disclaim all and any responsibility or liability (save for any statutory liability) whether arising in tort, contract or otherwise which it might have in respect of the contents of this announcement or any other statement made or purported to be made by it or on its behalf in connection with the Transaction.
This document does not constitute an offer or constitute any part of an offer to the public within the meaning of sections 85 and 102B of FSMA, the Companies Act 2006 or otherwise. Accordingly, this announcement does not constitute a prospectus under the prospectus rules published by the FCA and has not been and will not be approved by or filed with the FCA or approved or filed with any other authority which could be a competent authority for the purposes of the Prospectus Directive.
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