Cryptologic Online Casino Provider Relocates
Published: Monday, September 25, 2006 Online-Casinos.com
CRYPTOLOGIC ONLINE CASINO PROVIDER MOVING HEAD OFFICE TO IRELAND
But talented CEO Lewis Rose declines to move for family reasons and will leave the company
Shock news on Monday was the announcement that Internet gambling software provider CryptoLogic Inc. is moving its head office from Toronto to Ireland to gain "strategic flexibility."
CryptoLogic said Monday its software development personnel will remain in Canada and president and CEO Lewis Rose will step down, citing family reasons that render him unable to move to Ireland.
Subject to shareholder and regulatory approval, the new headquarters will be established in January 2007, and CryptoLogic will adopt London's Alternative Investment Market as its primary stock exchange while maintaining its listings on Toronto and Nasdaq markets.
"CryptoLogic's business is increasingly centred in Europe, and establishing our organisation in that market is the logical next step to support our international growth plans," Rose stated. "For CryptoLogic, this is about being closer to our customers and to the world's most thriving Internet gaming markets."
Monday's statement also pointed to Ireland's "gaming-friendly environment that enables the company to provide a wider range of marketing support and brand management services."
One-time costs of the reorganisation and head-office move are estimated at US$8 million to US$8.5 million, and the company said there will be added operation and staff costs of US$2.5 million to US$3 million annually.
However, "...the strategic benefits . . . of locating in a gaming-friendly environment are expected to yield a significant return on investment by positioning the company for the future."
CryptoLogic already has its electronic cash processing system in Ireland, which is "recognised as an attractive Internet gateway to Europe with state-of-the-art technology infrastructure and skilled personnel."
Rose is to remain as president and CEO into 2007 to assist with an orderly transition until a new Ireland-based CEO takes over.
With a primary listing on London's AIM, CryptoLogic "joins a broad peer group that is researched extensively by U.K.-based analysts," the company stated. "The U.K. has emerged as the global centre for Internet gaming and is leading the way in implementing a world-class regulated market for online gaming."
CryptoLogic proposes to exchange its existing common shares for shares in a new Irish-based company to be called CryptoLogic PLC.
The plan of arrangement is to be conducted on a tax-deferred basis for shareholders, who will vote at a special meeting planned for late November or early December.
CryptoLogic reported last month that its April-June earnings were up 73 percent from a year earlier to US$8.2 million as revenue increased 52 percent to US$30.4 million.
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