For some sectors, the Covid pandemic has been, at best, a mixed blessing. For the betting industry, it has been a disaster.
The one positive for B90 Holdings (LSE:B90) is it brought forward a much needed restructuring. B90 is now focused on its online Sportsbook and Casino products, as well as marketing activities for other online gaming companies.
Pandemic forced suspension of B90 Holdings shares
B90 had already been struggling when the pandemic hit. Revenues had collapsed from £8.6m in 2018 to £860,000 in 2019, which was reflected in the flatlining share price throughout 2019. With the arrival of the pandemic in 2020, and the cancellation of the entire sporting calendar globally, trading in its shares was suspended on 17 March, initially for six months but then for 12 months.
Trading resumed on 17 March this year, when b90 shares jumped 182%, from 11.65p to 32.81p, before falling back to 14.75p today (23 March). The directors confirmed they had no price-sensitive information that might explain the increase.
The return to trading on AIM also required B90 to issue a corporate update for 2019 and the interim results for the period ended 30 June 2020. The interim results show revenues continuing to fall to £277,000 (H1 2019: £449,000), while net losses after tax amounted to £860,000 (H1 2019: £860,000). With revenues falling, B90 in September 2019 started raising working capital through a series of convertible loans.
B90 took the opportunity to also announce they had raised more funds through another, much more ambitious convertible loan of £1,585,000, to launch new products, expand their geographical presence and enter into new marketing agreements for the existing markets. This leaves B90 with £3.8m in outstanding loans, equivalent to 75.3 million new shares, or 73% of the company’s current issued share capital. The convertible loans will automatically convert into ordinary shares at 5p per share if the closing mid-market price is 10p or more for 25 consecutive business days.
Enter the Norwegians
A significant development for the company is the arrival on the scene of Norwegian entrepreneur Ronny Breivik, a veteran of the online gaming industry, with an investment of £431,000, and most likely with a close involvement in shaping the company’s strategy. An agreement is also being finalised with Oddsen.nu, a leading Norwegian online gaming affiliate, to source revenue streams in that territory.
Mark Rosman, a non-executive director of the company, has also significantly increased his interest in the company, having invested an aggregate £592,000 in shares and convertible loans. The loans have a three-year maturity and a coupon of 5%.
Last year the company completed the takeover of Quasar Holdings, which owned Bet90 Sports. To reflect this change, the company changed its name from Veltyco Group to B90 Holdings, while also undergoing an internal restructuring to focus on online sportsbook operations as their main business.
B90 Holdings’ restructuring is very much what we would expect of a betting company that had just lost much of its revenue stream. The company is still in recovery phase, relying on its creditors to access further tranches of working capital. Of course, as they say, past performance should never be used as a guide to future potential. Unfortunately, with B90 the future potential is difficult to discern at the moment, in particular what the loan owners will do. Any adventurous investors wanting a gamble might be persuaded that Rosman, Breivik and the other key investors know what they are doing.