UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 18, 2000
0-13063
(Commission File Number)
------------------------------
AUTOTOTE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 81-0422894
(State of Incorporation) (IRS Employer
Identification Number)
750 Lexington Avenue, New York, New York 10022
(Address of registrant's principal executive office)
(212) 754-2233
(Registrant's telephone number)
------------------------------
<PAGE>
ITEM 5. Other Events
On May 19, 2000, Autotote Corporation, a Delaware corporation
("Parent"), ATX Enterprises Inc., a Delaware corporation and a newly formed,
wholly owned subsidiary of Parent ("Merger Sub"), and Scientific Games Holdings
Corp., a Delaware corporation ("Company"), announced that they have entered into
an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which,
among other things, Parent will acquire the Company through the merger of Merger
Sub with and into the Company. Under the terms of the Merger Agreement, each
outstanding share of Company common stock, par value $.001 per share, is to be
converted into the right to receive $26.00 per share in cash. Consummation of
the merger is subject to satisfaction or waiver by the parties of certain
closing conditions, including the receipt of regulatory approvals, approval by
the stockholders of the Company and other customary closing conditions. It is
expected that, subject to such conditions, the merger will be completed during
the summer.
Parent has received a commitment letter from affiliates of
Donaldson Lufkin Jenrette and Lehman Brothers to provide debt financing for the
merger, certain related costs and other purposes. Such commitment letter
contemplates financing under senior term loan and revolving credit facilities,
and issuance of senior subordinated notes, totaling up to $440 million or more.
Depending on the financing alternatives chosen by the Company, such financing
may include the issuance of warrants to purchase Company common stock, in
amounts and on terms common in transactions of this nature, dependent on market
conditions and the financing alternative being pursued. Such financing is
subject to various terms and conditions and will be embodied in definitive
documentation to be negotiated and completed by the parties.
As Parent also announced, it has received commitment letters
from Olivetti and other investors to purchase a contemplated new series of
convertible preferred stock of Parent for an aggregate of $110 million. Those
commitment letters contemplate the sale of at least $75 million of such new
preferred stock at the time of the merger, and $35 million thereafter on or
before January 31, 2001. Such new preferred stock, of which Olivetti or an
affiliated entity would purchase a total of $100 million, would be convertible
into Parent common stock at a conversion price of $6.00 per share (subject to
potential reset to no less than $5.00 per share based on possible future market
price minimums), would mature and become mandatorily convertible into common
stock after five years and would pay dividends at the rate of 6% per annum
(payable in kind in additional shares or, at Parent's option beginning with the
ninth quarterly dividend date, in cash). The preferred stock commitment letters
also contemplate that the definitive documentation will provide, among other
things, that holders of the new preferred stock would have certain rights with
respect to the composition of, and representation on, the Board of Directors and
other matters, including rights to participate in certain future financings, if
any, and would be subject for a period of time to maximum limitations on their
purchase of additional stock, and have certain other rights and obligations. The
purchase and sale of such new preferred stock are subject to various stated
conditions, and will be subject to definitive documentation to be negotiated and
completed by the parties.
ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(c) Exhibits.
Exhibit Number Title
- -------------- -----
99 Press Release dated May 19, 2000
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
AUTOTOTE CORPORATION
By:
---------------------------------
Martin E. Schloss
Vice President and General Counsel
Date: May 19, 2000
-3-
<PAGE>
Exhibit Index
Exhibit Number Title
- -------------- -----
99 Press Release dated May 19, 2000.
Exhibit 99
Contacts: David Pye, Vice President Cliff O. Bickell,
Autotote Corporation Vice President & CFO
212-754-2233 Scientific Games
WWW.AUTOTOTE.COM International
770-664-3723
Investor Relations: Lisa D. Lettieri, Vice President WWW.SCIGAMES.COM
Lippert/Heilshorn Assocs., Inc.
(212) 838-3777 or [email protected]
WWW.LHAI.COM
Media Relations: Pamela Rigler, Account Supervisor
Lippert/Heilshorn Assocs., Inc.
(212) 838-3777 or [email protected]
AUTOTOTE TO ACQUIRE SCIENTIFIC GAMES FOR $26 PER SHARE
Olivetti to Invest $100 Million in Autotote
NEW YORK, NY, ALPHARETTA, GA, MAY 19, 2000 - AUTOTOTE CORPORATION [AMEX:TTE] and
SCIENTIFIC GAMES HOLDINGS CORP. [NYSE:SG] announced today that they have signed
a definitive merger agreement. Autotote will pay $26 per share in cash, or a
total of approximately $310 million, to the shareholders of Scientific Games.
Scientific Games is a world leading supplier of lottery products, integrated
lottery systems and support services, and pre-paid telephone cards with
approximately 160 customers in 60 countries. The merger is subject to approval
by Scientific Games' shareholders and certain government entities and agencies.
Certain affiliates of Donaldson Lufkin Jenrette and Lehman Brothers have issued
a commitment letter to provide debt financing for the acquisition and related
costs.
In a separate transaction, Olivetti has issued a commitment letter for $100
million of preferred stock, convertible into Autotote shares, which, upon
conversion, would result in an approximately 30% participation in the combined
entity. Other investors have issued similar commitment letters for an additional
$10 million of convertible preferred stock. Ramius Securities, LLC acted as
placement agent for the preferred stock issue.
The acquisition merges the largest company in the pari-mutuel wagering business
with the only full service instant ticket and lottery systems company in the
world. The combined companies have reported revenue of $450 million and adjusted
EBITDA (earnings before interest, taxes, depreciation, amortization and one time
charges) of about $95 million for the last twelve months ending 1/31/00 (TTE)
and 3/31/00 (SG). Autotote intends to combine its rapidly growing lottery
on-line systems and terminal
<PAGE>
sales businesses with Scientific Games, already the second largest provider of
lottery services worldwide. Both companies serve huge markets - $116 billion in
handle for the worldwide pari-mutuel industry and $129 billion worldwide for the
lottery industry - and will enjoy substantial leverage from their complementary
products and sales channels and from the consolidation of corporate functions.
Both companies have a long-standing reputation for product innovation and
quality services, and offer complementary products and technologies. Autotote is
the leading developer and provider of products and services to the global
pari-mutuel industry. In North America alone, 65% of the estimated $20 billion
of pari-mutuel wagering is processed by Autotote. Autotote is also a licensed
pari-mutuel off-track betting operator in the US and Europe. As previously
announced, Autotote has several domestic and international Internet-based
wagering ventures underway. Scientific Games is the world leader in the
manufacture and marketing of instant lottery tickets with an approximate 68%
market share in the US. Scientific Games also provides extensive marketing and
distribution services to lotteries, and has 41 installed on-line or instant
ticket validation systems worldwide. In addition, Scientific Games is a leading
international supplier of prepaid phone cards.
Commenting on the acquisition, Lorne Weil, Chairman and CEO of Autotote, said,
"The Scientific Games merger combined with the Olivetti investment gives us an
entirely new strategic posture. With the former, we establish leading positions
in two of the largest segments of the gaming industry while more than doubling
revenue and cash flow. The association with the Olivetti/Telecom Italia Group,
which owns 45% of Lottomatica S.p.A., the leading operator in the lottery
business in Italy, will provide us with an important strategic partner worldwide
and will add significant strength to our balance sheet."
Lorne Weil added, "Scientific Games is widely regarded as the premier company in
the worldwide instant lottery business. This acquisition creates a new company
with very strong leverage to grow the lottery and pari-mutuel businesses
throughout the world. Autotote has won a high proportion of recent on-line
lottery contracts in the US using our highly successful Extrema(TM) terminals,
most of which were previously sold to international customers. By combining the
depth of experience of both companies, we can continue to innovate and expand
our products and services into new territories, leveraging the extensive lottery
customer relationships established by Scientific Games and adding our advanced
technology to the mix. We also believe our recently announced interactive
wagering services will be an attractive offering to lotteries worldwide. It is
our objective to become the leading full-line provider of global lottery
services, as we are in the pari-mutuel business."
William Malloy, Chairman, President and CEO of Scientific Games, said, "In a
world where `bigger is better' is no longer just a saying, the merger with
Autotote gives the newly combined company the breadth and scale to develop and
deliver the products that will drive the future success of the lottery industry.
Furthermore, as the pari-mutuel industry has always applied superior technology
to meet its needs, this combination will
<PAGE>
accelerate the pace of that technology's adaptation and introduction to the
lottery industry. Our customers have reason to be excited about the new choices
that this merger will bring to them." Mr. Malloy will remain as a consultant
reporting to Mr. Weil for a period of at least two years and will be nominated
for election to Autotote's board of directors.
Autotote and Scientific Games will be hosting a conference call for investors
and the media today at 11:00 A.M. ET. To access the call within the U.S. dial
888-243-1119 and for international callers dial 212-993-0201.
AUTOTOTE CORPORATION provides computerized wagering equipment, computer
software, management and satellite broadcast services for on-track, off-track
and inter-track wagering, lotteries and legalized sports betting facilities.
Autotote's systems are in use in the United States, Europe, Canada, Mexico,
Latin America, New Zealand and the Far East.
SCIENTIFIC GAMES INTERNATIONAL is a world leader in providing a full range of
lottery products, integrated systems and support services to lotteries in more
than 60 nations and 26 US states plus the District of Columbia, as well as
various commercial businesses around the globe. Currently there are 38 US
lotteries, including the District of Columbia. The company has production or
operating facilities in Georgia, California and the United Kingdom, France,
Germany, and Austria.
OLIVETTI Group, among many businesses, is, through Telecom Italia, one of the
world's largest providers of telecommunications services with significant
presences in Europe and South America. Olivetti and Telecom Italia, in addition
to their ownership in Lottomatica, provide wagering products and services to
sports betting outlets and pari-mutuel facilities in Italy.
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.
####
