betinternet.com PLC 22 December 2005 betinternet.com plc Placing & Notice of EGM Placing with Burnbrae Limited ('Burnbrae') of 40,000,000 new ordinary shares at 4p per share and amendment of a loan including accrued interest to be convertible into 6,442,577 new ordinary shares at 4p per share Approval of waiver of obligations under Rule 9 of the City Code to be granted by the Panel on Takeovers and Mergers, increase in authorised share capital and Notice of Extraordinary General Meeting Introduction The board of betinternet.com plc ("betinternet" or "the Company") the global on-line gaming group announced on 30 November 2005 within its preliminary announcement for the year ended 29 May 2005, that further financing is being put in place in order to provide additional resources for the Company. The financing package comprises a placing of 40,000,000 new ordinary shares with Burnbrae, a major existing shareholder in betinternet, to raise £1.6 million, before the costs of the placing. Betinternet will use the proceeds of the placing to repay a working capital facility of £615,000 due to Burnbrae, and to provide a further £985,000 to fund the next stage of the Company's growth. At the same time, Burnbrae's existing loan (comprising £250,000 of principal and £7,703.08 of accrued interest) will be amended and restated to provide that Burnbrae will be entitled to convert that aggregate amount at the rate of one ordinary share for every 4p of such amount converted. At this rate, Burnbrae will be entitled to an additional 6,442,577 new ordinary shares. Background to the placing and convertible loan note On 29 December 2004, a placing and loan note conversion of £1 million with Burnbrae was approved by the independent shareholders of the Company. The proceeds of that transaction allowed betinternet to continue to fund its operations. Early in 2005, as set out in an announcement made on 18 March 2005, the investigation of the International Players' Association ("IPA") in the US and betinternet's consequent suspension of its business with IPA had a negative impact on the group's income for the year. In addition, on 13 April 2005, betinternet completed a £250,000 investment in Global Coresports Limited, a private company specialising in virtual reality gaming software. The consideration for this investment was provided by Burnbrae, by way of a loan facility to betinternet. In mid 2005, the board undertook a detailed review of the group's operations, funding situation and strategy. The conclusion of this review was a recommendation to increase the level of investment in the group's business in order to finance future developments and growth. A proposal was made to raise a further tranche of new money from Burnbrae in order to resolve the group's immediate funding requirements and enable the financial statements for the 52 weeks ended 29 May 2005 to be signed off on a going concern basis, and also to start the first phase of an increased level of investment in the sportsbook business. The board has taken a decision to take wagers from US customers in the sportsbook business. This strategic move will involve a relocation of the Company sportsbook servers to a different jurisdiction, Curacao, which encourages the acceptance of wagers from the US. The majority of the Company's sportsbook staff and European Wagering Services will continue to operate from the Isle of Man, which the Board continues to believe provides a supportive environment for the majority of the Company's activities. Significant progress has been made in developing an improved software platform with a more complete sports offering and a comprehensive suite of both casino and 'fun' games for the Company's customers. The directors are confident of seeing a significant boost to performance within the sportsbook during the current financial year. The board is of the opinion that the future success of the group's businesses will be dependent on an increased level of investment and it is anticipated that a further fund raising will be carried out in the first half of 2006. Details of the placing and convertible loan note The proposed placing and conversion of the loan note in full will increase the holding of Burnbrae and its connected parties to 50.28 per cent. of the issued ordinary share capital. Accordingly, before the proposed placing and restatement and amendment of the loan note can proceed, a waiver of Rule 9 of the City Code on Takeovers and Mergers ('the City Code') must be obtained from the Panel on Takeovers and Mergers ('the Panel') in respect of the increase in Burnbrae's holding in the Company from 34.72 per cent. That waiver has been agreed by the Panel subject to approval, at an extraordinary general meeting, of the shareholders who are deemed independent of the proposed arrangement. It is therefore proposed that an extraordinary general meeting of the Company be held at 11.00am on 11 January 2006 to consider a resolution seeking the approval of the waiver by the Panel of any requirement under the City Code for Burnbrae and its connected parties to make a general offer under Rule 9 of the City Code and a resolution to increase the authorised share capital of the Company by the creation of an additional 215,000 Ordinary Shares in order to create sufficient share capital for this placing and any future placings. The independent director considers, having been so advised by Williams de Broe, that the placing and the convertible loan note is in the best interests of shareholders as a whole and that the terms of the placing and the convertible loan note are fair and reasonable insofar as shareholders are concerned. The independent director also considers, having been so advised by Williams de Broe, that it is in the best interests of shareholders as a whole that a waiver of the requirements of Rule 9 of the City Code be granted to Burnbrae such that Burnbrae would not be required to make a mandatory general offer to shareholders. In advising the independent director, Williams de Broe has taken into account the commercial assessment of the independent director. The directors consider, having been so advised by Williams de Broe, that the proposal to increase the Company's authorised share capital by the creation of an additional 215,000,000 ordinary shares in order to create sufficient share capital for the placing and any future placings is in the best interests of the Company. In advising the directors, Williams de Broe has taken into account the commercial assessment of the directors. A circular detailing the terms of the proposed placing and convertible loan note is being sent to shareholders today. For further information: betinternet.com plc Tel: 01624 698141 Paul Doona, Managing Director Williams de Broe plc Tel: 0113 243 1619 Joanne Lake Britton Financial PR Tel: 020 7251 2544 Tim Blackstone This information is provided by RNS The company news service from the London Stock Exchange