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FAIRGROUND BITES THE DUST
A brief but bright history blighted by the UIGEA. Spin Palace group bought back by former owner for GBP 11 million.
The shock news that Fairground Holdings is to terminate business as a result of having to abandon US-facing online gambling activities arrived as the week ended, a sad close to a brief but promising business future for the agglomerator.
In a public announcement Fairground reports that it is voluntarily winding up its affairs following the need to halt US-facing online gambling activities in the wake of the enactment of the Unlawful Internet Gambling Enforcement Act.
Before taking this drastic course, the directors of Fairground Gaming 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 best way forward is to dispose of its gaming operations and infrastructure, notably the Spin Palace group of online casino and poker venues, says the announcement.
The company has therefore entered into an agreement, conditional on shareholder approval, to dispose of The Spin Palace Group in its entirety to Seahouses Holdings Limited, the original owner and seller of the business, and a major shareholder in the company.
The main features of the proposed transaction are a total selling price of GBP 11 095 000 satisfied by a cash payment of GBP 5 090 000 and a complicated rearrangement of shares already held within Fairground by the buyer. Once completed, these arrangements will enable Seahouses to acquire The Spin Palace Group with all liabilities including player balances, all leases and the group's obligations to all employees.
The Executive Directors of Fairground Gaming will not remain with the operations which are being disposed of, but in any case Seahouses has advised the Fairground that it has no intention to operate the business of the Spin Palace Group in the United States.
The deal must be approved by Fairground shareholders, and to this end an Extraordinary General Meeting is to be held on December 11 this year.
Effective from the date of the announcement, announcement, Fairground has received irrevocable undertakings to vote in favour of the sale resolutions from shareholders representing approximately 9.7 percent of shareholders eligible to vote.
Fairground 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. Once the sale has gone through Fairground expects that it will be left with approximately GBP 6 160 000 in cash after providing for winding-up costs and fees related to the sale.
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 percent 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.
Commenting on developments, Evan Hoff, CEO of Fairground Gaming said: “The closure of our US-facing activity and the impact of that legislation on the listed company environment continues to be deeply felt, with our business now only marginally profitable. Accordingly, in the interests of maximising value for our shareholders, we believe it is in the best interests of all our shareholders to accept this offer for The Spin Palace Group and for the Company to proceed along the lines announced today.”
Fairground expects to cease trading on London's AIM exchange on December 18 2006.
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Originally Posted by Mousey
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