Youbet.com has withdrawn its proposal to acquire all of the issued and outstanding shares of American Wagering Inc. for $12 million, the company announced Friday. Youbet's proposal was part of a competing reorganization plan and accompanying disclosure statement filed with the United States Bankruptcy Court in Reno, Nevada. The court approved Youbet's $75,000 settlement agreement with AWI and Leroy's Horse and Sports Place in exchange for Youbet's withdrawal of its competing plan and a release of related claims. With the withdrawal, Youbet will record a one-time charge, net of the settlement payment, of approximately $275,000 pre-tax in its 2004 fourth quarter period ended Dec. 31, 2004, for expenses incurred in connection with its efforts to acquire AWI.
In a separate development, Youbet received a $1.3 million insurance settlement in December from its directors and officers' liability insurance carrier for reimbursement of legal and related expenses incurred in a settlement in the fiscal 2004 second quarter of legal issues involving TVG. As of Sept. 30, 2004, the Youbet balance sheet included a net receivable of $1,149,368 for this matter. Youbet anticipates that its cash position will reflect the settlement payment and that it will record in the period ended Dec. 31, approximately $150,000 in pre-tax income."While we continue to believe that our offers represented excellent financial and strategic proposals for American Wagering's creditors and shareholders," said Charles F. Champion, Youbet chairman/CEO, "it became increasingly apparent to us that none of our proposals would be favorably received by AWI's controlling shareholders. While we remain fully committed to expanding into ancillary areas of the gaming and wagering industries, we will only pursue these growth opportunities in a prudent manner that benefits Youbet shareholders with the creation of long-term value. "Despite the withdrawal of our offer, our focus on leveraging our existing capabilities and infrastructure, particularly in the Nevada market, remains a priority for Youbet. To that effect, we expect to proceed with the substantial licensing process necessary to do business in the state of Nevada and continue to explore opportunities in the state on either a stand-alone basis, investment, or as part of a strategic partnership."