NEW YORK and ALPHARETTA, Ga., Sept. 6 /PRNewswire/ -- Autotote Corporation (Amex: TTE) and Scientific Games Holdings Corp. (NYSE: SG) announced today that the acquisition of Scientific Games for $308 million, or $26.00 per share, has been completed. To finance the acquisition and repay existing debt, Autotote issued $280 million in senior secured loans and $150 million in Senior Subordinated Notes. Autotote also issued $110 million of new convertible preferred stock, $100 million to an affiliate of Lottomatica S.p.A., the state concessionaire for the Italian Lotto game and an affiliate of Olivetti S.p.A. and Telecom Italia S.p.A., and $10 million to other investors through Ramius Securities, LLC, who acted as the preferred stock placement agent. Donaldson Lufkin & Jenrette advised Autotote on the acquisition transaction and Salomon Smith Barney advised Scientific Games. Lorne Weil, Chairman and CEO of Autotote, said, "As a result of the Scientific Games acquisition, we are the largest provider of services, systems and products to both the pari-mutuel gaming and instant ticket lottery industries, and we believe we are the only fully integrated lottery service provider. On an unaudited combined pro forma basis, we would have generated revenues of approximately $450 million and EBITDA of approximately $100 million for the last twelve months." "This transaction demonstrates our commitment to both the pari-mutuel and lottery businesses and our conviction that these businesses should thrive as we execute our integration and expansion plans. It sets the stage for what could be the future expansion of the entire pari-mutuel and lottery industries through new games, distribution channels and entertainment options. Over the past few years, we have achieved significant cost savings in our pari-mutuel businesses. We continue to invest in the business to achieve further efficiencies through such programs as the consolidation of hubs and the application of the latest compression technology. We are also continuing to invest in racing such as our joint venture to develop the first global web-based pari-mutuel service with Arena Leisure plc. By applying the same business strategy to the lottery business, we should realize comparable savings and even faster growth." "We have been actively pursuing the integration of the two companies for the last couple of months and we have already begun to share ideas on technology, new products and new markets that we can now pursue. Because of this careful planning, we are ready to move quickly to take advantage of these significant synergies: - We expect to leverage our products, technologies and relationships to our lottery, racing and telecommunications customers. Combined, we have customer relationships in over 60 countries and 44 U.S. states and believe we have the potential to achieve a market share internationally commensurate with our approximately 68% share of the U.S. instant ticket market and our share of approximately 65% of the North American pari-mutuel market. - We will continue to offer highly innovative games. Our lottery business developed the proprietary technologies to offer secure probability games where every ticket could be a winner. Field trials without mass marketing have significantly increased total ticket sales. Six state lotteries are either actively selling or are seriously considering deploying our proprietary probability games. We have installed or have orders for 26,000 SciScan Technology(R) terminals that can validate the embedded electronic circuits in our Winner's Choice(TM) probability tickets. - We are in the process of integrating Autotote Lottery Corporation into Scientific Games. Autotote Lottery was awarded four of the last seven domestic on-line lottery contracts on which it bid and Scientific Games has 41 on-line and instant ticket validation system customers, principally overseas. Over the next three years, seven domestic on-line contracts will come up for bid that are currently held by our competitors. Since these contracts represented 21% of domestic on-line retail lottery revenues in 1999, we intend to be very aggressive wherever it makes economic sense. - Scientific Games has applied its lottery technologies to prepaid phone cards and has created a high growth business in this important business-to-business segment. For the six months ended June 2000, prepaid phone cards generated $21.5 million in revenues compared to $6.7 million for the comparable period in 1999. We expect continued growth as cellular subscribers in Europe grow from 154 million in 1999 to a forecasted 304 million in 2003 and prepaid services continue to increase from 29% to an estimated 41% of global subscribers (Sources: Baskerville Communications and FT Mobile Communications). - We have made substantial investments to reduce our cost of operations and expand our printing capacity. This month our new line in Alpharetta, Georgia was launched and we expect it to generate an estimated $5.1 million in annual cost savings and to increase annual capacity by approximately 3.5 billion tickets or 25%. We are also consolidating printing operations in the United Kingdom which should substantially lower our unit production costs for phone cards and increase our capacity from 120 million cards in early 1999 to an estimated 1 billion cards by early 2001. Mr. Weil continued, "Autotote's ability to execute its business plan is stronger than ever before. We have refinanced our existing debt and now have a positive net worth. William G. Malloy, previously Chairman and Chief Executive Officer of Scientific Games, will join Autotote's board of directors. Cliff Bickell, who was Vice President and Chief Financial Officer at Scientific Games, will be President, Scientific Games International, Printed Products. Bill Huntley, who had headed Autotote's lottery division during its recent accelerated growth phase, will now be President, Scientific Games International, Systems. Both Mr. Bickell and Mr. Huntley will report to me. This team allows Autotote to utilize the extensive experience and dedication of these managers to pursue our strategy to maintain our leadership in the pari-mutuel business and the lottery business, as well as develop the prepaid phone card opportunity to the fullest extent." Autotote will host a conference call for investors and the media on Thursday, September 7 at 2:30 pm ET to discuss the financial results and the completion of its acquisition of Scientific Games. The call will be broadcast live and archived for ninety days on http://www.vcall.com. Questions can be emailed to firstname.lastname@example.org. Autotote Corporation, after giving effect to the acquisition of Scientific Games, is the leading integrated supplier of instant tickets, systems and services to lotteries, the leading supplier of wagering systems and services to pari-mutuel operators, a leading supplier of prepaid phone cards to telephone operators and also is a licensed pari-mutuel gaming operator in Connecticut, Holland and Germany. Autotote's customers are in the United States and more than 60 other countries. For more information about AUTOTOTE, please visit the company's website at http://www.autotote.com. This press release includes statements that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This information involves risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. For certain information regarding these risks and uncertainties, reference is made to Autotote's Annual Report on Form 10-K for the year ended October 31, 1999 and Scientific Games' Annual Report and Form 10-K for the year ended December 31, 1999 and proxy statement with respect to the August 8, 2000 special meeting.
SOURCE Autotote Corporation