For the investors in Chariot, the cash-strapped company behind the troubled lottery game Monday, this week's emergency cash call was double or quits. Having already sunk close to £15m into creating a credible rival to the National Lottery, now was no time to give up.
Following the shakiest of starts after hugely disappointing ticket sales, Chariot is expected to announce tomorrow or on Friday that it has been given a second chance at life in the form of a £2.5m cash injection. Shareholders, led by the deputy chairman, Peter Jones, and one of his fellow non-executive directors, John Finan, have subscribed to a placing of new shares issued at 5p a throw - a far cry from the 115p they floated at on AIM less than four months ago.
As a quid pro quo, Messrs Jones and Finan are to take the executive reins of the Chariot from hell, while the two men most closely linked with the group's ill-fated past - Tim Holley, the chairman, and Craig Freeman, the managing director - are to alight. At least one other executive director is likely to leave, although his identity will only be announced alongside details of the fundraising.
The reincarnation of Monday, which was trumpeted as a plausible competitor to the National Lottery at its glitzy launch just five weeks ago, will provide some comfort for Suzie Counsell, the Australian co-founder shareholder who held a little less than 13 per cent of the company before its share placing. Ms Counsell, who has had a varied business past including running a couturier business, was left steering Chariot's course after her husband, Andrew, passed away in October 2004.
It was Andrew's idea to launch a charity lottery - hence the name "chari[l]ot" - following on from the work his wife had done during the past two decades for charities on the other side of the world. Mr Counsell was used to riding his luck: latterly, he was involved with a number of mining companies including Eurasia Mining, which he founded to exploit the business interests he had developed in the former Soviet Union.
Indeed, Mr Counsell was hoping to strike gold. He needed to, having fled Adelaide for London in 1995 after racking up losses with previous corporate ventures. According to his obituary in the newsletter from St Mark's College, his place of residence while studying for an economics degree at Adelaide University, the losses were racked up from "casualties of the hangover from the risks and adventures of the 80s ... amid considerable adverse publicity". The local newspaper, The Advertiser, chose to remember him by paying tribute to a "flamboyant force in the business world". And that was before the near collapse of his last venture.
When Mr Jones, who also chairs the Tote, met the Counsells it was 2003 and Chariot was still struggling to take flight. He was introduced to Suzie and Andrew by Peter Evans, now Chariot's charities director and one of the few who is tipped to escape the executive purge. The two men were acquaintances of old, having jointly set up the advertising agency Boase Massimi Pollitt, part of America's Omnicom since 1989.
By then the Counsells had got Craig Freeman, a fellow Aussie, on board, seemingly for no other reason than that Mr Freeman was keen to move to the UK and knew Suzie from Australia. Certainly, Mr Freeman, 38, had no experience in the gaming world. His biggest claim to fame was co-founding a cable television network called Neighbourhood Cable; he is also a director of Buzz Broadband, which provides wireless broadband services to parts of Australia.
But it was the recruitment of Tim Holley, the man who launched the National Lottery for Camelot in 1994, that was to prove pivotal in getting Chariot's wheels in motion. It was thought that Mr Holley, whose reputation has been shredded by Chariot's near collapse, would have the lottery know-how to make Monday the success he promised it would be. Indeed, at Monday's B-list celebrity-packed launch, in the seemingly prophetic venue of Titanic in London's Soho, Mr Holley boasted: "We've taken three years to develop this and we know it will succeed." How those words have returned to haunt him.
The new team spent three years in endless quests for capital. Some of the directors brought money with them - Mr Finan invested £100,000, which went on office rents and telephone bills - while others, such as Mr Jones, simply brought industry know-how and City connections for the Counsells. Their luck turned around in the middle of last year, when a series of headline-grabbing initial public offerings by internet poker companies - namely the £4.6bn flotation of PartyGaming - inflated a gaming bubble that took some time to burst.
Eventually, by late 2005 the posse behind Chariot managed to get enough potential blue-chip investors interested to suggest they had a future. They raised £4.4m privately, with the promise that the same shareholders would back Chariot's 115p-per-share listing on AIM in February. The flotation raised a further £10m, most of which was immediately sunk into a high-profile television advertising campaign, and the investors briefly looked like they had hit the jackpot when the stock touched 210p.
But, true to Monday's advertising promise of being the lottery "for the unlucky", Chariot's heyday was short-lived. From its first online draw, on 8 May, its problems quickly stacked up. Ironically, the first of these was that it was initially too successful: technical inadequacies meant it could not cope with the weight of traffic seeking to buy tickets for that first draw. The balls had to stay in their virtual cyber holes for four hours until the numbers could be drawn. Since then the group has sold only about 5 per cent of its available tickets, although it remains to be seen how it fared on Monday evening. The root of its problems appears to be that its business plan was ultimately not worth the paper it was written on because it has to rely on selling tickets over the internet due to laws stating that the country can have only one national lottery with a paper-based sale - the National Lottery. Even Camelot manages to sell only 4 million tickets a week online, yet Mr Holley was banking on selling up to 10 million.
The other factor counting against Chariot, which made much of the fact that it would give an extra 2p in every £1 wagered to its 70-odd charity partners, was the size of its jackpots. Although Chariot hoped to lure punters fed up with the wafer-thin chances of hitting Camelot's multimillion-pound jackpot by offering lower odds on lower prizes, this has not proved to be much of a draw if the lacklustre ticket sales are anything to go by.
As things stand, it looks as though Chariot will have a future - albeit as a scaled down, far less grandiose internet-based lottery. Its cost base will be slashed and staff pared back and there will be no more expensive television advertisements. As for Suzie Counsell, the one-time "social lioness" according to one Adelaide source, she could find her couturier past useful when it comes to stitching her late husband's legacy back together.Reuse content