Tabcorp sells stake in Jumbo Interactive
Tabcorp has entered into an agreement to sell an 11.6 per cent in online lottery business Jumbo Interactive for close to A$100 million.
iGamingbusiness reports the Australian gambling operator will sell more than 7 million shares in Jumbo to stock broker UBS.
Tabcorp managing director and chief executive David Attenborough explained there was no longer a need for the business to hold a stake in Jumbo, after it formalised a long-term extension of its reseller agreement until August 2030.
Under the agreement, Jumbo will pay $15 million to Tabcorp, as well as a service fee of 4.65 per cent of subscription revenue, for reselling rights for lottery products in New South Wales, Victoria, South Australia, Northern Territory, Australian Capital Territory and Tasmania, as well as international jurisdictions.
“Following the recent extension of our long-standing commercial distribution relationship with Jumbo for a ten-year term to August 2030, there is no longer a strategic rationale for Tabcorp’s shareholding in Jumbo,” Mr Attenborough said.
As a result, we have decided to monetise this investment, with the resulting capital to be used to further strengthen the balance sheet and support the move towards our recently revised target gearing range.
Tabcorp expects the deal to be worth a profit of $69m after tax. These funds will be used to pay down existing drawn bank debt facilities.
In related news, Tabcorp has appointed Janette Kendall to its board as a non-executive director.
Ms Kendall has previously worked as a senior vice president of marketing at Galaxy Entertainment Group in China, and executive general manager of marketing at Crown Resorts.
She also serves on the boards of Vicinity Centres, Costa Group, Australian VenueCo, KM Property Funds, Visit Victoria and the Melbourne Theatre Company.
Ms Kendall will take up her seat on the board after receiving regulatory approval, acting as an observer of board meetings until then.
“We welcome Janette Kendall to the Tabcorp board,” Tabcorp chairwoman Paula Dwyer said.
“Ms Kendall is a highly experienced director who brings deep experience in the gambling entertainment industry, digital innovation, and marketing.
Tabcorp flags massive losses due to COVID-19
One of Australia’s biggest betting companies flagged huge losses caused by the COVID-19 pandemic.
News.com.au reported in August that Tabcorp has warned the downturn caused by the coronavirus pandemic has slashed the value of its business by more than $1 billion.
In an update provided to investors on Monday morning, Tabcorp said its financial results for the year ended June 30 would incur a $1 billion to $1.1 billion non-cash impairment charge.
It said the charge had dented the value of its goodwill and was a direct impact of government measures imposed to curb the transmission of COVID-19.
A large proportion of Tabcorp’s sports betting and lotteries businesses were impacted by venue closures and the suspension of sporting fixtures across Australia.
The company also noted the expense to the business was partly a result of accelerated retail contraction and uncertainty about how long the pandemic would last.
Tabcorp’s outgoing chief executive David Attenborough said COVID-19 had materially impacted its wagering and media business.
“We are facing a challenging and uncertain environment, and the current operating conditions and those expected into the future are relevant factors in assessing the value of the goodwill in those businesses at this time,” he said.
The group has tipped its profits and earnings for the 2020 financial year will be lower than the previous corresponding period in 2019.
Tabcorp expects to post a net profit between $267 million and $273 million, approximately $130 million lower than the previous financial results in 2019.
It also expects earnings before tax and interest will be in the range of $990 million to $1 billion, which is lower than the $1.124 billion reported in 2019.
“We remain confident in the strength and resilience of Tabcorp’s diversified portfolio of assets and are pleased that integration is now substantially complete,” Mr Attenborough said.
“We are focused on supporting our people and partners during these challenging times, while ensuring Tabcorp emerges strongly post COVID-19.”