Mybet sells stake in German horse betting operator
German operator says cash shortage forced a decision over pferdewetten.de AG it would "have liked to avoid"
Mybet has sold its stake in German horse betting operator pferdewetten.de AG in attempt to raise enough cash to maintain liquidity in the business.
On Wednesday, mybet announced the sale of its 1,810,307 shares in the racing site – equivalent to a 50.2% stake – to a collection of individual investors.
The amount of cash raised by the sale was not disclosed but the market price of the shares currently stands at just over ?10m.
Mybet CEO Zene Ossko said the deal was necessary because funds from the sale of its C4U-Malta subsidiary had still not been received despite the deal being announced in October 2015.
“Due to the unforeseeable stay out of the funds from the C4U transaction we were forced to make a decision, that we would have liked to avoid,” said Ossko.
“To part with our subsidiary pferdewetten.de AG was the most expedient of the alternatives available to us, taking into account the ongoing focus of our business on the areas of sports betting and casino”.
A spokesperson for mybet said the company had expected to receive the money from the C4U deal – around ?3.3m – by the end of 2015, but the Malta regulator had yet to approve the deal.
If the deal fails to go through, it will also trigger extraordinary termination rights on a convertible bond issued by mybet in November, meaning the operator could have to pay back ?5m to bondholders immediately.
The spokesperson added that mybet had no reason to believe the deal wouldn’t go through.
The company is estimated to have little more than ?1m in cash reserves, excluding the pferdewetten deal, after reporting an 11% year-on-year drop in Q1 revenues, driven by a double-digit drop in both online sports betting revenue and gaming revenue.
A source close to the German gaming market told eGaming Review: “I think mybet really needs this cash to be safe. It has a huge demand for money since the new website is taking several months longer than expected.”
Mecan also suggested mybet could be selling off its subsidiaries in order to become a more streamlined business and thus more attractive to potential buyers.
The CVC/Tipico deal in April valued Tipico at around ?1.4bn and suggests that investors are comfortable ploughing big money into the grey German market.