Substantial Shareholders’ Divestiture Arrangements Pursuant To New Jersey Licence Application


31 October 2013 digital entertainment plc
('' or the 'Company')

Substantial Shareholders’ Divestiture Arrangements Pursuant To New Jersey Licence Application

On 29 July 2013, applied to the New Jersey Division of Gaming Enforcement (‘DGE’) for a Casino Service Industry Enterprise Licence (the ‘Licence’).  As part of the application process, certain substantial shareholders of are required to submit individual Licence applications to the DGE or otherwise dispose of their shareholdings.  As a result, certain substantial shareholders of have elected, subject to the conditions summarised below, to place their shares into divestiture trusts, through which their shares will be divested over a period of up to 36 months in one or more transactions at times to be determined.

Divestiture Arrangements
Emerald Bay Limited (‘Emerald’), wholly-owned by Ruth Parasol DeLeon, and Stinson Ridge Limited (‘Stinson’), wholly-owned by James Russell DeLeon (together, the ‘Substantial Shareholders’) have elected, pursuant to a divorce settlement and for reasons of privacy, to enter into a divestiture agreement with and the DGE (the ‘Divestiture Agreement’), rather than submit individual Licence applications.  Emerald currently owns 58,498,667 (7.16%) shares and Stinson currently owns 58,498,666 (7.16%) shares.  Under the terms of the Divestiture Agreement, the Substantial Shareholders have respectively agreed, subject to the conditions described below, to transfer their entire holding of shares into separate trusts, and such shares will thereafter be divested by the trustees of their respective trusts, working together, in one or more transactions.

Under the New Jersey online casino licensing regulations, will be required to obtain a transactional waiver from the DGE in order to participate in online gaming from the date the New Jersey online gaming market opens.  Under the terms of the Divestiture Agreement, as soon as is granted a transactional waiver by the DGE in respect of its Licence application, the Substantial Shareholders have agreed to place the entirety of their then current holdings of shares into trust (the Emerald Trust in respect of Emerald and the Stinson Trust in respect of Stinson) (together the ‘Trusts’).  The main terms of the Divestiture Agreement take effect on the date that the New Jersey online gaming market opens. The divestiture arrangements are subject to receiving and maintaining the Licence.

Divestiture Period and Key Terms
Under the terms of the Divestiture Agreement, the Substantial Shareholders will be entitled to direct the independent trustees of their Trusts (the 'Trustees') to divest their respective shares, on or off-market, to one or more transferees, in one transaction or a series of transactions, over the 24 month period commencing on the date that the first online wagers are allowed to be taken in New Jersey under the new regulations.  

In the event the Trusts have not disposed of all the shares by the end of the above 24 month period, the Company will take control of the divestiture process and dispose of any remaining shares in accordance with the disposal provisions in the articles of association over a 12 month period. 

The Trustees of the Emerald Trust and the Stinson Trust have agreed to work together with a view to divesting the shares held by each Trust in an orderly manner, with the Trustee of the Emerald Trust taking the lead in coordinating the timing and process of the divestiture.

The Substantial Shareholders will continue to be beneficially interested in the shares for as long as the Trusts continue to own the underlying shares.  The Trusts are entitled to receive any dividends or other distributions declared in respect of the shares held in trust. 

The terms of the Divestiture Agreement provide that the Trustees will act independently of the Substantial Shareholders, save that the Substantial Shareholders may direct the Trustees as to the manner and timing of any disposal of the shares held in trust during the initial 24 month divestiture period.

In addition, the Trustees will be able to exercise the voting rights attaching to the shares held in the Trusts at their sole discretion (subject to any proxies or powers of attorney put into place before the divestiture arrangements become unconditional, provided that any such proxy or attorney agrees to submit to review by the DGE). The Trustees of each Trust are required to co-ordinate the manner in which they exercise their voting rights over shares, with the Trustee of the Stinson Trust required to vote in the same manner as the Trustee of the Emerald Trust.

The Trustees will enter into deeds of adherence agreeing to comply with the terms of the 2010 regulatory process agreement and the 2010 relationship agreement with the Company which are currently in place with the Substantial Shareholders (the ‘Relationship Agreement’) and which were summarised in the listing particulars of issued in December 2010. 

Board Nomination Right
The Relationship Agreement provides that whilst the Substantial Shareholders together have a direct or indirect interest in 5% or more of’s issued share capital they collectively have the right to nominate one individual to the Board.  Currently this nomination right is not being exercised.  Under the terms of the Divestiture Agreement, the Trusts have agreed not to exercise this Board nomination right for so long as the divestiture arrangements remain in force and consequently the Trusts will not be subject to’s share dealing code.  Either Trust, however, may transfer this single right to nominate a Board member to a transferee that acquires at least 6% of the Company’s issued share capital pursuant to the divestiture arrangements described above and that meets the criteria contained in the Relationship Agreement.  

Contacts: digital entertainment plc 

Peter Reynolds             +44 (0) 20 7337 0100

John Shepherd              +44 (0) 20 7337 0100