Australian Gaming Company to buy WWTS

[jason_c]

The Directors of Consolidated Gaming Corporation Limited (CGC) are
pleased to announce that CGC has entered into a Share Sale Agreement
with the shareholders of Tasman Investments Inc (Tasman) to acquire
all the issued shares in Tasman.

Tasman, which is located in Antigua, West Indies, has entered into an
agreement to acquire the business of World Wide TeleSports (WWTS, and
www.betWWTS.com), which is one of the world's oldest, largest and
most respected sportsbooks, offering online and telephone services to
its extensive client base on a multitude of global sporting events.
WWTS is fully licensed and regulated by the government of Antigua.

Under the Share Sale Agreement, CGC will acquire 100% of the issued
capital of Tasman. The consideration for the purchase of all the
issued shares in Tasman is the issue by CGC of 61,548,698 fully paid
ordinary shares (post a 1 for 10 consolidation of CGC's share
capital) and the assumption of Tasman's debt relating to its
acquisition of the WWTS business, totalling US$17.2m in redeemable
convertible notes, which are exercisable into ordinary shares in CGC
at A$0.44 per share, being the price after the 1 for 10 share capital
consolidation.

The Share Sale Agreement with Tasman is conditional upon:

1. Compliance with the ASX Listing Rules;

2. Due diligence acceptable to both parties being conducted;

3. Receipt of all necessary regulatory approvals including from the
Northern Territory Racing Commission

4. The Best Bets acquisition, previously announced on 19 July 2002,
being approved by CGC shareholders, and the cash consideration of
$1.95m required to complete the transaction, being secured;

5. CGC obtaining a satisfactory Independent Experts Report in respect
of the WWTS business;

6. Completion of the Tasman acquisition of the WWTS business;

7. A private placement of CGC securities totalling a minimum of A$12m
(which includes the funds required to complete the Best Bets
acquisition) being approved by CGC shareholders, and the Company
receiving binding commitments from placees prior to 31 December 2002
conditional only on completion of the Tasman acquisition.

8. The approval by CGC shareholders of a consolidation of CGC's
issued capital on terms where the holder of 10 (ten) CGC shares
agrees to accept 1 (one) fully paid ordinary share in CGC as part of
a reconstruction of the Company's issued capital;

9. The appointment at completion of the acquisition of Tasman of 3
(three) Tasman nominees to the CGC Board of Directors.

10. A change in the company name of CGC.

The WWTS business to be acquired by Tasman has a turnover of in
excess of A$1.0 billion and is profitable, having provided both
telephone and online wagering services to its global database of
clients since 1991. The WWTS business is an internationally
recognised wagering service provider offering pricing on a multitude
of worldwide sports. The business primarily operates under the domain
name of www.betWWTS.com.

The Directors have commissioned PKF Corporate Advisers Pty Ltd to
carry out the Independent Experts Report on the acquisition of Tasman
and this, together with a more detailed report on the proposed Tasman
businesses and other information supporting a number of important
shareholder resolutions to approve this, and the Best Bets
acquisition, will be sent to shareholders shortly.

Shaw Corporate Finance has agreed to act as corporate advisors in
respect of the proposed capital raising by way of the placement.

Subject to a number of exceptions, ASX Listing Rule 7.1 prohibits a
company from issuing more than 15% of its capital in any 12 month
period without the approval of shareholders. Accordingly, a meeting
of CGC shareholders will be convened in the near future to consider
the share issue, and the other aspects of the Tasman acquisition.

In the meantime, in the interests of all shareholders and in
maintaining an orderly market and having regard to the conditional
nature of the transaction, the Directors have requested the ASX to
maintain the suspension of the Company's shares from official
quotation. The Directors envisage that this position will prevail
until such time as the market can be more fully informed as to the
status of the conditions of the transaction being satisfied and
compliance with ASX and other regulatory requirements.

Attached is a one page overview of the World Wide TeleSports Inc
WWTS) business.

A Sigalla
MANAGING DIRECTOR


OVERVIEW OF WORLDWIDE TELESPORTS INC ("WWTS")

HISTORY

WWTS is a licensed online sportsbetting business located in Antigua,
West Indies. It has been in operation since 1991 and in that time has
grown to become one of the world's largest, and most respected,
offshore sportsbooks.

SPORTS

WWTS offers predominantly non-credit based wagers on all of the
following major sports:

* Horse & greyhound racing;
* Golf;
* National Football League;
* National Basketball Association;
* National Hockey League;
* Soccer;
* College Football;
* College Basketball; as well as
* miscellaneous international sporting events; and
* propositions.

WWTS also offers sophisticated bet types such as Exotics, Parlays,
Straights, Reverse and Teasers.

FINANCIAL SUMMARY

For the year ended 31 December 2001, WWTS produced the following
result:

PRO FORMA PROFIT AND LOSS US$'m A$'m(1)

Turnover (Gross) (US$'m) 562.4 1,029.1
Gross Gaming Revenues % of Turnover (win %) 4.14% 4.14%
Gross Gaming Revenues (GGR) (US$'m) 23.3 42.6
EBITDA (US$'m) 4.6 8.4

(1) USD converted into AUD at US$0.5465; A$1.00.

WWTS is currently on budget to produce an EBITDA of US$5.9 million
(A$10.8 million) for the year to 31 December 2002.

HISTORICAL GROWTH

WWTS has experienced a compound annual growth rate in turnover of
27.7% over the past five years. This was despite the fact that in
2001, the Company restructured its client database, which resulted in
a slight drop in turnover:

YEAR ENDED 31 DECEMBER
1996 1997 1998 1999 2000 2001 5 yr
GAGR
Turnover (US$'m) 165.5 371.3 419.2 469.0 587.8 562.5 27.7%
Turnover (A$'M) 302.8 679.4 767.1 858.2 1,057.6 1,029.1 27.7%
(1) USD converted into AUD at US$0.5465; AS1.00.

INTERNET VERSUS PHONE WAGERING

WWTS was originally a phone betting operation but begun taking bets
over the Internet in 1997. Since then, the Internet based business
has grown to represent > 70% of total wagers.

STAFFING

WWTS currently employs 138 staff operating out of the head office in
Antigua. The company has a young, experienced senior management team.

CUSTOMER DATABASE

As at 30 September 2002, WWTS had approximately 40,000 customers,
6,000 of which were active in the last 3 months.

[rocketman]

Very interesting.
CGC shares were suspended about a month ago on the ASX, and the Australian sportsbetting company they own www.sportsbet.com.au was in what can only be described as a state of slow pay.

[CaptainK]

Given the on-again-off-again nature of Bill Scott's sale of his "empire" over the last 18 months, I wouldn't count this as a done deal. Although by the mere fact that Billy is willing to release financial data on his company, one must assume he's at least serious.

Here are my comments/observations, if anyone cares:

1. The buyer still has to raise the dough through the public markets. I've not looked into the company, nor do I follow the Oz markets, but one has to assume this won't be done overnight or easily. Who knows when this will finally close?

2. I assume the structure is for tax reasons as well as to limit liability to WWTS skeletons, but this is far from my expertise. Will this structure pass master in over-regulated OZ?

3. So how many people out there are shocked at Billy's numbers? I remember arguing with Heath and some others over the size of this industry a long time ago. If WWTS, by everyone's assertion one of the biggest books online, is only turning over just over $500m, winning just over $23m and has EBITDA of under $5m then I suspect the offshore win and earnings numbers are much lower than most of the pundits have predicted.

4. It's sort of hard to understand the price here as the terms associated with the convertible notes are not revealed. I suppose we can assume that he's getting 2.9x projected 2002 earnings ($17.2/$5.9). There's no mention of a non-refundable fee being paid to WWTS here to sit back and wait, but I would assume there is one (and there is reference to "debt relating to the acquisition").

[Pariaction]

Perhaps these numbers represent post up income and all expenses?
Overall, they are in the range of numbers that I would of (and did) guess (someone asked me before I read this)...

[BigMo]

The headline should be rewritten:

WWTS STOLEN

Captk, we seem to have some confusion on the numbers. Here's what I'm reading, could be wrong.

Wwts did slightly over 1 bil. ly.

CGC is not raising capital, they are going to issue shares to Tazman as payment. Because of the massive dilution of CGC shares, they will attempt to be temporarily delisted so their stock doesn't fall off the face of the earth.

Considering the conversion rate, they are paying $17.4mil for wwts. If this is true, somethings not passing the smell test down at WWTS. With an EBITDA of $8.4 mil and a 27% growth rate, thats a 2 year payback on the purchase. Doesn't make sense.

To compare, sportsbook and its affiliates were reported to be doing 1 bil when purchased by sportingbet, although there is conflicting evidence on that. Their hold was probably in the same vicinity, pretty high %, making them valuable.

Sbt paid $51mil right off the top, including about 10mil in cash raised from dilution. But the kicker was the performance clauses, which by sbt indications will be reached so have to be paid, which brought the deal up to over $100mil.

So you have two nearly identical books, one selling for $100mil almost all of it cash, and one selling for $17 mil. in greatly diluted stock.

More here than meets the eye. Billy boy's been trying to unload this thing for a long time now, what's the problem?

[SAM I AM]

I cant believe you would sell this cash cow just yet........the money that they make in casino and horses is mindblowing.....

[Pariaction]

Captain K...

A billion here and a billion there and eventually this adds up to some REAL money [img]i/expressions/face-icon-small-smile.gif[/img]

[Sportingbet PLC]

Mo..re: wwts. Where are you getting 1billion?

(perhaps i missed something)

Jeff

[Pariaction]

I think he is referring to this...
The WWTS business to be acquired by Tasman has a turnover of in
excess of A$1.0 billion and is profitable, having provided both
telephone and online wagering services to its global database of
clients since 1991. The WWTS business is an internationally
recognised wagering service provider offering pricing on a multitude
of worldwide sports. The business primarily operates under the domain
name of www.betWWTS.com.

that is because it is a billion in Aussie dollars

but they have a projected increase from 2001 of 27%...
so

562.5 plus the 27% equals $714, 375 projected handle for 2002. I know of two other books that have twice that handle and about the same bottom line...

[BigMo]

No miss, my error.

WWTS is half the size of sportsbook when it was purchased by sbt.

That would make wwts worth at least 25mil, and up to 50 mil using the sbt calculator.

Since we have you here Jeff, care to comment on this deal? And perhaps why sbt passed it up, looks alot cheaper than sportsbook.

[Pancho Sanza]

Sportingbet,

Look at the revenue line, 2 numbers, 562.4 and 1,029.1.

Looks like comparison between 00 and 01 fiscal years.

[Pancho Sanza]

Looks like the 1,029.1 (mm) is 01's revenue.

[Pariaction]

Pancho,
I believe one is in US$ and one in AUS$IE

(1) USD converted into AUD at US$0.5465; A$1.00.

[BigMo]

I see we posted at the same time pari, I didn't look at footnote (1). Should shoot myself for that. Rule 1: Always study the footnotes the hardest when reading financial statements. A kids mistake.

[Pancho Sanza]

Correct pariaction, my bad.

One thing of interest is the customer base, 6,000 actives.

I knew all along sportsbooks exagerrated the number of customers they had.

If WWTS has 6,000, how many do the smaller shops have?

[Pariaction]

The number of actives is not a very good indicator of the overall handle as many books have large, wise action. I know of alot of small books that come close to that number but with a handle much lower and visa versa...
It is my opinion that there are only about 25,000 active online bettors (excluding Europe and Asia) and most books have at least 500 to 1000 in common .

[Sportingbet PLC]

I can say this, as im sure you already know..the property has been available for some time now, and the particular parties involved here have been working on this for 'a while'. These numbers are no surprise; i had previously seen what is posted here.

I'd more than happy to comment, if and when the purchase agreement is signed.

Jeff

[Sportingbet PLC]

"It is my opinion that there are only about 25,000 active online bettors"

With all due respect, your figure is way off.

Jeff

[Pancho Sanza]

25,000 active?

That seems low.

Bodog claims 10,000 actives.....