Cryptologic Airs Dirty Linen In Public
Written by Maria T | Thursday, February 26th, 2009
Over the last two months a battle has been on between Cryptologic and its former CEO in full public gaze. Cryptologic is an online gaming service provider that offers software for online casinos and poker rooms. Javaid Aziz was the CEO from April 2007 to February 2008 and owns 12.5% of the Cryptologic’s stock.
Things began to heat up when Cryptologic announced a loss of $5.9 million for the third quarter of 2008. In December 2008 Aziz released a regulatory filing in which he suggested that Cryptologic should take steps to improve operating and financial performance. Some specific suggestions were streamlining size and operations, achieving cost reductions and managing cash flows in a better manner.
Cryptologic replied with a filing that stated that these issues were already being addressed by the management under the incumbent CEO, Brian Hadfield. On the 15th of January Cryptologic announced a restructuring plan that included cost reductions of $13 million and projected net profits of $9 million to $10 million for 2009. Aziz also sent a letter to the Cryptologic board asking for two of his nominees to be placed on the board.
To this the board replied, “After careful consideration, the board of directors also has unanimously concluded that providing Mr. Aziz with nominees to the board is not in the best interests of Cryptologic or its shareholders and would cause unwanted disruption at a crucial phase in Cryptologic’s development.” Aziz then requested for an Extraordinary General Meeting (EGM) of the shareholders to be convened. Cryptologic rejected this request on grounds that there were insufficient reasons for holding an EGM. The board added, “…that an EGM – with its substantial distraction and expense – is not in the best interests of shareholders at a time when the board and management are focusing on returning the company to profitability.”
Insiders believe that Aziz is acting out of self interest. Under the terms of his departure from Cryptologic Aziz stands to gain a whopping sum if there is a change of management control at Cryptologic before the end of April 2009. The sum is believed to include a £1.2 million farewell check and an additional bonus of €1.5 million. This amount has been held in escrow.
On Monday the 23rd of February Cryptologic announced that Aziz is in breach of various contractual obligations related to his severance from the company. Therefore Cryptologic has claimed that Aziz is not entitled to any severance benefit and that the company is entitled to recover more than the amount held in escrow. Cryptologic will take steps to recover this amount.
The end of April 2009 is more than two months away and more dirty linen is bound to be aired in the interim.
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· Written by Maria T · Filed Under Poker Gossip · Comments Off
