Posting of Redom Circular & A

RNS Number : 3639K

Gaming VC Holdings S.A.

19 April 2010

 

Press Release

19 April 2010

Gaming VC Holdings S.A.

("Gaming VC" or "the Company" and, together with its subsidiaries, the "Group")

Posting of Redomiciliation Circular and AIM Admission Document

1.         Introduction

Gaming VC Holdings S.A. (AIM: GVC) is pleased to announce that it is today posting a circular ("Circular") to its shareholders seeking their approval for the Group's redomiciliation ("Redomiciliation") to the Isle of Man.  The Circular is accompanied by an AIM admission document ("Admission Document") in respect of GVC Holdings plc ("GVC Holdings"), the Group's proposed new Isle of Man incorporated holding company. Copies of the Circular and Admission Document are available at www.gamingvc.com.

Dealings in Gaming VC Shares are expected to be suspended at 7.00 am on Friday 21 May 2010 ahead of an Extraordinary General Meeting ("EGM") later that day.  As part of the Redomiciliation, Gaming VC Shareholders will receive one GVC Holdings Share for each existing Gaming VC Share (or Depository Interest) then held.  Application will be made for the GVC Holdings Shares to be admitted to trading on AIM and it is expected that they will be so admitted on Monday 24 May 2010.

Following the Redomiciliation the existing Gaming VC shares will cease to hold any intrinsic value and their admission to trading on AIM is expected to be cancelled on Monday 24 May 2010.

2.         Background to and reasons for the Redomiciliation

Having consulted with its advisers, the Board of Gaming VC believes that the Redomiciliation will give rise to various practical and administrative advantages, in particular:

·         in the Isle of Man, the Group will benefit from having a holding company which is subject to more flexible and modern company law, being subject to the Companies Act 2006 (as amended) of the Isle of Man, rather than the Luxembourg law on commercial companies of 10 August 1915 (as amended). Among other benefits various corporate actions (such as share buybacks) and administrative procedures (such as notice and quorum requirements for shareholder meetings) are more flexible under Isle of Man company law;

·         GVC Holdings will be subject to the City Code on Takeovers and Mergers of the United Kingdom which will provide a standard framework for the conduct of any future takeover bid and greater protection for the Shareholders than is currently provided under the existing Articles of Association of Gaming VC;

·         The ability of the Group to pay dividends is currently constrained both by IFRS (to which the Group's subsidiaries are subject) which restrict the amount of profit that may be passed up the Group and by Luxembourg GAAP (to which Gaming VC is subject) under which the reserves available for distribution are calculated.  Redomiciliation to the Isle of Man will remove the latter constraint;

·         the GVC Holdings Shares will be CREST eligible, simplifying the way in which the majority of existing Shareholders hold their shares by removing the need to maintain Depository Interest arrangements; and

·         under current tax legislation future dividends will be payable without the need to deduct withholding tax which, in Luxembourg, is currently levied at a rate of 15%.

3.         Summary of the Redomiciliation

The Redomiciliation involves the transfer ("Transfer") of the Company's assets and liabilities to GVC Holdings and comprises a number of distinct steps.

(i)    The Transfer

Pursuant to the laws of Luxembourg, and subject to prior Shareholder approval, the Company will transfer its entire assets and liabilities (save for 100 GVC Holdings Shares (representing the whole of the issued share capital of GVC Holdings) currently held by the Company and certain agreements such as those with certain professional advisers) to GVC Holdings pursuant to a contribution agreement ("Contribution Agreement") (the terms of which are summarised in the Admission Document) in consideration for the issue by GVC Holdings to the Company of 31,135,662 GVC Holdings Shares (together with additional GVC Holdings Shares to the extent that any options are exercised prior to the Transfer). The Transfer will be conditional on the liquidation ("Liquidation") of the Company being approved.

(ii)   The Liquidation

Immediately following the Transfer, and subject to prior Shareholder approval, the Company will be dissolved and put into members' voluntary liquidation and a liquidator ("Liquidator") will be appointed. Following the dissolution, the Company will be deemed to exist solely for the purpose of its liquidation.

(iii)  The Distribution

Once appointed, the Liquidator will distribute the shares which the Company holds in GVC Holdings ("Distribution") to Shareholders (including the former Depository Interest holders).

Pursuant to the Distribution, the Shareholders will receive one GVC Holdings Share for every existing Gaming VC Share (or Depository Interest) they hold when the Company is put into Liquidation. As a result, the Shareholders will hold the GVC Holdings Shares in the same proportions as they currently hold the Gaming VC Shares and the ownership and issued share capital of GVC Holdings will mirror the ownership and issued share capital of Gaming VC immediately prior to the Transfer and the Distribution, save that the GVC Holdings Shares will carry a lower par value than the Gaming VC Shares.

Following the Distribution, Shareholders will hold both GVC Holdings Shares and Gaming VC Shares (with the latter having ceased to hold any intrinsic value).

Further details of GVC Holdings and the GVC Holdings Shares are set out in the Admission Document being sent to Shareholders today.

Each of the Transfer, Liquidation and Distribution is expected to take place on Friday 21 May 2010 or, if the EGM is adjourned or reconvened, on the day of the adjourned or reconvened EGM.

(iv)  Suspension, Cancellation and Admission

It is expected that trading in the existing Gaming VC Shares will be suspended at 7.00 a.m. on Friday 21 May 2010 (being the day of the EGM).

Following the EGM and subject to the passing of the resolutions to approve the Redomiciliation, the admission of the Gaming VC Shares to trading on AIM will be cancelled ("Cancellation") and application will be made for the GVC Holdings Shares to be admitted to trading on AIM in their place ("Admission"). It is expected that Cancellation and Admission  will take place at 7.00 a.m. and 8.00 a.m. (respectively) on Monday 24 May 2010 (being the Business Day after the EGM) or, if the EGM is adjourned or reconvened, the Business Day following the date of the adjourned or reconvened EGM.

(v)   Subsequent Liquidation steps

As described above, it is proposed that the Company be dissolved and put into members' voluntary liquidation as part of the Redomiciliation.  Liquidation of the Company will tidy up the corporate structure of the Group and complete the Redomiciliation.

4.         Change of Name

As part of the Redomiciliation it is proposed that the new holding company of the Group will have the name "GVC Holdings PLC".

In the Isle of Man, the consent of the Isle of Man Gambling Supervision Committee is required in order for a company to have the word "Gaming" in its name. To avoid the time delay and the administrative burden involved with obtaining such consent (particularly as the Group's gaming activities will not be regulated in the Isle of Man), it is proposed that the word "Gaming" will not be part of the new holding company's name.

5.         Depository Interests and CREST

Termination of Depository Interest arrangements

As the Company is incorporated in Luxembourg, the Gaming VC Shares are not directly eligible to be traded via CREST.  Accordingly, the Company currently maintains a Depository Interest arrangement with Capita IRG Trustees Limited ("Capita") whereby the Depository Interests, which represent beneficial interests in the Gaming VC Shares, are traded via CREST.  Capita holds the legal title to the Gaming VC Shares on trust for the underlying Shareholders (and is registered as such in the register of shares of the Company).

The GVC Holdings Shares will be directly CREST eligible.  As a result, following Admission, there will no longer be any need to maintain Depository Interest arrangements.

It is intended that, subject to the Redomiciliation proceeding, the Depository Interest arrangements be terminated. Depository Interest holders are today being sent a Notice of Termination. Application will be made to Euroclear for the admission of the Depository Interests to be cancelled.

Once the Depository Interest arrangements have been terminated, Depository Interest holders will cease to hold their Gaming VC Shares via Depository Interests and will be entered on the share register, held by the Luxembourg Registrars, as the registered legal owners of the Gaming VC Shares. Following the registration and the subsequent Distribution, Shareholders will continue to hold Gaming VC Shares (albeit of no intrinsic value) until such time as the Liquidation of the Company is finally closed. Share certificates in respect of the Gaming VC Shares will not be despatched to former Depository Interest holders.

Trading of GVC Holdings Shares within CREST

Application will be made to CREST for the GVC Holdings Shares to be admitted to dealing through CREST as a participating security.

Depository Interest holders who wish to hold their GVC Holdings Shares in CREST should complete the CREST Dematerialisation Form (which is today being sent to them) and return it as soon as possible and in any event by 10.00am on Tuesday 18 May 2010 to Capita Registrars. GVC Holdings Shares are expected to be credited to the CREST accounts of those Depository Interest holders who complete and return their CREST Dematerialisation Form by the requisite date on Monday 24 May 2010 (or, if the EGM is adjourned or reconvened, the Business Day following the adjourned or reconvened EGM).

Depository Interest holders who do not complete and return CREST Dematerialisation Forms in accordance with the paragraph above will hold their GVC Holdings Shares in certificated form, which will not be capable of being traded in CREST. Certificates in respect of the GVC Holdings Shares are expected to be issued within 10 Business Days of Admission. Pending despatch of certificates in respect of the GVC Holdings Shares, Transfers will be certified against the register.

The ISIN for the Gaming VC Shares is currently LU0208436914 and the ISIN for the GVC Holdings Shares will be IM00B5VQMV65.

6.         Taxation

The following statements are a general description of certain tax consequences relating to the Redomiciliation.  These statements are based on current tax legislation and practice.

The statements are not exhaustive and do not deal with all potential tax issues that may affect a particular investor.  All shareholders are strongly advised to obtain independent tax advice as to the consequences of the Redomiciliation.

UK shareholders

On the Liquidation, UK shareholders will be treated as having disposed of their Gaming VC Shares for a consideration equal to the value of the GVC Holdings Shares which they receive.  To the extent that this consideration exceeds the acquisition cost of the shares in the Company, a taxable gain will arise. 

UK shareholders who are individuals will be subject to tax at a rate of 18%.  Individuals may also be able to deduct other amounts including all or part of their annual exemption (£10,100 for the year 2009/2010) and any capital losses available to them.

UK shareholders, who are companies, will be subject to tax at their normal rate of corporation tax (up to 28% for the year 2009/2010).  Companies may be entitled to indexation allowance which increases the acquisition cost in accordance with the rise in the Retail Prices Index.

Depending on their status, other UK shareholders may not be subject to tax on the gain, or may be subject to tax at different rates. In addition, Gaming VC Shares held by employees may be subject to the provisions of ITEPA 2003.

US shareholders

The Directors expect that the reorganisation will qualify as a "D" or "F" reorganisation such that no taxable gain arises to US shareholders as a result of the Redomiciliation.

The Company

From a Luxembourg corporate income tax perspective, the Transfer will be considered a disposal at fair market value of the Company's assets and liabilities. Any capital gain or foreign exchange gains recognised further to such disposal at fair market value will be fully subject to tax, except for the disposal of the shareholdings in Gaming VC Corporation Ltd and Gaming VC (Cyprus) Ltd which should benefit from the Luxembourg participation exemption regime under the conditions and limits thereof. Capital gains or foreign exchange gains that would not benefit from the Luxembourg participation exemption may be offset by available tax losses carried forward. The Directors in any case believe that no gain will arise based on the current fair market value of the Company's assets.

The subsequent Liquidation and Distribution to Shareholders should not generate any additional Luxembourg corporate income tax basis, except to the extent of the potential increase of the fair market value of the GVC Holdings Shares between 29 March 2010 (being the date that 100 GVC Holdings Shares were transferred to the Company) and the Distribution. Such potential increase in value of the GVC Holdings Shares may however be offset by available tax losses carried forward.  The Directors in any case believe that there has been no increase in value because GVC Holdings has had no activity in this period.

The Liquidation should not be subject to any Luxembourg withholding tax.

As a result, and to the extent the taxable capital or foreign exchange gains do not exceed the available tax losses carried forward, no tax (including transfer tax and stamp duty) should arise to either Gaming VC or GVC Holdings as a result of the Redomiciliation.

No Luxembourg or Isle of Man stamp duty should arise on the Liquidation.

7.         Revised share incentive arrangements

Option Plan

Options to acquire ordinary shares in Gaming VC ("Options" and each an "Option") are currently outstanding under the terms of the Gaming VC Holdings S.A. Share Option Plan (the "Option Plan").  Subject to the consent of individual holders of Options and to the Liquidation being approved by the Gaming VC Shareholders, the terms of certain of these Options will be varied so as to become options over GVC Holdings Shares rather than Gaming VC Shares.  At the same time the rules of the Option Plan will be changed so that references to the "Company" and to "Shares" throughout the Option Plan become references to GVC Holdings and to GVC Holdings Shares respectively.

On Admission, therefore, Options are expected to be outstanding under the Option Plan to acquire up to 829,590 GVC Holdings Shares, representing up to approximately 2.7% of GVC Holdings' issued share capital, at exercise prices ranging from 100p to 138.16p per share.

LTIP

Following a review of the Company's incentive arrangements for the Directors in 2009, the Remuneration Committee considered introducing a long-term incentive plan; however, no such plan was adopted at that time.  Subsequently, in recognition of the importance of the Executive Directors to the business of the Group and their lack of participation to date in a long-term incentive plan, the Remuneration Committee recommended the payment of substantial discretionary cash bonuses to Kenneth Alexander and Richard Cooper.  Those bonuses were paid earlier this year, in addition to the Executive Directors' annual performance-based bonus payments.

The Remuneration Committee is keen to ensure that the Directors and senior managers are properly remunerated and appropriately incentivised to continue to drive the Group's performance.  The Remuneration Committee recognises the sensitivity surrounding executive remuneration and wishes to avoid any need to make future one-off discretionary cash bonus payments.  Accordingly, the Remuneration Committee has again reviewed the Directors' remuneration arrangements and, as part of a restructuring of those arrangements, wishes to introduce a long-term incentive plan, to be known as the GVC Holdings PLC 2010 Long Term Incentive Plan (the "LTIP").

There is no formal requirement for AIM companies to seek shareholder approval for the introduction of an LTIP. However, the Directors believe that it would be appropriate to seek the approval of the Shareholders to the LTIP. Resolution 3 in the Circular therefore seeks Shareholder approval for the introduction of the LTIP.  The Redomiciliation is not conditional on Shareholders' approval of the LTIP.

Further details of the proposed LTIP and, if it is approved, of the intended grants of awards under it are set out in the Circular and Admission Document.

- Ends -

For further information:

Gaming VC Holdings S.A.	Tel: [phone]
Richard Cooper, Group Finance Director	www.gamingvc.com

Arbuthnot Securities Limited (Nominated Adviser)	Tel: [phone]
James Steel / Ed Gay

Media enquiries:

Abchurch
Henry Harrison-Topham ./ Nick Probert	Tel: [phone]
[e-mail]	www.abchurch-group.com

Further information on the Group is available at www.gamingvc.com.

 

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