In a move announced by Lakes Entertainment on Tuesday, the company “declared a stock dividend of all of the Company’s shares in WPT Enterprises, Inc.,” according to its statement. The actual distribution of stock will take place on November 21st. The company owns 61% of the outstanding common stock of World Poker Tour Enterprises, which is traded on the NASDAQ Stock Exchange under the symbol “WPTE.” Lakes Entertainment is traded on the same exchange under the symbol “LACO.”
Tim Cope, President and CFO of Lakes Entertainment, commented in Tuesday’s release, “Lakes will benefit in that we will no longer be required to consolidate WPTE’s financial and business information in our SEC filings. This will enable us to provide greater transparency of Lakes’ operations and financial results to our shareholders and the public.” Each Lakes shareholder is expected to receive approximately 0.48 shares of WPTE for every share of Lakes Entertainment stock he or she owns.
A manager for day trading firm SwiftTRADE told Poker News Daily that he does not expect the stock price of WPTE to be affected as a result: “The shares are the same, but they have just changed ownership. It appears as if LACO is washing its hands of WPTE stock. Stockholders would need to contact their brokers in order to sell the WPTE stock in the future.” Information on the decision by Lakes Entertainment executives will be mailed to shareholders on October 24th.
WPTE stock has wavered in a wide range in today’s trading, bouncing from $0.31 to $0.49, which is where it currently sits at the time of writing. WPTE may be de-listed from the NASDAQ unless the company can push its stock price to at least $1 and keep it there for 10 consecutive business days. The company has around 130 days left to do so, else face punishment from the stock exchange. In July of 2005, the stock traded at $26.50. By October 17th, 2005, it had plummeted to $6.50. It has traded below $5 since the end of April, 2007.
On Tuesday, it was also announced that WPT Enterprises had filed form 8-K, which signifies changes in control of a company. The 12.5 million shares of stock that currently belong to Lakes Entertainment will technically be changing ownership, now becoming property of LACO shareholders. Cope added, “The spin-off of WPTE shares to our shareholders provides an option for them to monetize the value of WPTE shares if they so choose.” The new owners could also elect to retain the stock and hope for a greater share price in the future. The major stock indices in the United States are at their lowest levels since 2004.
In February of 2005, LACO stock had traded as high as $18.60. It is currently at $5.02, trading down 2% on the day. In the past year, it has ranged between $3.86 and $9.93 and now sheds itself of WPTE common stock. The transmission of stock comes in the form of a dividend, which has tax implications for all parties involved. Normally, dividends are given in the form of cash, which is taxable.
Over the weekend, the World Poker Tour aired the first ClubWPT tournament on Fox Sports Net. The show pitted six online qualifiers against each other. The show airs a new episode this Sunday at 4:00pm local time with an encore presentation at 11:00pm. Soon, Season VII WPT tournaments will begin airing on Sunday nights on Fox Sports Net. The WPT’s North American Poker Championship begins on Friday from the Fallsview Casino.
Lyle Berman is the Chairman of the Board and Chief Executive Officer of Lakes Entertainment.