INTRALOT

All,

CThe announced 550 terminal contract in Hamburg is a minor contract that will not play a significant roll in the company’s earnings projection. It’s likely E1.5m sales with E.5m EBITDA and its a one-off.

More importantly, the company does not seem to have announced that it has practically won the tender for Washington DC. While this is a small constituency and the contract itself will be minor, it has some very interesting aspects for Intralot. DC represents one of the first Europe-Style deregulations in the states where the previous regime required sports betting to be carried out from casino’s physical locations. The new regime allows betting to take place from lotteries as well and importantly online - including mobile. Intralot - if all goes well - will have the monopoly for mobile sports betting in DC. Clearly the hope is to copy - paste this regime for states like Ohio and Illinois. That could have E15m EBITDA waiting there (we’ll have to see about the CapEx). Clearly a win in the DC “pilot” puts Intralot into a decent position to participate in those bigger tenders. We expect some significant marketing of those prospects by the company to its bondholders. 

Even more importantly, the re-tender for the Turkish contract will take place on Monday 11th of Feb. The company is putting forward the same plan as last time and again does not expect anyone else to make a serious bid. The Turkish law requires a contract by March we understand, so there is unlikely to be a third round. The market is pricing in a win, which we also find overwhelmingly likely. But anything else would be catastrophic for the bonds.

Wolfgang