Regulators scrutinize Alexander Investment Co. 888 crash
888 Holdings Plc (OTC: EIHDF) warned on Friday that its UK license could be in jeopardy as UK regulators consider an investment in the company through a company controlled by Kenny Alexander, sending shares higher this week. Five plunges.
Last month, FS Gaming Investments, the investment group led by Alexander, acquired 888 6.57% stake. The move by the group, led by the former GVC chairman, raised hopes among 888 investors that Alexander's involvement would trigger a turnaround. Despite some controversy, Alexander is widely regarded as one of the godfathers of the modern sports betting industry. Today, GVC Entain Plc (OTC:GMVHY) – is one of the largest sports betting operators in the world.
However, this is one of the controversies that could put 888 at risk of financial penalties and possible revocation of its UK license. The British Gambling Commission (GBGC) is investigating Alexander's involvement in the 888 incident over alleged questionable ways in which GVC divested a Turkish company in the fashion industry under Alexander's leadership.
Shortly before FS announced its investment in 888, Entain noted that the company could be in trouble following a bribery investigation by HM Revenue and Customs (HMRC) into its legacy Turkish operations.
888 We hope to allay regulators’ concerns
About a week after announcing its investment in 888, FS Gaming submitted a plan to the gaming company's board of directors, under which Alexander would serve as CEO. FS also told the board it wanted to appoint Stephen Morana as financial director and replace 888 CEO Jonathan Mendelsohn with former GVC chairman Lee Feldman.
888 admitted there had been discussions with the FS over the proposal, but those discussions had been interrupted as the gaming company sought to work with the GBGC, potentially avoiding fines and retaining its UK licence.
"The GBGC is concerned about HMRC's ongoing investigation into the activities of GVC, relating to the period during which individuals recommended to the board by FS Gaming held senior management positions at GVC, and the GBGC is in close dialogue with HMRC about its ongoing investigation," the 888 statement said wrote. “The GBGC requires 888 to be regularly updated on any new developments regarding the situation at FS Gaming and its proposals so that it can fully discharge its duties as GB regulator.”
888 has strong incentives to partner with GBGC because, as Investec analyst Roberta Ciaccia told the Evening Standard, GBGC accounts for 60% of the operator's expected 2022 earnings before interest, tax, depreciation, and amortization (EBITDA). Great Britain and Ireland are omitted.
Next steps for 888
888 has ended negotiations with FS, and Alexander's group is expected to announce soon that it will no longer seek a seat on the gaming company's board of directors. That might reassure regulators but also unsettle investors.
In the short term, William Hill's parent company will be back to the task of finding a new CEO and strengthening market share.
"While this appointment temporarily pauses the thorough search process to appoint a new CEO, the board is finalizing the appointment and expects to make an announcement in the near future," Mendelsohn concluded in the statement. "The board remains determined "We are fully committed to delivering on the Group's clear strategy to unlock shareholder value and I am pleased to confirm that the Company remains on track to meet market expectations for Adjusted EBITDA in 2023."
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Source: www.casino.org
