The U.K government has decided that they wish to sell the state-owned bookmaker to the racing industry and have given a deadline of January 26th to come up with a set price of £400 million.
The consortium, which is made up of the Race Course Association, the Racehorse Owners Association and the Racecourse Holdings Trust, is seen as the ideal buyer by the government as they believe a sale to the industry would benefit racing on the whole.
However, many racing insiders fear the large amount of debt and borrowing that would be required by the consortium if they were to come up with the full valuation.
“One option was to get financial support from international bodies and reduce the amount of borrowing,” said an industry source. “The equivalent Tote operators in South Africa and Australia could have taken an active interest in making the bid a success, as well as lending their expertise.
“But the government made it clear they did not want a party from abroad investing in a British-backed bid. They won't accept a penny less than £400m, but racing mustn't be in debt over this,” he added.
Last year, a bid from the racing industry of £320 million was blocked by the European Commission, stating that the price was so low that it constituted state aid. This alerted other interested parties, such as Gala Coral and Interactive Gaming Holdings, who were both willing to offer the £400 million valuation set by PricewaterhouseCoopers after this initial bid from the consortium was rejected.
However, the government appeared to discount their interest, determined to uphold their pledge to sell Tote to the racing industry. They have also remained quiet over the way a bid from the consortium would be funded, simply stating the benefits of a sale to the industry.
“The new proposal meets the government's commitment to ensure racing benefits from the sale,” a government statement declared.
John Maxse, director of communications for RHT, reiterated this desire and his consortiums resolve to come up with the cash.
"Racing gets £11m a year from the Tote and the consortium is keen to protect that income stream," he said.
"It will be a big hole in finances if that stops, so we will be working hard to get a result in what is a fairly tight time constraint."
Editor, Jackpot.co.uk - 2006-12-18 11:01:34