Australian gambling business Tabcorp announced the demerger of its Lotteries & Keno business moved one step closer after the Supreme Court of New South Wales ruled for a shareholder vote on the proposed scheme.
Court Green-Lighted Demerger
The NSW court ruling requires Tabcorp to convene a shareholder meeting and conduct a shareholder vote on a scheme of arrangement for the proposed demerger. Tabcorp has a general meeting already scheduled for May 12, 2022, and will convene the scheme meeting on the same date.
The demerger was initially proposed in July last year, following a comprehensive strategic review of all relevant structural and ownership options, looking to maximize value for shareholders.
By creating two standalone businesses, both listed on the Australian Securities Exchange (ASX) and with distinct operating profiles, strategies and growth opportunities, the demerger is expected to create shareholder value by allowing shareholders to value each business, including the potential for a market re-rating.
Lotteries & Keno, licensed to operate in all Australian states and territories bar Western Australia, will be seeking to obtain an investment-grade credit rating with a strong BBB band. Tabcorp already has a preliminary agreement with holders of its US Private Placement (USPP) notes under which these notes will be allocated to the Lotteries & Keno business from the date of the demerger.
Wagering & GamingCo, comprising of Tabcorp’s wagering, media and gaming services, including Australia’s omnichannel wagering operator TAB, sports broadcaster Sky, businesses in Europe and the US, as well as Australia’s largest gaming services provider MAX, will be targeting credit metrics consistent with an investment-grade credit profile.
Board of Directors Recommend Approval
The demerger was unanimously recommended for approval to Tabcorp shareholders by the Board of Directors ahead of the scheme meeting. The directors also recommended a vote in favor of the capital reduction that will be subjected to voting at the general meeting.
The independent expert Tabcorp had appointed to review the demerger, Grant Samuel, came up with a conclusion that the demerger would be in the best interests of Tabcorp shareholders.
Tabcorp said that all information relating to the demerger, including the directors’ reasoning, a copy of the independent expert’s report, as well as notices for the upcoming general and scheme meetings will be available via a demerger booklet that will be disseminated to shareholders on or before April 8, 2022, as it needs to be registered with the ASX first.
The general and scheme meetings will take place one after the other at the Whiteley Ballroom of the Amora Hotel Jamison Sydney on 11 Jamison Street in Sydney, but shareholders could also attend the meetings via the online meeting platform.