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News Breaks | | | | February 27, 2013 | | 07:57 EDT |  | EGT | Entertainment Gaming to sell non-gaming manufacturing operations in Australia
Entertainment Gaming Asia announced it plans to sell its non-gaming manufacturing operations of its wholly-owned Dolphin Products subsidiary in Melbourne, Australia in a management-led buyout and relocate its manufacturing operations for its gaming chips and plaques to a high-tech and high-security facility in Hong Kong. These actions enable the company to exit a non-core, legacy business and are expected to enhance the profitability of its higher potential gaming chips and plaques division and better penetrate and service the growing Asian gaming markets. After reviewing its other alternatives, such as liquidation of the non-gaming business or the possibility of selling it to an unrelated third party, the Company has elected to sell the non-gaming manufacturing operations in a management-led buyout to Dolphin Australia’s existing general manager of operations. Total consideration for the sale of these assets is $361,000 based on conversion rates as of February 22 to be paid upon completion of the transaction on or before March 28. Prior to completion, all business and assets that relate to the gaming chip and plaque production operations, including but not limited to, the equipment and tooling, finished goods, work-in-progress, raw materials, business orders, technology know-how, and related intellectual property rights, will be transferred to the new Dolphin operations in Hong Kong. For a period of up to five years after the completion of the sale, the non-gaming operations under the new ownership will not be permitted to engage in the gaming business in Australia and certain countries in Asia. The company will terminate the employment of all existing Dolphin Australia employees, including the existing general manager of operations, and pay the severance costs to them as part of the transaction although some of them may be re-employed in the non-gaming operations under the new ownership. The company expects to record one-time cash costs associated with the sale and relocation, which include severance and new facility set-up, of approximately $1.7M, net of the consideration for the sale of the non-gaming manufacturing assets. These costs will be incurred in 2013 and will be funded from the Company’s available working capital. | |
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