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 maximizing 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 favor 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 maximizing 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.