Chariot bosses ousted after rescue refinancing

Mr Holley, who launched the National Lottery for Camelot in 1994, will leave the company with immediate effect with no compensation. Craig Freeman, Chariot's managing director, will leave next month and get a year's salary, £132,000, for loss of office, along with David Gray, its administrative director, who will receive £42,000 in compensation. All three have agreed to have their share options cancelled.

Peter Jones and John Finan, previously non-executives, take over as chairman and deputy chairman respectively. They spent much of last week drumming up support for the £2.6m rescue fundraising Chariot unveiled yesterday priced at 5p.

Mr Jones and Mr Finan will plough £250,000 of their own money into the fundraising, giving them a stake of about 7 per cent in the enlarged company. Suzanne Counsell, the group's Australian founder, will put in a more modest £50,000 and remain as a director. Analysts said that without the trio's investment, it was likely Chariot would have failed to raise enough money from the City to keep going.

Institutional investors, including Rathbone Investment Management, Fidelity, New Star Asset Management and Savoy Investment Management, all took part in the company's February float, which raised £9.6m at 115p. Only Rathbone is thought to have taken part in the latest fundraising. Although the stock enjoyed a brief bull run and touched 210p in April, it soon collapsed as it became apparent that ticket sales from its Monday lottery game would not cover the company's massive marketing budget. Yesterday the shares closed 0.5p lower at 5.75p.

Chariot was beset by problems from the outset. To start with, the company was too successful and technical inadequacies meant it could not cope with the weight of traffic seeking to buy tickets. This led to a four-hour delay of the company's first online draw on 8 May.

Since then it has sold only 5 per cent of available tickets. The root cause of this problem appears to have been its inability to sell paper tickets because of a law which prohibits the UK from having more than one national lottery. By focusing on internet transactions, the group originally budgeted for sales of 10 million tickets, even though Camelot manages to sell only 4 million tickets online in an average week.

Mr Jones, who also chairs the Tote, plans to use the new money raised to reform the business. He and Mr Finan, who do not intend to draw salaries until Chariot becomes profitable, will focus on developing the company's playmonday.com website and significantly reduce its cost base. Mr Jones said yesterday: "With a renewed business model and revised expectations, management will look to stabilise and build ticket sales over the coming months".