Progressive Gaming Announces NASDAQ Waiver of Stockholder Approval Requirement Related to Financing Transactions
LAS VEGAS--(Business Wire)--
Progressive Gaming International Corporation, (NASDAQ: PGIC) (the
"Company"), previously announced in a press release on August 4, 2008
that it entered into two financing transactions (the "Financing
Transactions"), which include (i) a new senior secured credit facility
with Private Equity Management Group Financial Corporation ("PEM"),
for up to $27.5 million, which consists of a revolving loan of up to
$12.5 million and a term loan of $15.0 million and (ii) a $15.0
million senior secured convertible note offering with International
Game Technology ("IGT"). The Company expects to initially raise
approximately $33.0 million from the Financing Transactions, which are
subject to closing conditions and are expected to close by August 15,
2008. The Company intends to use the net proceeds from the Financing
Transactions to retire its remaining outstanding $30.0 million of
11.875% senior secured notes and accrued interest and transaction
costs. The purpose of this press release is to describe a waiver from
the shareholder approval requirements of The NASDAQ Stock Market, LLC
that is being relied upon by the Company in connection with these
transactions.
Transaction with PEM
In connection with the senior secured credit facility, PEM will
receive one million shares of the Company's common stock (the "Initial
Shares"), at closing for no cash consideration. If on November 15,
2008, the dollar volume weighted average price for the Company's
common stock, as traded on the NASDAQ Global Market, for the 20
trading days (the "20-day VWAP") prior to that date does not equal or
exceed $1.50, then PEM would receive additional shares of the
Company's common stock (the "Additional Shares"), such that the 20-day
VWAP on November 15, 2008 multiplied by the number of Initial Shares
plus the Additional Shares equals a total value of $1.5 million,
although in no event may the number of Additional Shares exceed
900,000 shares of the Company's common stock. PEM will also receive
warrants to purchase one million shares of the Company's common stock
with an exercise price equal to $1.05 per share. These warrants will
be subject to standard anti-dilution adjustments in the event of stock
splits, stock dividends, recapitalization and similar circumstances
and will have a five year term.
Transaction with IGT
In connection with the convertible note offering, IGT will receive
a $15.0 million senior secured convertible note that bears interest at
7.0% per annum and has a six year term. The interest rate increases to
12.0% in the event the Company issues any equity securities or
equity-linked securities in the future at a price below the conversion
price of the note, subject to limited exceptions. IGT may convert all
or a portion of the note into shares of the Company's common stock at
any time after closing. The conversion price for the note will be
$0.89 per share, which was the dollar volume weighted average price
for the Company's common stock, as traded on the NASDAQ Global Market,
for the 20 trading days prior to the signing of the note and warrant
purchase agreement, subject to anti-dilution adjustments in the event
of stock splits, stock, cash or property dividends, recapitalizations,
reorganizations, mergers and similar circumstances.
IGT will also receive warrants to purchase (i) 550,000 shares of
the Company's common stock with an exercise price equal to $1.05 per
share, and (ii) 891,892 shares of the Company's common stock with an
exercise price equal to $0.89 per share ((i) and (ii) together being
the "Initial IGT Warrants"). If on November 15, 2008, the 20-day VWAP
(determined as of such date) does not equal or exceed $1.50, then IGT
would receive additional warrants to acquire shares of the Company's
common stock (the "Additional Warrants"), such that the Initial IGT
Warrants plus the Additional Warrants equals a total value of $825,000
(calculated in accordance with a Black-Scholes valuation model),
although in no event may the Additional Warrants be issuable for more
than 1.8 million shares of the Company's common stock. Any Additional
Warrants would be issued with an exercise price equal to the 20-day
VWAP calculated as of November 15, 2008. These warrants would be
subject to anti-dilution adjustments in the event of stock splits,
stock, cash or property dividends, recapitalizations, reorganizations,
mergers and similar circumstances and will have a five year term.
Potential Effect of Stock Issuances Related to the Financing
Transactions
The $15.0 million in principal amount of the convertible
promissory note could be initially convertible into approximately
16,853,932 shares of the Company's common stock. The Company will also
issue 1,000,000 new shares, and if certain conditions are not met
could issue up to 900,000 new shares of common stock to PEM in the
future (which includes the Initial Shares and any Additional Shares)
and could issue warrants to PEM and IGT (which includes the one
million share PEM warrant, the Initial IGT Warrants and any Additional
Warrants) to purchase up to approximately an additional 4,241,892
shares of common stock. As of the date of this release, the Company
has approximately 62,111,310 shares of common stock outstanding. If
the maximum amount of the convertible promissory note is converted,
the maximum amount of the common stock issuable pursuant to the
Financing Transactions is issued and the maximum amount of all the
warrants to be issued pursuant to the Financing Transactions is
exercised, the Company will have up to approximately 85,107,134 shares
outstanding, representing a potential increase of approximately 37% in
the number of shares outstanding prior to the Financing Transactions.
NASDAQ Exception
Transactions that involve the issuance or potential issuance of
more than 20% of the Company's outstanding common stock at a price
that is less than the greater of (i) the consolidated closing bid
price for the Company's common stock on the trading day prior to
execution of definitive agreements and (ii) the book value of the
Company's common stock, in either case ordinarily would require the
Company to obtain stockholder approval under the NASDAQ Stock Market's
Marketplace Rules. However, in connection with the Financing
Transactions, the NASDAQ Stock Market granted the Company's request
for an exception to its stockholder approval requirements. The Company
has sent a letter to its stockholders describing the transaction and
the circumstances surrounding the exception. A copy of the letter will
be filed with a Form 8-K with the U.S. Securities and Exchange
Commission. The Company's SEC filings are available to the public at
no cost from the SEC's Web site at http://www.sec.gov.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities. The securities being
offered have not been registered under the Securities Act, or
applicable state securities laws. Unless so registered, the common
stock, warrants and any shares of common stock that may be issued upon
exercise of the warrants or conversion of the notes may not be offered
or sold in the United States except pursuant to an exemption from the
registration requirements of the Securities Act and applicable state
securities laws.
About Progressive Gaming
Progressive Gaming is a trusted leader of enterprise gaming
solutions and supplier of integrated casino and jackpot management
system solutions for the gaming industry worldwide. This technology is
widely used to enhance casino operations and drive greater revenues
for existing products. Progressive Gaming is unique in the industry in
offering casino management and progressive systems in a modular yet
integrated solution. Products include multiple forms of regulated
wagering solutions in wired, wireless and mobile formats. There are
Progressive Gaming products in over 1,000 casinos throughout the
world. For further information, visit www.progressivegaming.net.
(C)2008 Progressive Gaming International Corporation(R). All
rights reserved.
This release contains forward-looking statements, including
references to the Company's expected financing activities and the
proposed financing transactions with PEM and IGT as well as the
closing, timing, anticipated use of proceeds and dilutive effect of
the financing transactions, all of which are prospective. Such
statements are subject to certain risks and uncertainties, and actual
circumstances, events or results may differ materially from those
projected in such forward-looking statements. Factors that could cause
or contribute to differences include, but are not limited to, risks
related to the failure to satisfy any of the closing conditions
related to the financing transactions, the failure to obtain NASDAQ's
waiver of the shareholder approval requirements implicated by these
transactions, IGT's termination of the Note and Warrant Purchase
Agreement prior to closing, market conditions and other factors that
could affect the Company's ability to complete the financing
transactions and whether PEM and IGT will elect to convert the
convertible promissory note and exercise their warrants. For a
discussion of these and other factors which may cause actual events or
results to differ from those projected, please refer to the Company's
most recent annual report on Form 10-K and quarterly reports on Form
10-Q, as well as other subsequent filings with the Securities and
Exchange Commission. The Company cautions readers not to place undue
reliance on any forward-looking statements. The Company does not
undertake, and specifically disclaims any obligation, to update or
revise any forward-looking statements to reflect new circumstances or
anticipated or unanticipated events or circumstances.
Progressive Gaming International Corporation
Heather A. Rollo, 702-263-2583
Chief Financial Officer
or
Jaffoni & Collins Incorporated
Richard Land/Dave Jacoby, 212-835-8500
pgic@jcir.com
Copyright Business Wire 2008
