Lottomatica to Raise €350 million for Italian Expansion

20th October 2009 8:22 am GMT

Lottomatica Group is to undertake a share capital increase of up to €350 million by the end of the year to support the company's development plans in Italy, primarily the renewal of the Italian scratch card concession which expires next year, as well as the new investment in video lottery terminals (VLTs) across the country.

Last week Lottomatica was the sole bidder for the Italian 'Gratta & Vinci' scratch card concession, after rivals Intralot, Sisal, and Snai decided not to take part in the bidding process (more).

Lottomatica said that assuming a one-concessionaire scenario does take place, the company will have to pay up to a maximum of €315 million in November of this year and €189 million in November 2010 for the nine-year concession, representing 63% of the total required upfront payment of €800 needed.

Lottomatica has a 63% stake in the consortium that bid for the concession, which also includes Scientific Games Corporation.

"The Gratta & Vinci one-concessionaire scenario gained ground only in the past few days and made it necessary to tap the capital markets with this approach," said Stefano Bortoli, Lottomatica Group Chief Financial Officer.

"The chosen financing structure has the key characteristic of a fast execution and strengthens Lottomatica Group's balance sheet."

In addition, Lottomatica will later this month pay for its 50% contribution to buy VLT rights in Italy, which will amount to some €81 million. The investment will effectively support a commitment to buy 5,380 VLT rights, which has the potential to increase to up to a maximum of 10,761 rights by March 2010.

On these grounds, the company's Board will propose that shareholders waive their pre-emptive right to subscribe to the new shares in order to reduce the time to raise the necessary financing.

"The deal approved will allow us to meet our upcoming commitments, pursue our growth plan, and maintain a balanced financial structure," continued Bortoli. "Maintaining our investment-grade rating continues to be a priority for the Group."

The issue price of the shares will be determined on the basis of a premium on the average Lottomatica Group's share price in the period immediately following shareholder approval.

The company's Board of Directors, chaired by Lorenzo Pellicioli, has resolved to convene an extraordinary shareholders' meeting on November 20th to approve the share issue and the waiver of shareholder's right.

Share in Lottomatica Group (Co. Profile) (MIB:LTO) have gained 2.21% to currently trade at €16.66 per share in Milan this morning following the announcement.

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