Ladbrokes to break debt shackles with rights issue; Q3 rev down

LADBROKES PLANS TO raise £275m through a significantly discounted rights issue, the British bookmaker revealed today, together with third quarter results showing net gaming revenue down 15%.

The company, which in June also revealed revenue down for the first half of this year, offered a fully underwritten issue of 301 million new shares at 95p a share, a discount of almost half on last night’s market closing price of 181.2p.

The bookmaker said that it wanted to reduce its £962m net debts to £687m and to refinance its remaining debt and reinforce its balance sheet with extra capital in a tough trading climate.

The company attributed the bad trading to a particularly bad run of trading on football bets, after the first 66 Premier League matches saw just four draws, compared with a five-year season average of 25% of games being drawn. Poker net revenue over the three-month period also fell 21%.The dips saw Ladbrokes’ operating profits down by 58%, to £22.4m, from £52.8m last year.

Chief executive Christopher Bell said: “The rights issue is something the board has been considering for some time. Bank lending has been difficult over the last 12 months. It has been a difficult quarter, particularly due to the football results. We have got to take the level of debt down and this puts the right capital structure in place for the future.”

Net revenue from casino and bingo performed more strongly, growing 5% and 3% respectively. Gaming player yields also achieved year-on-year growth, rising 10% in casino, 9% in poker and 19% in bingo, which the company said reflected the improved CRM and value maximisation measures.

Ladbrokes today said that it would not pay a final dividend to shareholders in 2009, but that it hoped to make an interim dividend in 2010. As well as cutting its dividend, the bookmaker also plans to reduce its operating costs, and in August joined William Hill in announcing it would move its online sportsbook to Gibraltar.

The company added that it had identified £2.6m of staffing and operational efficiencies deliverable in Ladbrokes eGaming in 2009, and a further £3.9m in 2010.

As reported on EGRmagazine.com, Ladbrokes eGaming fell three places in this year’s Power 50 ranking of the world’s 50 leading operators.