The CEO of Ainsworth Gaming Technology (AGT), Harald Neumann, is facing an exit from the ASX gambling group due to licensing problems in Nevada.
AGT informed investors that the Nevada Gaming Control Board (NGCB) recommended that the board of directors withdraw Neumann’s application to be licensed in Las Vegas.
Neumann, who has led Ainsworth since 2021 and was previously licensed by the NGCB. He was scheduled to meet with the board regarding his licence, which must be renewed every five years, on 11 October.
However, after a meeting with the NGCB, AGT’s Chair, Danny Gladstone, confirmed that Neumann’s position is now in doubt.
“The Board is undertaking a review of Mr Neumann’s role following the outcome of the NGCB’s meeting and will provide further details to the market once this review is completed,” said Gladstone in a brief statement.
Corruption probe
Although no reason has been provided for the NGCB’s reluctance to license Neumann, he is still facing a historical corruption probe in Austria related to his time leading rival Novomatic AG, the same company that is currently in the middle of a takeover bid of AGT.
In 2019, a series of investigations into more than 100 individuals was launched by Austria’s Economic and Corruption Prosecutor’s Office. Neumann was initially implicated in some of these cases, however, all but one have been discontinued as no further evidence of corruption was uncovered.
He resigned as Novomatic’s CEO in 2020 and became a “strategic advisor” for the company before joining AGT as CEO in 2021.
Neumann has always denied any wrongdoing related to the investigations. In June, an AGT spokesperson stated that it was “our understanding that the one remaining investigation is largely complete, and it is anticipated that this will be similarly dismissed”.
Takeover troubles
Novomatic’s takeover attempt has been anything but smooth, as current AGT investors have hit back at the Austrian company’s valuation.
In August, Novomatic tabled a “best and final” offer of AU$1 per share, representing a 35% premium on AGT’s shares.
However, Kjeruif Ainsworth, son of Founder Len Ainsworth and the second-largest shareholder, accused the company of undervaluing its US property assets and stated his belief that Novomatic’s offer should be closer to $3 per share.
Novomatic’s dogged pursuit of AGT centres on its desire to expand its presence in Asia, as well as take control of the distribution of gaming machines (pokies) in Australia.
Since the announcement of Nevada’s stance on Neumann’s licence application, Kjeruif Ainsworth told ABC that if Neumann doesn’t have a licence, “he can’t stay as CEO”.
He added that the US regulator appears to have taken the Austrian investigation into account and that he is “glad the process is working properly”.
Other AGT shareholders, including Allan Gray, Spheria Asset Management and Kanen Wealth Management, have also expressed their disappointment in the $1 per share proposal, stating that it undervalues the business.
While Novomatic’s direct takeover attempts continue to stall, the company has pushed on with an off-market bid, increasing its shareholding of AGT to 61.5% at the time of writing.
