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GVC says FOBT legislation enactment means contingent value right payment to shareholders to be cancelled

As part of its acquisition of Ladbrokes Coral, which completed in March this year, the firm agreed to pay a CVR linked to the FOBT legislation, which was worth 35p per Ladbrokes Coral share if the legislation was not enacted by 28 March 2019
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GVC said it expects to be in a position to announce the cancellation of the CVRs on or around 7 January 2019

GVC Holdings PLC (LON:GVC) has noted that the UK government’s move on Tuesday to enact the cut in maximum staking levels to £2 on fixed-odds betting terminals (FOBT) means it will cancel a contingent value right (CVR) payment to shareholders.

As part of its acquisition of Ladbrokes Coral, which completed in March this year, the FTSE 100-listed firm agreed to pay a CVR linked to the FOBT legislation, which was worth 35p per Ladbrokes Coral share if the legislation was not enacted by 28 March 2019.

READ: GVC shares slip as Ladbrokes comes under fire for problem gambler hush money

In a statement on Wednesday, GVC said the CVR Instrument requires a period of 10 business days to elapse post-enactment of the law before the formal valuation process can be completed by the representatives of GVC and the CVR holders.

The group, therefore, said it expects to be in a position to announce the cancellation of the CVRs on or around 7 January 2019.

In a note last week, analysts at Citigroup said they thought the enactment of the cut would be a "significant positive catalyst" for the GVC shares as it could eliminate the possibility the company would have to pay out around £676mln to CVR shareholders.

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