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| Vol. 34 No. 2 -- Monday January 16, 2006 |
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NOVARA and ROME, Italy, and WEST GREENWICH, Rhode Island (January 10, 2006) -- Lottomatica S.p.A. (Milan: LTO), the exclusive license holder and operator of Italy’s Lotto, one of the world’s largest lotteries; De Agostini S.p.A., a privately held Italian diversified industrial and financial holding group that is Lottomatica’s majority shareholder; and GTECH Holdings Corporation (NYSE: GTK), a leading provider of gaming technology and services, today announced that Lottomatica and GTECH have entered into an agreement pursuant to which Lottomatica will acquire GTECH for $35.00 in cash per outstanding GTECH share. The transaction will create one of the world’s leading gaming solutions providers, with significant global market presence and the broadest portfolio of lottery technology, services, and content solutions. The combined company will have operations in over 50 countries worldwide and approximately 6,300 employees. The combined consensus estimates of 2005 revenues and EBITDA for the combined company would be 1.6 billion euros ($1.9 billion) and 0.7 billion euros ($0.84 billion), respectively. In its fiscal year ended February 26, 2005, GTECH reported revenues and net income of $1,257 million and $196 million, respectively.
Under the terms of the agreement, which was approved by the boards of directors of both Lottomatica and GTECH, Lottomatica will acquire all of the outstanding shares of GTECH’s common stock. The $35.00 per share consideration represents a premium of 15% over the closing price of GTECH shares on September 9, 2005, the last trading day before GTECH announced that its board of directors had decided to explore strategic alternatives for the company. GTECH currently has approximately 132.8 million shares of common stock outstanding on a fully diluted basis, including options and shares issuable upon conversion of convertible debt. The total value of the transaction is approximately 4.0 billion euros ($4.8 billion), including the assumption of GTECH’s existing net debt. The acquisition will be effected by means of a “cash merger” of a special purpose vehicle into GTECH as a result of which the shareholders of GTECH will be entitled to receive the $35.00 per share in cash and the GTECH shares shall be delisted. Lottomatica will fund the transaction through:
De Agostini S.p.A. has agreed, subject to certain conditions, to exercise its full, direct and indirect, pro-rata share of the rights offering (0.8 billion euros) ($1.0 billion). Credit Suisse First Boston (CSFB) and Goldman Sachs have agreed to underwrite Lottomatica’s rights issue and subordinated securities and have committed to provide the senior loan financing. The financings and related underwritings and commitments are subject to Lottomatica maintaining a pro forma investment grade credit rating and other customary conditions. Furthermore, De Agostini and Lottomatica have agreed to enter into lock up undertakings consistent with those provided for in similar market transactions. It is expected that Lottomatica will maintain its investment-grade rating and that the new capital structure will have the flexibility to pay a dividend to shareholders and make investments in growth opportunities. The subordinated securities, due 2066 (the statutory life of Lottomatica will therefore be extended), will be listed on a European stock exchange, and will be offered to institutional investors. Completion of the transaction, which is expected to occur in mid-2006, is subject to receipt of financing, approval by GTECH shareholders, regulatory approvals, receipt of contract assignment assurance from certain significant lottery customers, Lottomatica maintaining a pro forma investment grade credit rating, and other customary conditions. Following completion of the transaction, GTECH will continue to operate as a separate business unit within a newly formed Lottomatica group structure. The group is to be headquartered in Rome and GTECH will continue to be headquartered in Rhode Island. The transaction is not expected to involve any substantial disruptions to the workforces of either GTECH or Lottomatica due to minimal operational and geographic overlap. As previously planned, Rosario Bifulco, Chairman and CEO of Lottomatica, will relinquish his executive roles after leading the company for four years through a period of significant development. It is expected that at the closing of the transaction, and subject to the required approvals of the relevant regulatory authorities under the Italian Lotto concession:
It is also expected that Jaymin Patel, Chief Financial Officer of GTECH, will become CFO of Lottomatica upon completion of the transaction. GTECH’s other current officers and management team are also expected to remain in their positions with GTECH. It is currently anticipated that independent directors from the United States will be named to serve on the Board in due course.
It is expected that Mr. Turner, Mr. Patel and other members of GTECH’s management team will invest a material portion of the proceeds from the sale of their GTECH shares to acquire Lottomatica stock from Lottomatica at the price of the rights offering. It is expected that Lottomatica’s stock option plans will be expanded and extended to include members of GTECH’s management. Mr. Sala is also expected to have an investment in Lottomatica. “This transaction is an extraordinary opportunity for De Agostini,” said Mr. Lorenzo Pellicioli, Chief Executive Officer of De Agostini S.p.A. “Since investing in Lottomatica in 2002, we have looked for ways to assist the company in developing an international footprint within the gaming industry. This merger enhances the long-term potential of our investment by creating a global gaming platform, with diverse revenue streams, quality customer relationships and leading-edge technological capabilities. As we announce this transformational transaction, I would like to thank Rosario Bifulco, current Chairman and CEO of Lottomatica, for his invaluable contribution to the development of the company over the last few years, and I look forward to his continued support of the company. We are pleased to join forces with Bruce Turner and his team, which includes many outstanding gaming industry executives, to build further both Lottomatica’s and GTECH’s gaming platforms and competitive positions.” Mr. Bifulco commented, “With the acquisition of GTECH, Lottomatica caps a period of successful development, transforming itself from a domestic company to a truly international business. I believe this is a rare achievement for an Italian enterprise. I am proud to have contributed to this process and to Lottomatica’s operations. We have indisputably strengthened our business, and we have also laid the foundations for the further creation of shareholder value as well as a high quality offering for our customers.” “We are proud to partner with De Agostini and Lottomatica to create the largest global, vertically integrated operator and solutions provider to the international lottery market,” said Mr. Turner. “During the past several years we have firmly established GTECH as the leading global lottery provider with strong positions in gaming solutions and commercial services, with a commitment to integrity and customer service. At the same time, Lottomatica has successfully grown one of the world’s largest, most profitable and most complex lotteries. The combined company will have considerable scale and financial strength, superior customer solutions and significant long-term growth prospects. “My colleagues and I are pleased that the combined company will retain our existing commitments to the Rhode Island community and that GTECH’s operations will remain intact and poised for additional growth,” Mr. Turner concluded. “The cash consideration afforded to GTECH shareholders in the transaction provides attractive value for the business,” added Robert M. Dewey, Jr., Chairman of the Board of Directors of GTECH. “The combined company will benefit from the experience and expertise of GTECH management and the dedication and commitment of GTECH employees worldwide.” Mr. Sala said, “The acquisition of GTECH further enhances our expertise, capabilities and technologies, which will benefit our operations in Italy and in other markets around the world. Our Italian team looks forward to sharing ideas and strategies with our new colleagues, as we work together to strengthen the new Lottomatica’s global leadership position.” GTECH’s Board of Directors has received separate opinions from Citigroup Global Markets and Houlihan Lokey Howard & Zukin that the transaction is fair to GTECH stockholders from a financial point of view. GTECH’s financial advisor is Citigroup Global Markets, and its legal counsel is Cravath Swaine & Moore LLP and Edwards Angell Palmer and Dodge LLP.
Lottomatica’s financial advisor with respect to this transaction (with regard to rating advisory and hybrid structuring) is Credit Suisse First Boston (Europe) Limited (“CSFB”), and its legal counsel are Dewey Ballantine LLP and Bonelli Erede Pappalardo. Shearman & Sterling LLP and Gianni, Origoni, Grippo & Partners are the legal counsel for CSFB and Goldman Sachs in the transaction (including with regards to financing). The Lottomatica Board has received from CSFB and Goldman Sachs opinions with respect to the fairness to the company from a financial point of view of the consideration to be paid pursuant to the terms of the transaction. Revenues and EBITDA for Lottomatica and GTECH have been presented on a combined basis in this document for illustrative purposes only and do not indicate the actual combined revenues and EBITDA of the companies for the periods presented after giving effect to the transaction. The combined numbers have been calculated solely as the pure arithmetic sum of the I/B/E/S December 2005 estimates for the standalone revenues and EBITDA of Lottomatica and GTECH. In addition, for GTECH, the December 2005 estimates are obtained by calendarising I/B/E/S estimates for February 2005 (2/12) and February 2006 (10/12). The combined numbers are presented solely to illustrate generally the overall scope of the combined company, and should not be taken to represent how the companies would have performed on a historical basis had their operations been combined during the periods presented, or how the companies will perform on a combined basis after giving effect to the transactions. Moreover, the combined numbers do not reflect any pro forma or other adjustments to reflect the combination or any adjustments to conform the accounting principles of the two companies. Lottomatica reports its financial information in accordance with IFRS, and GTECH reports its financial information in accordance with United States generally accepted accounting principles. EBITDA, as used in this document, means earnings before interest, taxes, depreciation and amortization. For the foregoing reasons, such numbers are not comparably determined and are presented herein only for illustrative purposes. About
Lottomatica About De
Agostini About GTECH SOURCE: GTECH Holdings Corporation Swisslos Appoints New Director BASEL, Switzerland (January 6, 2006) -- The lottery company SWISSLOS Interkantonale Landeslotterie announces a change of leadership: the Supervisory Board appointed Dr. Roger Fasnacht as the new Director of the company.
For the last two years the business economist has been heading the SWISSLOS marketing division and as of beginning of 2006 is taking over the Directorate from George Kennel, who has reached retirement age. SWISSLOS is responsible for the provisioning and marketing of all lottery and sports betting products in the German and Italian-speaking cantons of Switzerland and in the Principality of Liechtenstein. Its entire net profit is distributed among the cantonal Lottery and Sport-Toto funds for the sourcing of non-profit activities in the cultural, social, nature and sports domains. SOURCE: SWISSLOS Interkantonale Landeslotterie media
release. West Virginia Lottery Celebrates 20th
Anniversary Musgrave said the monthly second chance drawings would culminate in a grand prize event next Dec. in which one winner will receive $2 million. “In celebrating players and profits, we have planned a year of monthly second chance drawings between February and November, in addition to bonus payouts scheduled for Cash25, Daily3, Daily4 and statewide promotions throughout the year that we have dedicated $4.5 million in prizes to support,” said Musgrave.
In addition, he noted that the three instant games offer a combined record of $18 million in prizes. Musgrave said “20th Anniversary Spectacular,” costs $20 a ticket but also offers a top prize of $200,000 and for the first time in lottery history, the instant game includes more than $11 million in cash prizes. The $2 ticket “20 Grand” offers nearly $4 million in prizes, including tickets that will pay some winners up to $20,000. The $1 “Quick $20” game has a top cash prize of $20 and includes more than $2 million in prizes. “Normally, sales from instant games cannot support
such high prize returns, but in using money from our unclaimed prize fund,
which must be returned to players in prizes, we have been able to provide
players a year of higher payouts for 20th anniversary games and
promotions,” Musgrave said. In addition, the 200 winning monthly entries will be eligible for a drawing in which 20 will win a spot in the $3 million grand prize giveaway scheduled for Dec. 6. In that event, Musgrave said the Lottery would award $2 million to one winner, $200,000 to two winners, $50,000 to seven winners and $20,000 to 10 winners.
Dates for the 20th Anniversary monthly drawings are scheduled for February 21, April 21, June 21, August 21, October 20, March 20, May 19, July 20, September 20 and November 20. Entry envelopes must be mailed to WVL Giveaway, PO Box
18414, South Charleston, WV 25303 and received one business day in advance of
each drawing. Non-winning tickets will be discarded following each monthly
drawing. Game rules may be found on the Lottery’s web site at
www.wvlottery.com and at local lottery
retail locations. America’s Most Beloved Artist Joins MDI’s License
Portfolio ALPHARETTA, Georgia, USA (January 11, 2006) -- The works of one of America’s most cherished artists of all times are available to lotteries now that MDI Entertainment, a wholly-owned subsidiary of Scientific Games Corporation (NASDAQ: SGMS), has acquired the rights to Norman Rockwell’s The Saturday Evening Post illustrations.
Under the agreement with The Curtis Publishing Company, MDI can offer lotteries the rights to Norman Rockwell’s and other illustrations from The Saturday Evening Post and Country Gentlemen magazines. MDI’s parent company, Scientific Games, held the rights to this brand from 1999 to 2001. Several clients requested that MDI acquire the property to re-introduce it to the lottery industry. "Americana is defined in the works of the late Norman Rockwell,” said Steve Saferin, MDI president. “Through his sometimes hilarious depictions of everyday life and rites of passage, Mr. Rockwell’s pieces are recognized immediately around the globe. Nostalgia is an important Lottery game category and this license would be an excellent choice for a special-occasion game or as a commemorative instant ticket.” 
Norman Rockwell was born in New York in 1894 and at an early age decided he wanted to be an artist. He studied at Chase Art School, the National Academy of Design and the Arts Students League. It was then when his drawings were published in Boy’s Life magazine. In 1916, his ambition was reached when the editor of the Saturday Evening Post accepted two cover paintings and commissioned three more. That was the start of his 45 year relationship with the magazine resulting in 317 cover paintings. In addition to magazine covers, Rockwell provided illustrations for advertising campaigns, Hollywood movie posters, commemorative stamps and illustrated books such as The Adventures of Tom Sawyer and The Adventures of Huckleberry Finn. Norman Rockwell died in 1978. Joan SerVaas, Curtis Publishing Co. president and CEO, said one attraction to this ticket is that in itself, it is a piece of art and a collector’s item. “The licensing partnership between Curtis Publishing Company and MDI will afford lottery customers to view Norman Rockwell’s famous The Saturday Evening Post illustrations. Norman Rockwell was able to capture so much of what makes life special and put it in his paintings,” SerVaas said. “Rockwell’s art transcends generations. Both young and old can imagine and relate to the joy, contentment, humility, mischievousness and the many other aspects of life…the way we want it to be.” About Scientific Games Scientific Games Corporation (www.scientificgames.com) is the leading integrated supplier of instant tickets, systems and services to lotteries, and the leading supplier of wagering systems and services to pari-mutuel operators. It is also a licensed pari-mutuel gaming operator in Connecticut and the Netherlands, and is a leading supplier of prepaid phone cards to telephone companies. MDI Entertainment, a wholly-owned subsidiary of Scientific Games Corporation, is the worldwide leader in licensed lottery games and promotions. SOURCE: MDI Entertainment. SC Education Lottery Continues to Celebrate Milestones With Its 4th
Anniversary!
“This milestone could not have
been achieved without the support of our stakeholders: the people of the
Palmetto State,” said Ernie Passailaigue, SCEL’s Executive
Director.
“2005 was another record-setting year, and we are confident that our coordinated marketing plan will enable us to meet the educational funding goals for fiscal 2006,” said Passailaigue. Marketing highlights for 2005 included:
What to look for in 2006:
On Monday, January 9, 2006, players were encouraged to bring in four non-winning tickets to any claims center to receive an anniversary gift while supplies last. SOURCE: South Carolina Education Lottery
media release. It Pays to Play on TV! -- $100,000,000 Awarded on Game
Show
Having boosted the total amount won on the show to $100
million, Mrs. Rioux received another chance to appear on TV anytime during the
lottery's 2005-2006 season, plus a 2006 Mazda5, courtesy of
Loto-Québec. This bonus prize is
in addition to the $79,500 that the lucky winner collected by participating to
the TV show. It was also her lucky duty to spin the wheel for the extra
combination that would give another TV viewer a chance to win a spot on the
show and a 2006 Mazda5 offered by Loto-Québec. Camelot Appoints New Marketing Director
Prior to joining Camelot, Martin was Marketing Director at Pizza Hut UK, the joint venture between YUM! Brands and Whitbread. He joined Pizza Hut from Safeway where he led the company’s return to TV advertising and oversaw brand strategy, customer communications, and marketing services, as Marketing Director, and a member of the Operations Board. Previously Martin spent over two years at Comet Group, first
as Head of New Business Development and then as Head of Marketing. He began his
career at Barclay’s before spending six years at Mars, where he held a
variety of sales and marketing roles, rising to become National Account
Controller, Grocery. “As operator of the
National Lottery, Camelot has an enviable
portfolio of brands with exciting games which are amongst the biggest and best
known FMCG brands in the country. I’m thrilled to be joining; it’s a
unique business and I can’t wait to get my teeth into the job and meet the
team.” La Française des Jeux Reports Growth of 4.3% in 2005 BOULOGNE, France (January 6, 2006) -- In 2005 La Française des Jeux registered sales of 8.9 billion Euros, up by 4.3% vs. previous year. This growth has been mainly driven by Euro Millions which accounts for 77% of total company’s growth. During this first full year of operation and with the 7 new partners, Euro Millions sales reached 869 million Euros. Another major lever was the extension of the distribution network through 1,200 new online outlets installed in 2005.
Loto stays in a good health with sales of 1.48 billion Euros. The aggregated sales of the two games, Loto and Euro Millions achieved a 10.8% growth. In contrast Rapido has seen a slowdown in its development with a sales increase of only 1.9%. Instant games sales more sensible to the economic environment represented 3.5 billion euros and a 1.5% growth. This result can be linked to the successful launch of the new game concept 7EXTRA during the last quarter of the year. Sports betting generated a turnover of 283 million Euros (compared to 221 million in 2004), explained by the success of Loto Foot 7&15 and the changes made to Cote & Match with its 2/2 new formula and the launch of single bets. Sales through multimedia channels (Loto, Euro Millions, instant games and sports betting) also continue to develop and achieved 68 million Euros (compared to 29 million in 2004), which accounts for 0.8% of the company’s overall turnover. In 2005, La Française des Jeux kept enforcing its mission of public order, fulfilling its obligations on security and gaming control. It managed to balance the appropriate renewal of its offer and the requirements for a development socially responsible allowing a large public to play moderately (less than 6 Euros in weekly stakes). SOURCE: La Française des Jeux.
New Mexico Gaming Control Board Awards Contract to Scientific
Games NEW YORK, USA (January 12, 2006) -- Scientific Games SGMS signed an eight year contract with the New Mexico Gaming Control Board for the AEGIS-Video™ system to monitor and control the state's gaming machines. The contract commenced on December 28, 2005 and is valued at approximately $7.1 million. Scientific Games will install the AEGIS-Video™ system and provide ongoing maintenance support for a hybrid network which includes 5 racinos and 60-plus non-profit veteran and fraternal organizations. The AEGIS-Video system will support two communication protocols including the industry standard SAS 6.01 (Slot Account System) protocol and SGI's F-3 protocol which allow the existing gaming machines to communicate to the new system.
"We appreciate being chosen by the New Mexico Gaming Control Board for this important contract in a growing market," said Brennen Lawrence, Vice President and General Manager of Video Gaming Systems of Scientific Games. "We continue to provide valuable enhancements to our systems' technologies with AEGIS-Video™ to embrace industry standards and protocols and meet our customers' needs." "The Gaming Control Board has been extremely pleased with the performance of the AEGIS-Video™ system during the pilot," said Interim Executive Director India Hatch of the New Mexico Gaming Control Board. "Upgrading to AEGIS Video allows the State of New Mexico the ability to jurisdictionally control the security and integrity of the machines and the facilities, while allowing new SAS based gaming machines to come to the market and add significant growth to revenue." The New Mexico VLT network consists of more than 3,000 machines at the state's five racetracks and about 60 non-profits, mostly veterans and fraternal organizations. In fiscal 2005 the total net win from the gaming machines was $186.6 million, which played a major role in adding $34.9 million to the purses offered at the state's tracks. About Scientific Games Scientific Games Corporation is the leading integrated supplier of instant tickets, systems and services to lotteries, and the leading supplier of wagering systems and services to pari-mutuel operators. It is also a licensed pari-mutuel gaming operator in Connecticut and the Netherlands and is a leading supplier of prepaid phone cards to telephone companies. Scientific Games' customers are in the United States and more than 60 other countries. For more information about Scientific Games, please visit our web site at http://www.scientificgames.com. SOURCE: Scientific Games Corporation.
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