Discloseable Transaction Sale Of Warrants Of Elixir Gaming
Technologies, Inc.
The
Company is pleased to announce that on [11] December 2007,
Elixir, EGT and Investors entered into the Warrant Purchase
Agreement whereby Elixir has agreed to sell, and the Investors
have agreed to purchase an aggregate of 16 million warrants
of EGT currently held by Elixir, at a price of US$[0.86] per
Sale Warrant, for a total consideration of US$[13,760,000]
(equivalent to approximately HK$[107,328,000]).
All the Sale Warrants are readily exercisable at an exercise
price of US$2.65 per Sale Warrant and upon completion of the
Warrant Purchase Agreement, the Investors are obliged to exercise
the Sale Warrants in full. It is contemplated that EGT will
receive approximately US$[42.4] million in net proceeds from
the exercise of the Sale Warrants.
As a result of the sale of the Sale Warrants, EGT will cease
to be a subsidiary of the Company and as such the transactions
as contemplated under the Warrant Purchase Agreement will
be regarded as a disposal of EGT by the Company. Since the
applicable percentage ratios (as defined in the Listing Rules)
for the disposal are more than 5% but less than 25%, pursuant
to Rule 14.06(2) of the Listing Rules, the disposal constitutes
a discloseable transaction for the Company under Chapter 14
of the Listing Rules. A circular containing further detail
of the Warrant Purchase Agreement and the transaction contemplated
therein, will be dispatched to Shareholders as soon as practicable.
Elixir,
EGT and the Investors entered into the Warrant Purchase Agreement
whereby Elixir has agreed to sell, and the Investors have
agreed to purchase an aggregate of 16 million warrants of
EGT currently held by Elixir.
BACKGROUND
Participation Agreement
As
disclosed in the Company’s announcement and circular
respectively dated 14 June 2007 and 6 July 2007, Elixir completed
the subscription of 1 million new shares in EGT (which was
then known as VendingData Corporation) and obtained the grant
from EGT of 16 million warrants to purchase 16 million new
EGT shares in January 2007. The exercise prices of
the16 million warrants are ranging from US$1 to US$3.5 per
warrant. Subsequent to that, Elixir entered into
a Securities Purchase and Product Participation Agreement
with EGT in June 2007 (“Participation Agreement”).
Pursuant to the terms of the Participation Agreement, Elixir
has agreed to provide certain services to EGT, which, in return,
has agreed to issue its new shares and warrants to Elixir
upon fulfillment of various performance milestones. Details
of the Participation Agreement and the related transactions
are contained in the aforesaid announcement and circular.
On
10 September 2007, following the approval of the Participation
Agreement by EGT’s shareholders and the fulfillment
of the first performance milestone as set out in the Participation
Agreement,
EGT issued (a) 25 million of its new shares and (b) 88 million
warrants to purchase an additional 88 million shares of EGT
to Elixir. On 13 September 2007, by virtue of the fulfillment
of the second performance milestone as set out in the Participation
Agreement, EGT issued an additional 15 million of its new
shares to Elixir and out of the aforesaid 88 million warrants,
22 million of them have become exercisable with the exercise
price of US$2.65 per warrant. As disclosed in the Company’s
interim report dated 13 September 2007, based on the aggregate
holdings of 41 million shares of EGT, representing approximately
53% of the then total issued share capital of EGT, EGT has
become a direct non-wholly owned subsidiary of Elixir and
an indirect non-wholly owned subsidiary of the Company.
EGT’s
Placement
As
disclosed in the Company’s “overseas regulatory
announcement” dated 23 October 2007, EGT carried out
a private placement of 15 million of its new shares to various
institutional investors in the United States. As a result
of such issuance of new shares, the actual shareholding interest in EGT held by Elixir was diluted and reduced from approximately
53% to 44%. Nevertheless, after consultation with the auditors,
the Company has continued to treat EGT as its indirect non-wholly
owned subsidiary based on the two criterions set out in the
section headed “Impact of the Warrant Purchase Agreement
on the Subsidiary Status of EGT” below.
THE
WARRANT PURCHASE AGREEMENT
| Date: |
[11]
December 2007 |
| Parties
Involved: |
(1)
Elixir, as vendor; |
| |
(2)
EGT, as the issuer of the Warrants and the Warrant Shares
upon their exercise; and |
| |
(3)
19 Investors |
To
the best of the Directors’ knowledge, information and
belief having made all reasonableenquiry, all of the Investors
and the ultimate beneficial owners of the Investors are Independent
Third Parties and are not connected persons of the Company.
Sale
and Purchase of Sale Warrants :
Elixir has agreed to sell and the Investors have agree to
purchase, the Sale Warrants, representing 16 million readily
exercisable warrants to purchase up to 16 million new shares
of EGT at an exercise price of US$2.65 each. The closing price
of EGT shares as at 11 December 2007, being the last trading
before the date of this announcement is US$4.19 per EGT share.
Consideration:
Based on the agreed sale price of US$[0.86] per Sale Warrant,
the consideration for the sale of the Sales Warrants is US$[13,760,000]
(equivalent to approximately HK$[107,328,000]).
Basis
of the Consideration:
The consideration for the Sale Warrants was determined after
arm’s length negotiations betweenthe parties with reference
to (a) the exercise price of US$2.65 per Sale Warrant; (b)
theplacing price of US$3.50 per new share of EGT at the recent
EGT’s Placement, as referred to in the Company’s
“overseas regulatory announcement” dated 23 October
2007; and (c) the prevailing equity market condition in the
United States.
Conditions
Precedent:
Completion of the Warrant Purchase Agreement is conditional
upon satisfaction of the following conditions precedent:
| (i) |
if
applicable, the obtaining of all necessary governmental,
regulatory or third party consents and approvals for
the sale of the Sale Warrants by Elixir and EGT; |
| (ii) |
(the
representations and warranties provided by Elixir, EGT
and the Investors respectively as set forth in the Warrant
Purchase Agreement remaining true, accurate and complete
in all material respects; |
| (iii) |
each
party of the Warrant Purchase Agreement having performed
its obligations there under; |
| (iv) |
there
being no legal or regulatory impediments restraining
or prohibiting the transactions contemplated under the
Warrant Purchase Agreement; |
| (v) |
there
being no occurrence of event or series of events resulting
or reasonably expected to result in a material adverse
effect on the assets, business, operations or financial
position of EGT and its subsidiaries; and |
| (vi) |
the
shares of EGT being continued to be listed on AMEX for
trading. |
Any
party to the Warrant Purchase Agreement shall have the right
to waive any of the above conditions which is/are to its own
benefit and if all the conditions above are not satisfied
(or as the case may be waived) on or before 19 December 2007,
the Warrant Purchase Agreement shall cease and terminate and
neither party thereto shall have any obligations or liabilities
towards the other under the Warrant Purchase Agreement save
for any antecedent breaches of the terms of the Warrant Purchase
Agreement.
IMPACT
OF THE WARRANT PURCHASE AGREEMENT ON THE SUBSIDIARY STATUS
OF EGT
As
mentioned in the sub-section headed “EGT’s Placement”
of the section titled “Background” above, immediately
after completion of EGT’s Placement, the actual shareholding
interest by Elixir in EGT was approximately 44%. After consultation
with the auditors, the Company has continued to treat EGT
as its indirect non-wholly owned subsidiary based on the following
two criterions:
| (i) |
Elixir
has maintained control over the board of directors of
EGT; and |
| (ii) |
The
Collective Voting Rights held by Elixir, representing
the aggregate of actual voting rights attached to the
41 million shares and the potential voting rights attached
to the 38 million exercisable warrants then held by
Elixir, exceed 50.1% of all actual and potential voting
rights attached to all issued shares and readily exercisable
convertible securities of EGT on a fully diluted basis. |
Since
immediately after the sale of the Sale Warrants, the Collective
Voting Rights held by Elixir will also fall below 50.1% of
all actual and potential voting rights attached to all issued
shares and readily exercisable convertible securities of EGT
on a fully diluted basis, as a result, the above criterions
could no longer be fulfilled and EGT will cease to be a subsidiary
of the Company and will not be consolidated in the accounts
of the Group and EGT will become an associate of the Company.
The
following table depicts the Collective Voting Rights of Elixir
in EGT (before and immediately after the sale of the Sale
Warrants) :
GAIN/
LOSS ON THE TRANSACTION
Since following the sale of the Sale Warrants, EGT will cease
to be considered as a subsidiary of the Company, the Directors,
subject to further confirmation with the auditors, expect
that the Group will record a gain of HK$95 million by the
sale of the Sales Warrants and the consequential cessation
of EGT as a subsidiary of the Company for the year ending
31 December 2007.
REASONS
FOR THE TRANSACTION
The Directors believe that the transactions as contemplated
under the Warrant Purchase Agreement would create benefits
for both the Company and EGT for the following reasons:
| (a) |
it
is expected that the net proceeds from the sale of the
Sale Warrants would amount to approximately US$[13,760,000]
(equivalent to approximately HK$[107,328,000]). It is
intended that such proceeds will be used as general
working capital; and |
| (b) |
upon
completion of the Warrant Purchase Agreement, the Investors
are obliged to exercise the Sale Warrants in full and
EGT will receive approximately US$[42.4] million in
net proceeds from the exercise of the Sale Warrants.
The net proceeds are intended to fund the purchase of
electronic gaming machines pursuant to the Participation
Agreement and for its general working capital purposes. |
The
Directors (including the non-executive Directors) consider
the terms of the Warrant Purchase
Agreement are fair and reasonable and in the interests of
the Company and Shareholders as a whole.
INFORMATION
ON THE COMPANY AND ELIXIR
The Company’s business is broadly divided into four
divisions, namely, (i) gaming, entertainment and hospitality
division; (ii) technology division; (iii) investment banking
and financial services division; and (iv) property and other
investments division.
Elixir
is a wholly-owned subsidiary of the Company and it is the
major arm of the Company’s technology division, principally
engaged in providing gaming technology solutions to casino
operators, including the distribution of electronic gaming
machines and other gaming products and provision of integrated
security system to the hotels and casino operators.
INFORMATION
ON EGT
EGT is a company incorporated in the Nevada State of the United
States of America and having its shares listed on the AMEX
since May 2004. EGT is principally engaged in the provision
of electronic gaming machines to gaming operators in the Asian
Pacific Region on a revenue-sharing basis. Since the announcement
of the Participation Agreement in June 2007, EGT has established
a business presence in various Asian countries including the
Philippines, Cambodia and Vietnam by securing clients therein.
In addition, EGT also engages in the developments, manufacturing
and distribution of products and services to the gaming industry
that automate the current manual processes supporting the
casino table games business. Its principal products include
playing card security devices, paying cards shuffling devices
and gaming chips washer that are commonly used in a casino.
Set
out below is the financial information of EGT based on its
audited consolidated accounts for the two years ended 31 December
2005 and 31 December 2006 which have been prepared in accordance
with the US GAAP:
LISTING
RULES IMPLICATIONS
As a result of the sale of the Sale Warrants, EGT will cease
to be a subsidiary of the Company and as such the transactions
as contemplated under the Warrant Purchase Agreement will
be regarded as a disposal of EGT by the Company. Since the
applicable percentage ratios (as defined in the Listing Rules)
for the disposal are more than 5% but less than 25%, pursuant
to Rule 14.06(2) of the Listing Rules, the disposal constitutes
a discloseable transaction for the Company under Chapter 14
of the Listing Rules. A circular containing further detail
of the Warrant Purchase Agreement and the transaction contemplated
therein, will be dispatched to Shareholders as soon as practicable.
DEFINITIONS
“AMEX” |
American
Stock Exchange |
“Collective
Voting Rights” |
the
aggregate of actual voting rights attached to the issued
shares and the potential voting rights attached to the
readily exercisable convertible securities of EGT on
a fully diluted basis held by the relevant party |
“Company” |
Melco
International Development Limited |
“Directors” |
directors
of the Company |
“Elixir” |
Elixir
Group Limited, a company incorporated in Hong Kong with
limited liability and a wholly-owned subsidiary of the
Company |
“EGT” |
Elixir
Gaming Technologies, Inc., a company incorporated under
the laws of the State of Nevada, the United States of
America and having its shares listed on the AMEX |
“EGT’s
Placement” |
the
private placement of 15 million new shares by EGT carried
out in October 2007, details of which are contained
in the Company’s “overseas regulatory announcement”
dated 23 October 2007 |
“Investors” |
institutional
investors in the United States |
“Group” |
The
Company and its subsidiaries from time to time |
“HK$” |
Hong
Kong dollars, the lawful currency of Hong Kong |
“Independent
Third Party(ies)” |
independent
third party(ies) not connected with the Company and
its subsidiaries, the controlling shareholders, directors,
chief executive or substantial shareholders of the Company
and its subsidiaries, or an associate of any of them
under the
Listing Rules |
“Listing
Rules” |
The
Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited |
“Participation
Agreement” |
the
Securities Purchase and Product Participation Agreement
entered into between Elixir and EGT in June 2007, details
of which are contained in the announcement and circular
of the Company respectively dated 14 June 2007 and 6
July 2007 |
“Sale
Warrants” |
the
16 million readily exercisable warrants to purchase
up to 16 million new shares of EGT at an exercise price
of US$2.65 each |
“Shareholders” |
shareholders
of the Company |
“Warrant
Purchase Agreement” |
the
agreement regarding the sale and purchase of the Sale
Warrants and the exercise of the same entered into amongst
Elixir, EGT and the Investors dated [11] December 2007 |
“Warrant
Shares” |
the
underlying shares of EGT to be issued upon exercise
of the Sale Warrants by the Investors |
“US$” |
United
States dollars, the lawful currency of the United States
of America |
“%” |
Percentage |
For
the purpose of this announcement, amounts in US$ is respectively
translated into HK$ at the following exchange rates :
US$1.00:HK$7.8
By
order of the Board of
Melco International Development Limited
Tsang Yuen Wai, Samuel
Company Secretary
Hong
Kong, 12 December 2007
As
at the date of this announcement, the Board comprises three
Executive Directors; namely, Mr. Ho, Lawrence Yau Lung (Chairman
and Chief Executive Officer), Mr. Tsui Che Yin, Frank and
Mr. Chung Yuk Man, Clarence (Chief Operating Officer); one
Non executive Director, namely Mr. Ng Ching Wo; and three
Independent non executive Directors, namely Sir Roger Lobo,
Dr. Lo Ka Shui and Mr. Sham Sui Leung, Daniel.
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Asia’s GEM
Gaming & Entertainment
plus Leisure Expo Manila
April 2 & 3, 2009
SMX Convention Center,
Seashell Drive, Mall of Asia Complex, Pasay City, Philippines  
» Shuffle Master abandons Appeal against Elixir Gaming Technologies (12/03/2008)
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» Elixir Gaming provides update on Business Optimization Plan(07/07/2008)
» Elixir Gaming Technologies to Host Asian Gaming Market Tour(05/14/2008)
» Elixir Gaming Technologies Reports First Quarter
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