Under the proposal, up to 88,751,257 ordinary shares, representing 47.02% of Sportech’s issued ordinary share capital will be purchased
The tender price will be set at 40 pence per share and should Sportech purchase the maximum amount of shares, this would generate £35.5m in funds to be returned to its shareholders.
Sportech will also seek approval to carry out a reduction in the nominal value of its ordinary shares from 20 pence each to one penny per share.
This would also include cancelling the entire amount standing to the credit of Sportech’s capital redemption reserve, which stood at £10.3, as of yesterday (5 August).
Should this reduction proceed as planned, Sportech would generate approximately £46.2m in reserves, which would be available for the business to distribute to shareholders via the tender offer.
In the absence of the capital reduction, the amount available for return to shareholders would be approximately £11.3m due to the Companies Act requirement that a company can only make distributions to shareholders out of profits available for that purpose.
The proposals come following the sale of Sportech’s Global Tote Business to BetMakers, the sale of its Bump 50:50 arm to Canadian Banknote and a freehold property in Connecticut. This, Sportech said, led to it securing £36.1m in net cash proceeds.
“Given the change in size of the group, the group now has funds surplus to its current operational requirements and the board believes that now is an appropriate time to return through the tender offer up to approximately £35.5m of cash to its shareholders,” Sportech said.
“The board is satisfied that, following the capital reduction and tender offer and assuming the tender offer is fully subscribed, the company will remain an attractive size with sufficient liquidity to pursue the strategies of the Venues and Lottery businesses.”
The proposal also comes after Sportech last month also began trading its ordinary shares on the AIM, the sub-market of the London Stock Exchange.
Sportech previously said the AIM would offer “greater flexibility” in regards to corporate transactions and also enable the business to agree and execute certain transactions more quickly and cost effectively.