In attendance (11 October): Mike Channon, Terry Jackson, Bill Keith, Kevin Nowland, Matt Papp, Bernie Russell

In attendance (13 October): Terry Jackson, Bill Keith, Kevin Nowland, Bernie Russell

Apologies (both meetings):  Gary Kichenside

The following issues were discussed:

Poker Machine Revenue Projections

Poker machine revenue projections were agreed to be central to whether the new club could be confirmed to be viable or not.  The following factors were agreed to have the capacity to influence revenue:

• Potential loss of licences (major factor);
• Proposed changes to legislation;
• Industry trends, e.g. move to online gaming;
• Long term revenue trends (strongly negative);
• Short term revenue trends (slightly positive);
• Economic climate.

It is difficult to predict likely revenues up to 21 months out.  The committee agreed to use projections based on a range of decline in revenues between 8% and 10% over the period from 2009/10 to 2011/12.  It was noted that this isn't expected to be a straight-line decline over the period, with the loss of one in three poker machine licenses in July 2011 being the biggest risk factor.

Using the 8-10% figure, this results in an EBITARD of between approximately $224,500k and $242,500k for 2011/12, prior to the stock & cash loan repayments.  If a 3 year moratorium on loan repayments can be agreed, the committee felt that this was a sufficient basis upon which to regard the new Tura club as fiancially viable.

Stock and Cash

The committee agreed that a moratorium of 3 years for the commencement of repayments for stock and cash would be highly desirable, in order for the new club to have sufficient time to increase its revenues by a sufficient amount to cover the amount of the repayments.  This is especially important in light of the tight EBITARD projections.

Legal Advice

The committee agreed that advice from Piggot Stinson on the oustanding issues would be acceptable in order to sign off the recommendations, so long as Piggot Stinson would confirm that there was no conflict of interest in them providing such advice.

The issues requiring advice are:

1. That the Steering Committee has taken into account all relevant legislation pertinent to the de-amalgamation tasks for which it is responsible, and that the processes followed by MIBC and the Steering Committee comply with such legislation;
2. Whether any of the arrangements proposed by MIBC and/or the Steering Committee are in any way prejudicial to the interests of those MIBC members who intend to join the new Tura Beach club;
3. Whether there are any issues of personal liability for the Steering Committee members that arise from the proposal to appoint Steering Committee members as interim Board members of the new Tura Beach club.

Lot 1442

In addition to the provisions already agreed, the committee felt that it would be of great benefit to the new Tura club if MIBC would agree not to sell Lot 1442 to another party for the first 3 years following de-amalgamation.  While the provisions already offered by the Board are welcome, it would be highly undesirable for the new Tura club if MIBC wished to pursue a sale soon after de-amalgamation, as the new club would have no financial capacity to purchase the land and would be unlikely to have sufficient time to explore a joint venture with a third party.

Conclusions

The committee agreed to finalise the report to the Board based on the above discussions and to meet on Thursday 14 October to sign the report.

Bernie Russell
Secretary