Online casino’s £100m gamble - Monday 27th of July 2009

THE internet gambling group Party Gaming has clinched a £100m deal to buy Cashcade, owner of foxybingo.com, the bingo website.

The sale, which is likely to be announced in the next two days, will provide a much needed cash windfall for Independent News & Media (IN&M), the indebted newspaper publisher that owns a near-20% stake in Cashcade.

Party Gaming is thought to be paying an initial £75m to take control of its smaller rival. It will then have to pay up to £25m, depending on the performance of the business this year and in 2010.

After settling a legal dispute with the US Department of Justice in April, Party Gaming said it was hoping to make a number of acquisitions in the online gaming sector.

This deal will mark its first since the settlement. It is also known to have looked at a deal to buy GigaMedia, owner of the Everest Poker online site.

As well as Foxybingo, which has used stars including glamour model Katie Price in its adverts, Cashcade operates getminted.com, an online casino.

The group, which is majority owned by its directors and staff, has enjoyed strong growth since its launch in 2000. Last year, the company generated earnings before interest, tax, depreciation and amortisation (ebitda) of just over £12m on revenues of about £45m and is said to be trading well this year.

Party Gaming’s rival, 888 Holdings, had been seen as favourite to buy the business as Foxybingo uses its software.

IN&M has been trying to offload assets to raise money to repay a €200m (£173m) bond. A standstill agreement between the media company and its lenders is expected to be renewed until late August or early September to allow it more time to to negotiate a restructuring.

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