Party Gaming rumor weakens
 June 5, 2008, 10:03 am (5 months ago)Richard Carter, Numis Securities expert, contradicted the rumor of Party Gaming settlement with the US Department of Justice that raised Party shares by 20 to 30 last Friday by describing the whole thing as “premature”. Carter asserted that despite “extensive channel checks, we believe talk of an imminent settlement is premature and in our view is still several months off”. According to him, “US$24 million and US$150 million based on profits made in the US” is the estimated amount of financial penalty faced by Party, and that a deal with the US authorities remained on course. This figure is much shorter than the "billion dollar penalty settlement".
Even if US$150 million fine was imposed on the online gambling group, the Party Gaming investment thesis is still powerful. Though there is no comment on the rumors yet.
“We believe that post a Department of Justice settlement, the group valuation would materially rise as a key unknown is removed. In addition, we believe the potential shareholder base for Party would dramatically widen and the group would then tap debt markets and borrow up to 2.5x EBITDA, or $409 million, for acquisitions".
Carter predicted a 2008 pre-tax profit figure of US$143.2 million and US$180.8 million for 2009.
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