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Non-Tech : International Lottery and Totalizator Systems (ITSI) -- Ignore unavailable to you. Want to Upgrade?

To: LEO RISHTY who wrote (82)	6/15/1998 2:36:00 PM
From: Vinnie	Read Replies (1) \| Respond to of 160

International Lottery & Totalizator Systems Executes Letter of Intent to Acquire Controlling Interest in Supplier to Philippine Lottery PR Newswire - June 08, 1998 06:34 ------------------------------------------------------------------------ Shareholders and Board of Directors Approve Reverse Stock Split CARLSBAD, Calif., June 8 /PRNewswire/ -- International Lottery & Totalizator Systems, Inc. (Nasdaq: ITSI) has executed a letter of intent with Berjaya Lottery Management (H.K.) Limited ("Berjaya"), pursuant to which ILTS would acquire a controlling interest in Prime Gaming Philippines Inc. ("Prime") from Berjaya and/or other current Prime shareholders in exchange for the issuance of ILTS common stock. Prime is a holding company listed on the Philippine Stock Exchange which owns 100% of Philippine Gaming Management Corporation ("PGMC"). PGMC is the exclusive provider of lottery hardware, software, management and technical services to the Philippines Charity Sweepstakes Office ("PCSO") in the Luzon region which includes metropolitan Manila and the National Capital Region. PCSO is the exclusive government agency which is authorized to conduct lottery gaming in the Philippines. PGMC is committed to provide the aforementioned equipment and services to PCSO for a remaining eight year period. Berjaya presently owns 36.6% of ILTS and approximately 54.3% of Prime and has representation on both corporation's Board of Directors. For the most recent 6 months, on-line lottery sales in the region serviced by PGMC averaged U.S. $9.6 million per month. Under its contracts with PCSO, PGMC receives a total of 4.45% of gross sales. "This transaction provides a number of potential benefits to ILTS. The acquisition of Prime Gaming provides ILTS with the opportunity to manage a highly successful operational lottery, which has consistently generated positive cash flow from operations." said ILTS President Mark Michalko. He continued: "In addition, in the very dynamic Asian market, the Philippine operation provides ILTS the opportunity to showcase the Company's leading products and capabilities." Under the proposed transaction ILTS would issue 28.5 million new common shares (computed prior to the 1 for 3 reverse stock split covered herein) to Berjaya and/or other current Prime shareholders in exchange for a 52.25% interest in Prime. The exchange ratio was negotiated on the basis that the ILTS stock price for purposes of the transaction will be U.S. $0.80 per share and that the Prime stock price will be Philippine pesos 17.5 per share (or U.S. $0.4375 per share at an assumed exchange rate of approximately Philippine pesos 40 per U.S. $1.00). Prime currently has 99.5 million shares outstanding. The ILTS shares to be issued in the transaction would represent approximately 61% of ILTS' outstanding shares upon completion of the transaction. In the event that the other current Prime shareholders assign their interest in the transaction to Berjaya, Berjaya's percentage ownership of ILTS would increase from its present 36.6% to 75.4%. If none of the current Prime shareholders assign their interest in the transaction to Berjaya, Berjaya's percentage ownership of ILTS would be 38.7%. The Prime shares to be received by ILTS can only be sold in private transactions, subject to Philippine Securities and Exchange Commission approval, during a two year holding period. ILTS will grant the selling Prime shareholders and Berjaya demand and piggy back registration rights on the ILTS shares to be issued in the transaction. The proposed transaction is subject to negotiation and execution of a definitive agreement and satisfaction of customary closing conditions, including approval of the transaction by ILTS shareholders, the shareholders of Berjaya Group Berhad (the parent of Berjaya) and approval of the sale of Prime shares to ILTS by the Philippines Securities & Exchange Commission and completion of due diligence. Subject to these conditions, the transaction is expected to close in late August or September immediately following ILTS shareholder approval at a special shareholders meeting. There is no assurance, however, that the transaction will occur, or if so, when or on what terms. ILTS has retained the international investment banking firm, Translink International, Inc., to provide a "fairness opinion" for the benefit of the current ILTS shareholders, other than Berjaya. The PGMC contract with PCSO requires that at least 2,000 terminals be installed during the contract term. Since the inception of PGMC in February 1995, ILTS has supplied approximately 1,400 terminals, project management, central system equipment and ongoing software support. ILTS also announced that its shareholders and Board of Directors have approved a one for three reverse stock split to be effective June 12, 1998. _______________________________ Now that's what I call DILUTION OF INVESTMENT!! My math might not be correct, but I calculate a 150% dilution with the newly issued shares. Is this going to be accretive to earnings...I don't see any mention of that.....not to forget our lovely 3 to 1 reverse split. The word "toilet" comes to mind when I think about the direction this company is currently headed. I'm using this one as a future write off against other gains.