Q. Why did Entertainment Gaming Asia decide to implement a reverse stock split of its common stock?
A. The Company elected to effect a reverse stock split as part of its efforts to better align the stock price with its accomplishments and future growth potential. The Company believes that an increase in the share price of its common stock may enhance its ability to attract new investors and broaden its shareholder base. Many institutional investors and investment funds may be reluctant to invest, and in some cases prohibited from investing, in lower-priced stocks. In addition, the Company expects that the reverse stock split should provide benefits to Entertainment Gaming Asia stockholders by facilitating lower transaction costs, improving trading liquidity of the stock, and reducing share price volatility.
Q. When will Entertainment Gaming Asia’s reverse stock split become effective and what is the ratio for the reverse stock split?
A. The 1-for-4 reverse stock split is scheduled to become effective on Tuesday, June 12, 2012.
Q. Did the Company effect the reverse for exchange listing reasons?
A. No. The Company elected to effect a reverse split for the reasons cited above. It is not in response to a notice from the NYSE MKT regarding a listing deficiency.
Q. What will be the impact of Entertainment Gaming Asia’s reverse stock split on its outstanding stock?
A. The 1-for-4 reverse stock split will reduce the total number of Entertainment Gaming Asia’s issued and outstanding shares of common stock and its authorized shares. As a result of the reduction in the number of shares of common stock, the share price should increase proportionately upon the completion of the reverse stock split. Therefore, an Entertainment Gaming Asia stockholder on the effective date of the reverse stock split, as a result of the reverse split, will have fewer shares of Entertainment Gaming Asia common stock, but each share should have a higher trading price. Therefore, the value of the stockholder’s total economic investment should be unchanged.
The reverse stock split will not affect any stockholder's percentage ownership interest in Entertainment Gaming Asia, except to the extent that the reverse stock split results in any of the Company’s stockholders owning fractional shares, as discussed further below. The reverse stock split will not negatively affect any of the rights that accrue to holders of Entertainment Gaming Asia common stock or options.
Q. Will the CUSIP number for Entertainment Gaming Asia common stock or its ticker change?
A. Yes, the CUSIP number will change. Effective Tuesday, June 12, 2012, the CUSIP number will change from 29383V 107 to 29383V 206.
The ticker symbol for Entertainment Gaming Asia common shares will remain "EGT." There will be no designation attached to the Company's NYSE MKT symbol, either before or after the reverse stock split, in relation to the reverse stock split.
Q. What will be the effect of the reverse stock split on authorized but unissued shares of Entertainment Gaming Asia common stock?
A. The total number of authorized shares of Entertainment Gaming Asia common stock, par value $0.001 per share, will be reduced proportionately from 300 million to 75 million shares.
Q. How will fractional shares of Entertainment Gaming Asia common stock be treated in the reverse stock split?
A. Entertainment Gaming Asia stockholders will not receive fractional shares in connection with the reverse stock split. Instead, all fractional shares will be rounded up to the nearest whole number and distributed to the stockholder upon the issuance of new stock certificates, as discussed further below.
Q. Was shareholder approval required to effect the reverse stock split?
A. The reverse stock split was duly approved by the Company’s Board of Directors. Given the Company elected to reduce its authorized shares in the same proportion as that of the common stock outstanding, shareholder approval was not required pursuant to the Company’s bylaws or Nevada corporate law.
Q. What should stockholders do with their share certificates of Entertainment Gaming Asia common stock?
A. Shareholders as of the effective date with outstanding certificates will be asked to exchange them for new certificates representing the post-split number of shares and the new CUSIP number. The Company’s transfer agent, Continental Stock Transfer & Trust Company, is the exchange agent for the Reverse Split and will distribute a letter of transmittal to shareholders with instructions on how to surrender old stock certificates. Continental Stock Transfer & Trust Company will mail the Letters of Transmittal shortly after June 12, 2012, the effective date of the reverse stock split. In the meantime, each outstanding certificate that prior to the reverse split represented shares of common stock of the Company will thereafter represent shares of common stock in the post-split amount.
If a stockholder’s shares of Entertainment Gaming Asia common stock are held with a bank, broker or other nominee, they are authorized to exchange the shares on behalf of the stockholder, and the number of shares owned by the stockholder after the reverse stock split should be reflected in their account shortly after the effective date of the reverse stock split.
Q. How do you replace a lost stock certificate for Entertainment Gaming Asia common stock?
A. If a stock certificate has been lost, stolen, or destroyed, follow the instructions provided in the Letter of Transmittal which will be mailed to stockholders from Entertainment Gaming Asia’s transfer agent, Continental Stock Transfer & Trust Company shortly after the effective date of the reverse stock split.
Q. What are the tax consequences of the reverse stock split to Entertainment Gaming Asia stockholders?
A. Other than with respect to the distribution shares for fractional shares discussed above, no gain or loss should be recognized by Entertainment Gaming Asia stockholders in the reverse stock split for U.S. federal income tax purposes. Stockholders should consult their own tax advisor regarding the particular consequences of the distribution, including the applicability and effect of any U.S. federal, state and local, and foreign tax laws.
Q. Will stockholders be subject to fees in connection with the reverse split?
A. There will be a fee for the exchange of stock certificates; however, this will be paid by the Company. There will be no fees charged by the Company to stockholders in relation the reverse stock split. There may however be a handling fee for beneficial stockholders (those that hold shares through a broker, bank, or other nominee) and such stockholders should contact their bank, broker, or other nominee for details of any such applicable fees.
Q. Who should I call with additional questions regarding the reverse stock split?
A. All stockholders may direct their questions to Entertainment Gaming Asia’s Investor Relations Department by email at IR@egt-group.com or by calling (312) 867-0848.
After effective date of the reverse split, stockholders may also direct questions as follows:
If you are a record holder of Entertainment Gaming Asia stockholder (you hold a physical stock certificate in your name), you can contact the Company’s transfer agent, Continental Stock Transfer & Trust Company, for more information by calling (212) 509-4000.
If you are a beneficial stockholder (you hold your shares through a broker, bank, or other nominee), you should contact your broker, bank, or other nominee directly.
Forward looking statements:
The statements contained herein that are forward looking are based on current expectations that are subject to a number of uncertainties and risks, and actual results may differ materially. Such statements include those relating to the ability of the Company to achieve future growth and profitability. The uncertainties and risks include, but are not limited to broadening the shareholder base of Entertainment Gaming Asia, increasing the appeal of its stock to institutional investors, facilitating lower transaction costs, improved trading liquidity of the stock, the earnings potential of the Company’s current gaming operations, its ability to execute on its strategy to expand its gaming operations, and the overall growth of the gaming industry in the Company’s target markets. 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 those risks set forth in Entertainment Gaming Asia’s annual report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 30, 2012 and subsequently filed quarterly reports on Form 10-Q. Entertainment Gaming Asia cautions readers not to place undue reliance on any forward-looking statements. Entertainment Gaming Asia does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.