Tabcorp Holdings Limited · ASX:TAH
Tabcorp — Merger or Acquisition (October 2010)
63 slides from Tabcorp's merger presentation, Oct 18, 2010
Slide 1: Demerger and Entitlement Offer
For personal use only Tabcorp Holdings Limited Demerger and Entitlement Offer 18 October 2010 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS
Slide 2: Disclaimer
Disclaimer For personal use only This Presentation has been prepared by Tabcorp Holdings Limited (ABN 66 063 780 709) (Tabcorp). Summary information This Presentation contains summary information about the current activities of Tabcorp and its subsidiaries (Tabcorp Group). The information in this Pr
Slide 3: Disclaimer
Disclaimer For personal use only Financial data All dollar values are in Australian dollars (A$) and financial data is presented within the financial year ended of 30 June 2010 unless otherwise stated. The pro forma historical financial information included in this Presentation does not purport to b
Slide 4: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Tabcorp post demerger 5 Trading update 6 Entitlement offer 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSON
Slide 5: Overview
Overview For personal use only Tabcorp will pursue a demerger of its Casinos business from its Wagering, Gaming and Keno businesses Creates two attractive, focused, market leading businesses Recognises the different opportunities and investment profiles of the businesses Separate capital str
Slide 6: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Tabcorp post demerger 5 Trading update 6 Entitlement offer 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSON
Slide 7: Demerger rationale
Demerger rationale For personal use only Demerger to create two independent and focused companies One of Australia’s largest Casino operators A leading Wagering, Gaming and Keno business Timing is right—both businesses now have differing profiles, strategies and investment priorities Separ
Slide 8: Market leading, focused gambling entertainment business
Market leading, focused gambling entertainment business For personal use only Casinos Tabcorp post demerger Brands Profile • 415 tables • 2,549 wagering outlets in NSW and Victoria • 309 MTGMs • 13,349 EGMs in 263 Tabarets in Victoria • 4,433 EGMs • 2,633 Keno outlets in Queensland, NSW and • 58 res
Slide 9: Capital structure and dividend policy
Capital structure and dividend policy Each company will have a capital structure and dividend policy reflecting its specific profile For personal use only Casinos Tabcorp post demerger It is not intended that this company will have a Intention to maintain investment grade credit credit rating in
Slide 10: Board and senior management structure
Board and senior management structure Both businesses equipped with strong Boards and experienced senior management For personal use only Casinos, Wagering and Gaming have operated as independent businesses through the operational separation of the divisions and full P&L accountability Board mem
Slide 11: Indicative demerger timeline
Indicative demerger timeline For personal use only The currently anticipated timeline is for the demerger to be completed by 1 July 2011 October 2010 to Accelerated renounceable entitlement offer to raise approximately $430 million November 2010 April/May 2011 Expected despatch of demerger-relat
Slide 12: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Tabcorp post demerger 5 Trading update 6 Entitlement offer 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSON
Slide 13: Casinos investment case
Casinos investment case For personal use only Casinos has an attractive investment case with significant growth expected from new investments Unique portfolio of properties Summary of key licences held by Casinos Year of licence expiry Market leading positions Star City 2093 Geographic diversi
Slide 14: Profile of Casinos
Profile of Casinos For personal use only Casinos financial profile1 EBITDA by geography—FY10 y/e 30 June FY10 Revenue 1,372 2% growth 1.0% 17% EBITDA 360 EBITDA margin (%) 26.2% Star City EBIT 271 Treasury EBIT margin (%) 19.7% Jupiters 21% 60% Note: Jupiters Townsville 1 Normalised for theoretical
Slide 15: Key strategies
Key strategies For personal use only Undertake expansion projects at largest properties – Star City and Jupiters Gold Coast account for 77% of FY2010 Casinos revenue Deliver Project Star, including further expansion recently announced Create world class (Events centre, VIP strategy) destinations
Slide 16: Project Star – Star City expansion
Project Star – Star City expansion For personal use only Transformation of Star City into a world class entertainment destination is on track Project Star – $600m redevelopment Components MGF/concessions/exclusivity Creation of entertainment destination F&B/nightlife/retail World class restauran
Slide 17: Expansion of Star City is on track
Expansion of Star City is on track For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS 17
Slide 18: Expansion of Star City – new customer experience
Expansion of Star City – new customer experience For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS 18
Slide 19: Project Icon – $175m investment at Jupiters on Gold Coast
Project Icon – $175m investment at Jupiters on Gold Coast For personal use only Project Icon will revitalise the Jupiters Gold Coast property Renovation and expansion of non-gaming offer Six new restaurants and two new bars International night life venue New spa facilities, refurbishment of
Slide 20: Project Icon – Jupiters on the Gold Coast
Project Icon – Jupiters on the Gold Coast For personal use only VVIP gaming & penthouses New world class spa Upgraded resort pool New VIP Club gaming International night venue Expanded main New restaurants including gaming floor private dining NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR
Slide 21: Potential further investment in Queensland
Potential further investment in Queensland For personal use only Currently in discussions with the Queensland Government on potential for further expansion of Gold Coast, Brisbane and Townsville casinos May include the construction of one or two hotels Investment subject to reaching agreement
Slide 22: Casinos capital expenditure and timing
Casinos capital expenditure and timing For personal use only Project Icon will build on previously announced investment in Star City Project Star Capex profile Total budgeted capex of $960m, including 450 Events Centre, VIP facilities and payments 10 to the NSW Government 400 FY11 capex of app
Slide 23: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Tabcorp post demerger 5 Trading update 6 Entitlement 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS 23
Slide 24: Tabcorp (post demerger) investment case
Tabcorp (post demerger) investment case Market leading position in Australian Wagering, Gaming and Keno which brings with it a For personal use only range of significant strategic strengths Summary of existing key licences1 Substantial business with market leading positions in Wagering, Gaming and
Slide 25: Profile of Tabcorp post demerger
Profile of Tabcorp post demerger For personal use only Tabcorp (post demerger)1,2 EBITDA by business—FY10A1,2 y/e 30 June FY10 9% Revenue 2,866 22% growth 1.7% NSW Wagering EBITDA 649 Vic Wagering EBITDA margin (%) 22.6% Media EBIT 534 40% Vic Gaming EBIT margin (%) 18.6% 20% Keno 9% Key achievement
Slide 26: Key strategies
Key strategies The key strategies to continue leadership in the retail and online gaming and wagering For personal use only markets are in place Drive fixed odds Expand fixed odds offering and pursue regulatory reform to level the fixed expansion odds playing field Drive online Develop leading o
Slide 27: Potential investment in NSW Wagering
Potential investment in NSW Wagering For personal use only Potential for further investment in NSW and expanded customer offer Tabcorp has been in discussions with the NSW Government and Racing NSW to expand the customer offer in NSW and create new growth in the NSW market Includes introduction
Slide 28: Victorian Wagering and Betting Licence and Keno Licence
Victorian Wagering and Betting Licence and Keno Licence For personal use only Victorian Wagering and Betting Licence The Victorian Government has announced that three parties have been invited to submit an application for the Victorian Wagering and Betting Licence Tabcorp intends to submit an ap
Slide 29: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Tabcorp post demerger 5 Trading update 6 Entitlement offer 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSON
Slide 30: Trading update—first quarter FY2011
Trading update—first quarter FY2011 Tabcorp has experienced solid trading conditions during the July to September 2010 period For personal use only Division Revenue Comments growth v pcp NSW—Star City1 8.4% Strong EGM and MTGM growth PGR and MGF solid, despite disruption Non-gaming recovering
Slide 31: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Tabcorp post demerger 5 Trading update 6 Entitlement offer 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSON
Slide 32: Entitlement offer
Entitlement offer Offer details1 For personal use only 1 for 9 accelerated renounceable2 pro-rata entitlement offer to raise approximately $430 million Offer size Approximately 68.5 million new Tabcorp ordinary shares to be issued (c.11% of issued capital) The offer is fully underwritten $6.
Slide 33: Use of funds
Use of funds For personal use only Funding certainty for casino growth initiatives Project Star (Sydney expansion) with budgeted capex of $960 million (previously announced) Project Icon (Gold Coast expansion) with budgeted capex of $175 million announced today Funding flexibility for potent
Slide 34: Pro-forma group balance sheet
Pro-forma group balance sheet For personal use only Pro-forma Tabcorp balance sheet for equity capital raising only A$m 30 June 2010 Adjustments¹ Pro-forma Cash & cash equivalents 261.9 – 261.9 Property, plant & equipment 1,762.9 – 1,762.9 Other assets 4,432.9 – 4,432.9 Total assets 6,457.7 – 6,457.
Slide 35: Offer timetable
Offer timetable For personal use only Trading halt commences 18 October 2010 Institutional entitlement offer opens 19 October 2010 Institutional entitlement offer closes (11.00am) 20 October 2010 Institutional shortfall bookbuild Trading halt lifted 21 October 2010 Record date (7.00pm) 2
Slide 36: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Tabcorp post demerger 5 Trading update 6 Entitlement offer 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSON
Slide 37: Summary
Summary For personal use only Demerger to create two independent and focused companies One of Australia’s largest Casino operators A leading Wagering, Gaming and Keno business The separate companies can focus on core competencies and growth opportunities Casinos is investing to transform i
Slide 38: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Tabcorp post demerger 5 Trading update 6 Entitlement offer 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSON
Slide 39: Index of key risks
Index of key risks For personal use only RISKS ASSOCIATED WITH TABCORP AND THE TABCORP GROUP a) Victorian wagering, gaming and Keno licences b) Regulation and changes to the regulatory environment c) Disciplinary action and cancellation of the wagering, gaming and casino licences d) Demerger not pro
Slide 40: Key risks
Key risks For personal use only This section discusses some of the key risks attaching to an investment in Tabcorp. Before investing in Tabcorp, you should consider whether this investment is suitable for you. Potential investors should consider publicly available information on Tabcorp (such as tha
Slide 41: Key risks
Key risks For personal use only Tabcorp has submitted an application for the Victorian Keno Licence. The Victorian Government has announced that Tabcorp has been invited to submit an application for the Victorian Wagering and Betting Licence and Tabcorp intends to submit an application. There is no
Slide 42: Key risks
Key risks For personal use only (b) Regulation and changes to the regulatory environment General The activities of the Tabcorp Group are operated in highly regulated industries. The gambling activities that they conduct, and will conduct, and the level of competition that they experience, and will e
Slide 43: Key risks
Key risks For personal use only Changes to the regulatory environment generally Changes to the regulatory environment in some of the jurisdictions in which the Tabcorp Group operates which have been made or foreshadowed and which may have an adverse effect on the operational and financial performanc
Slide 44: Key risks
Key risks For personal use only Federal government intervention The Prime Minister of Australia, the Honourable Julia Gillard MP, announced in or around September 2010 following the Federal Government election that as part of the arrangement agreed with an independent Federal member of parliament to
Slide 45: Key risks
Key risks For personal use only (d) Demerger not proceeding The demerger remains subject to a number of factors. It requires approval from shareholders, court approval and various NSW and Queensland regulatory approvals, including Queensland Ministerial approval and approval from the NSW Casino Liqu
Slide 46: Key risks
Key risks For personal use only (g) Consequences of breach of shareholding restrictions There are a number of restrictions on shareholdings in Tabcorp which arise under legislation or due to the requirements of various regulatory authorities. Under the Gambling Regulation Act 2003 (Vic), it is unlaw
Slide 47: Key risks
Key risks For personal use only (h) Entitlement to refund in relation to the Victorian Gaming Licence and the Victorian Wagering Licence The Victorian Government considers that its decision to move to a new structure for the gambling industry represents an entirely new regulatory model for the opera
Slide 48: Key risks
Key risks For personal use only (k) Investigations From time to time Tabcorp is subject to various regulatory investigations such as tax compliance investigations carried out by the Australian Taxation Office (ATO). Past reviews have been completed by the ATO without material adjustment. The outcome
Slide 49: Key risks
Key risks For personal use only (o) Competition In a broad sense, gambling activities compete with other consumer products for consumers’ discretionary expenditure and in particular with other forms of leisure and entertainment including cinema, restaurants, sporting events, the internet and pay tel
Slide 50: Key risks
Key risks For personal use only (q) Taxes and levies applicable to the Queensland casinos The Queensland Government can review the fees and charges payable under Queensland gambling legislation which may result in new or increased taxes or levies payable by members of the Tabcorp Group in respect of
Slide 51: Key risks
Key risks For personal use only (v) NSW Totalizator Licences exclusivity The exclusivity period relating to Tab Ltd’s licences to operate totalizators in New South Wales expires in 2013. The New South Wales Government has not yet foreshadowed what will occur after 2013, but the potential licensing o
Slide 52: Key risks
Key risks For personal use only (z) Sky Channel arrangements Sky Channel presently holds rights to broadcast various race meetings and other sporting events held throughout Australia and internationally. Certain of the contracts pursuant to which these broadcast rights are held will expire. While Ta
Slide 53: Key risks
Key risks For personal use only RISKS ASSOCIATED WITH THE CURRENT GLOBAL ECONOMIC ENVIRONMENT General economic factors may affect an investment in Tabcorp or the performance of Tabcorp. Some of these include: movements in Australian and international stock markets, changes in interest rates, infla
Slide 54: Key risks
Key risks For personal use only RISKS SPECIFIC TO THE ENTITLEMENT OFFER (a) Underwriting risk The Underwriting Agreement relating to the Entitlement Offer sets out various events, the occurrence of which will entitle the Underwriter to terminate the Underwriting Agreement. Accordingly, there is a ri
Slide 55: Key risks
Key risks For personal use only The ability of the Underwriter to terminate the Underwriting Agreement in respect of some events will depend upon whether the event: has or is likely to have a material adverse effect on the success, marketing or settlement of the Entitlement Offer, the likely marke
Slide 56: Agenda
Agenda For personal use only 1 Overview 2 Demerger of Casinos 3 Profile of Casinos 4 Profile of Wagering, Gaming and Keno 5 Trading update 6 Entitlement offer 7 Summary Appendix A—Key risks Appendix B—International selling restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PE
Slide 57: International selling restrictions
International selling restrictions For personal use only This Presentation does not constitute an offer of securities in any jurisdiction in which it would be unlawful. New shares in Tabcorp Holdings Limited ("Tabcorp") that are the subject of the Entitlement Offer referred to in this Presentation (
Slide 58: International selling restrictions
International selling restrictions For personal use only Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than (a) in the case of any action for rescission, 180 days after the date of the transaction that gave rise to the cause of ac
Slide 59: International selling restrictions
International selling restrictions For personal use only Such offers, sales and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411
Slide 60: International selling restrictions
International selling restrictions For personal use only Any offer, sale or delivery of the New Shares or distribution of any offer document relating to the New Shares in Italy (excluding placements where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be: m
Slide 61: International selling restrictions
International selling restrictions For personal use only Singapore This Presentation and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this Presentation and any o
Slide 62: International selling restrictions
International selling restrictions For personal use only United Arab Emirates Neither this Presentation nor the New Shares have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates, nor has
Slide 63: For personal use only
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