Tan is the largest shareholder of BCB by virtue of a 45.59% direct stake.
BCB said the acquisition would be partly funded by the issuance of up to RM614.45mil nominal value of 10-year 8% irredeemable convertible unsecured loan stocks (Iculs) on the basis of one RM1 nominal value of Iculs for every eight of the company's shares held.
The sale price is RM9.37 per share based on ASSB's paid-up share capital of RM80mil comprising RM1 shares.
BCB said Tan will guarantee that the company would make a cumulative after-tax profit of at least RM375mil for the first three years of operations and had backed this with an offer to deposit RM81.25mil worth of listed securities.
AmInvestment Bank Bhd on behalf of BCB informed that ASSB recorded consolidated net liabilities of RM11.2mil and loss after tax of RM4.6mil for the financial year ended Dec 31, 2008.
BCB would also withhold RM125mil cash from the total consideration, which would mean that the initial consideration would be RM400mil.
The withheld cash would only be released annually upon achievement of profits proportionate to the guarantee.
The company said Tan would also undertake to subscribe to the portion of the Iculs entitled to him and his private companies, which would total at least RM400mil.
When contacted, Tan said this plan was 23 years in the making as the sports betting licence was first granted by the Government in 1987. “I waited 23 years to be able to finally launch this. I wish to emphasise that this is not a newly issued licence by the current administration,” he said.
“I'm glad that Prime Minister Datuk Seri Najib Tun Razak is economically sound like Tun Dr Mahathir Mohamad and understands economics. This licence will generate revenue to the company which, in turn, will help the Treasury particularly in these trying times,” Tan said.
According to a StarBiz report yesterday, ASSB regained the licence on Jan 13 with conditions including that it would only be allowed to operate in 200 of the 680 Sports Toto outlets in non-Muslim areas of major towns and online betting would not be allowed.
Ascot Sports had surrendered the licence in 1990, got it back in 2003 but was not allowed to operate a year later.
AmInvestment said ASSB proposed to commence operations in the second half of the year and would provide telephone betting services to those with registered accounts with the company.
More sports betting licences could eventually be granted by the Government with the reissue of the old licence to ASSB although analysts believe this was not in the horizon for now despite a recent statement by Deputy Finance Minister Datuk Dr Awang Adek Hussein.
A HwangDBS Vickers Research Sdn Bhd analyst believe there could be no further issuance of any more sports betting licence due to political sensitivity. “The Government may want to test the waters first by reissuing ASSB's licence, then see what's the reaction before issuing any more,” she added.
OSK Research Sdn Bhd analyst Keith Wee said in a report yesterday that talk of any new licences was premature over the immediate to medium-term.
“That said, we think that over the longer term, all the numbers forecast operators (NFOs) will benefit if the Government were to eventually liberalise the sector by leveraging on all the NFOs to expand the distribution network for sports betting to take away the market share from all illegal operators,” he said.
I think these analysts are spot on!
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