LNG forced into administration and cut price Betshop sale
Leisure & Gaming Group forced into administration but salvage last minute Betshop sale for a fifth of the original asking price.
Embattled Leisure & Gaming (LNG) has been placed into administration with its principal asset, Betshop Group (Europe) Ltd (BSG) sold as a going concern to Honeymead Services for 1m, less than a fifth of the price it had previously agreed with Pefaco earlier this month.
On 12 October LNG announced that it had failed to agree terms with Spain’s Grupo Pefaco for the sale of its gaming subsidiary BSG in a deal worth up to 5.3m, however the sale fell through after the terms of exclusivity with Pefaco expired without renewal.
LNG’s directors were then forced to call on joint administrators Philip Watkins and Geoff Rowley of FRP Advisory placing the company into administration yesterday at 4.36pm and agreeing to sell BSG to Honeymead, a company controlled by a syndicate of investors including Gabriel Chaleplis, a director of BSG. Selling BSG as a going concern has safeguarded the jobs of more than 600 agents and employees in Italy, Greece, Cyprus and the UK. LNG originally said it would sell BSG in July this year.
FRP Advisory was employed by LNG on 12 October this year and initially contacted 13 “potentially interested parties” and five turnaround funds, according to a LNG statement, with a deadline to receive offers for BSG by 14 October with a view to completing both due diligence and a transaction by the beginning of last week.
The group’s cash position was “critical” the statement read, requiring an injection of around 3m, including 1.5m as working capital into BSG, 0.5m into the company to “deal with immediate creditors” and 1m to the bank that had issued demand for repayment. It also revealed that it incurred 450k of sports betting losses in a single week earlier this month “further compounding the cash position in BSG”, it added.
Four offers were then received including the acquisition of an intercompany loan of 0.9m due from BSG to LNG. According to a LNG this included a “materially reduced offer” by Pefaco and interest from a “significant international gaming operator”. However, Honeymead then increased its initial offer to 1m with 500k payable on completion of the deal and 500k deferred over 12 months payable in four 125k instalments. The other interested parties then withdrew from the bidding process.
Trading in LNG shares was suspended on London’s AIM market on 21 May this year after Betshop business was hit by poor sports betting margins arising from the consistent success of the dominant football teams across Europe since the start of the year.
In a statement released late this afternoon the Betshop group board said it was “pleased to announce it had today been acquired by Honeymead, a company representing a syndicate of investors supporting the present management team”.
It said Honeymead “has the funds” to grow the business in its core markets and develop further territories and products. “The Betshop brand, recognised for reliability and innovation, has grown rapidly over the past three years and has excellent staff and the support of a strong and loyal partner network.”
It added that the new investors intend to use “this solid platform” to expand in existing and new markets. “European markets are opening to competition all the time and Italy, the core market, is recognised as the best regulated gaming market in Europe.”