Update: Tabcorp Wants To Take A State Court Verdict To The High Court In Australia

| About: TABCORP Holdings (TABCF)
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Summary

Tabcorp seeks special leave to appeal to Australia’s High Court after Victoria’s Supreme Court decided against awarding the company a $500M+ payment.

As we’re not talking about peanuts here, I’m not surprised to see Tabcorp doing everything it can to get its hands on the cash.

The investment thesis doesn’t change for now, but a $500M payout could obviously have a huge impact.

Tabcorp (OTCPK:TABCF) has announced it will apply for a special leave to appeal to Australia's High Court against a verdict by the Supreme Court of Victoria. In a dispute which has been going on for a while, Tabcorp was demanding Victoria to cough up A$686M ($557M) as compensation for when Tabcorp's licenses expired and new ones were granted. According to Tabcorp, a law of 1994 included a statutory provision whereon Tabcorp's IPO was based. The government already decided in 2008 that Tabcorp wasn't entitled to the payout and the company already recorded a charge of roughly $400M back then, so if the high court decides there's no payment due, Tabcorp's financial results won't be impacted other than by the lawyer's fees.

If the special leave for appeal is granted, Tabcorp intends to pursue the payment of A$686M as well as additional interests. I'm not sure whether or not Tabcorp will be successful and maybe it won't even get the possibility to go to Australia's High Court, but a $500M payout is definitely something worth pursuing.

In other news, Tabcorp's short-term agreement with TVN (ThoroughVisioN) has expired and Tabcorp's races are no longer broadcasted on its channels. This is obviously a bit disappointing as the previous long-term contract expired in 2012 and the past two years were covered by several short-term deals whilst the negotiations to sign a long-term contract were still ongoing. A final offer made by Tabcorp's subsidiary Sky Racing was rejected by TVN and Tabcorp felt that it wasn't in its best interests to enter into another short-term deal. Sky Racing obviously wants its races to be broadcasted to attract more people and wagerers and I hope the company has some more aces up its sleeve.

Disclosure: The author is long TABCF.

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