Shares plunge for Progressive Gaming

by Howard Stutz

LAS VEGAS, Nevada – One trading day after Progressive Gaming International Corp. warned Wall Street it might be facing bankruptcy, the Las Vegas-based casino equipment provider's stock tumble to a record low as nervous investors worried about the company's future.

Progressive Gaming, which had been known as Mikohn Gaming until 2005, sought Monday to alleviate concerns throughout the investment community as analysts debated the company's financial health.

"That's really the rumor going around," Jefferies & Co. gaming analyst Aimee Marcel Remey said of investment community discussion that Progressive Gaming was going bankrupt. "The company has been doing damage control and I've been getting a lot of investor calls."

In a statement sent Monday to the U.S. Securities and Exchange Commission, Progressive Gaming said the bankruptcy comments were taken out of context from its 2006 annual report, which was filed late Friday. In the section under risk management, Progressive disclosed it could have to file for bankruptcy protection if it is forced to pay a $39 million jury verdict for violating federal antitrust laws.

The company is appealing the Feb. 8 judgment that was tried in U.S. District Court in Mississippi. It doesn't expect to have a decision on the appeal until some time in 2008.

Progressive Gaming shares closed Monday at $4.20 in heavy trading on the Nasdaq National Market, down 73 cents or 14.8 percent. Initially, the company's shares were off more than 26 percent, falling to $3.65 at the market's outset and $3.55 by midmorning. By the end of day, more than 7.2 million shares of Progressive Gaming were traded, seven-and-a-half times the average daily volume.

Since the end of February, shares of Progressive have fallen more than 45 percent in value.

"It might have been a bit of an over reaction," Marcel Remey said. "The news (about the lawsuit) was old news."

In a statement, Progressive Gaming Chief Financial Officer Heather Rollo said the company was confident in its legal, financial and strategic positions.

"As mentioned in previous disclosures, we believe the company is on track to strengthen its balance sheet and return to profitability," Rollo said. "We remain in good standing with our lenders, gaming regulatory agencies and other key stakeholders."

Also on Monday, Interactive Systems Worldwide announced that it and Progressive Gaming had settled a patent infringement lawsuit filed by the New Jersey company over Progressive's Rapid Bet Live sports wagering system.

Interactive Systems said the companies have signed a licensing agreement that grants Progressive Gaming a worldwide, nonexclusive license to "practice ISWI's existing patent portfolio regarding sports wagering."

Terms weren't disclosed. Interactive Systems will receive an initial license payment, as well as a continuing royalty based on product placement milestones and revenue generated by Rapid Bet Live and other related products.

"Some investors might have confused the two lawsuits," Marcel Remey said.