he company expects that it would retain its rights and agreements related to wireless, server based and peer to peer systems, content, applications and certain other assets related to the table games route. The proceeds from the sale of these assets would be expected to be used for the repayment of debt, including the company’s outstanding high yield notes, and to provide additional working capital to fund growth in the company’s core systems products.
The potential transaction would allow the company to solely focus on the growth of its core systems offerings which are expected to grow by over 65% in 2007 over 2006. Additionally, it expects the proceeds of a sale of its table games route to help solidify its balance sheet.
President and CEO Russel McMeekin stated: "This proposed sale would divest us of the last vestige of our non-systems products and allow us to focus solely on the development and distribution of our core systems offerings. We will continue to distribute table games systems and we anticipate that the buyer of these assets could become a new channel for our progressive systems for tables including our Casinolink Jackpot System (CJS).”
Then added: “We also anticipate that the transactions will provide us with a more efficient operating structure for our frontline sales and marketing departments as well as further streamline our support and administrative functions. A transaction will not be expected to have an impact on any of our other strategic initiatives; including our central server product, peer to peer poker or our planned wireless and mobile gaming initiatives through our partnership with Cantor Gaming."
McMeekin continued: "We have considered the sale of this business on prior occasions and determined that it was best to wait until the market position of Texas Hold’ Em Bonus worldwide and Caribbean Stud in Macau were well established. We believe these games are positioned for growth and believe the timing is appropriate to maximize the value of these assets for our shareholders."
Chief Financial Officer Heather Rollo commented: "This transaction and related actions are expected to provide us the basis to derive the benefit of our business model and provide the foundation for solid cash flow and operating income performance."
Rollo continued: "At this time, we will not be updating our revenue and gross margin guidance for fiscal 2007. However, we will consider updating this guidance when we have more specific information regarding the terms and timing of these potential transactions."