32Red sees red
32Red plc. saw shares fall by 42.2 percent after it warned today that operating results for this year will fall considerably below market forecasts. The situation has become so bleak for 32Red that they have announced that they are in danger of breaching the terms of its loan arrangements with the Royal Bank of Scotland (RBS).
The current crisis has been blamed on poor trading by the ailing Bet Direct, the sports betting business 32Red bought in June for £12 million from Littlewoods, who also found it hard to market the product. Bet Direct were one of the only independent telephone and internet betting firms in the U.K. but were never considered as major player by industry observers.
Ed Ware, CEO of 32Red said at the time "The acquisition of Bet Direct fits the strategic objectives of 32Red extremely well providing a much enlarged customer database and the ability to offer the full portfolio of betting and gaming products through a variety of distribution channels. Our combined UK focus has enabled both management teams to identify areas of marketing cross-over, area for review and customer recruitment and retention opportunities,"
That positivity was short-lived and the company had disastrous horseracing results in October and November. The company is currently in talks with employees about the possibility of moving Bet Direct’s operations to Gibraltar with the hope of reducing costs and improving profitability.
32Red attempted to bring some calm to the situation by underlining its ‘constructive’ relationship with RBS bankers, although they currently owe £6 million but only have a cash balance of £5.3 million.
They are also confident in 2007 being a much better year for Bet Direct, believing it will move into a ‘much improved’ position, with the 32Red online casino recovering well after a poor performance in the middle of the year.
32Red will release another performance update in late January 2007.
Editor, Jackpot.co.uk - 2006-12-13 12:27:24