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					                         Section 2.
                         Compliance
Section 2
            Compliance
2. Compliance

Response to:                                        Group Limited were acquired by OTPPB
Section 3.2.1.- Question: Information               in a transaction approved by the UK
describing the Offeror, its organizational          National Lottery Commission.
structure (both in terms of its key                 Consistent with its investment
executives/management team and                      objectives, OTPPB acquired Camelot to
relationship to parent, subsidiary, and             create value for the teachers of Ontario
related companies), its financial status,           through Camelot’s industry-wide
and references, as described in                     reputation as the premier operator of
Attachment C to this RFP.                           socially responsible lotteries, its
Camelot Global Services Limited is the              outstanding record of performance as a
international lottery services division of          lottery operator, and its state-of-the-art
the Camelot Group of companies                      lottery operational processes and
(“Camelot”). Camelot includes Camelot               procedures. OTPPB invests for the long
Group Limited, which operates the UK                term, matching its investments in
National Lottery under a license granted            financially stable and successful
by the UK government-appointed                      companies with the long term
National Lottery Commission. It also                investment needs of retired teachers.
includes Camelot Global Services (North             OTPPB was established as a
America) Inc., which is a wholly-owned              corporation by the government of
subsidiary of Camelot Global Services               Ontario in 1990 and is overseen by a
Limited and which was appointed in                  nine-member board. OTPPB has
July 2009 as a strategic business                   established Premier Lotteries US, Inc., a
consultant to the California State                  Delaware corporation (“Premier
Lottery.                                            Lotteries US”), as the holding company
With $96.4 billion in net assets at 31              for its U.S. business. Camelot Illinois,
December 2009, the Ontario Teachers’                LLC (“Camelot Illinois”), a member-
Pension Plan Board (“OTPPB”)                        managed Illinois limited liability
manages the largest single-profession               company, is the Offeror as defined in
pension plan in Canada. An                          the RFP. The ownership of Camelot
independent organization, it invests the            Illinois will be:
pension plan assets and administers the             ● Premier Lotteries US           95%
pensions of 289,000 active and retired
                                                    ● Camelot Global Services Limited 5%
teachers in Ontario. Today, the plan’s
members include 175,000 teachers in                 Prior to July 8, 2010, the date on which
elementary and secondary schools in                 Camelot was acquired by OTPPB,
Ontario, 114,000 pensioners, and                    Camelot was owned by five
69,000 inactive members. The Plan has               shareholders:
one of Canada’s largest payrolls with
                                                    ● Cadbury Holdings Limited                 20%
$4.4 billion in benefits paid to plan
members, and $2.7 billion received in               ● De La Rue Holdings plc                   20%
total contributions from teachers, the              ● Fujitsu Services Limited                 20%
provincial government and designated                ● Royal Mail Enterprises Limited           20%
employers in 2009.                                  ● Thales plc                               20%
On July 8, 2010, shares of Camelot
Global Services Limited and Camelot




                                    Camelot Illinois Response to RFP Illinois Lottery Private Manager   13
     2. Compliance

     FIGURE 1: ORGANIZATIONAL STRUCTURE

                                    Ontario Teachers’ Pension Plan Board




                  Premier Lotteries US                                   Premier Lotteries UK

                   95%
                                             5%
                                                                Camelot Global
        Camelot Illinois                                                                Camelot Group
                                                                  Services
      ● Single-purpose                                      ● Established to focus   ● The single-purpose,
        company, focused                                      on international         regulated operator of
        on the                                                lottery-related          the UK National
        management of                                         opportunities            Lottery
        the Illinois lottery                                ● Founding shareholder   ● Camelot was
                                 Employee Secondment
      ● Leverages                                             and key business         established to bid for
                                   and Management
        Camelot’s UK                                          partner to the first     the first ever UK
                                  Services Agreement
        operator                                              ever South African       National Lottery in
        experience through                                    National Lottery         1993
        Camelot Global                                      ● Appointed as a         ● It successfully bid for
        Services                                              strategic business       all three licenses
      ● Primary                                               consultant to the      ● Responsible for the
        responsibility is to                                  California State         full operation of the
        deliver a world                                       Lottery                  UK National Lottery
        class, consumer                                                              ● Key responsibility is
        focused, multi-                                                                to maximize Returns
        channel business                                                               to the State (Net
        that has social                                                                Income) via the sale
        responsibility at its                                                          of National Lottery
        heart                                                                          games in a socially
                                                                                       responsible manner

     OTPPB holds its investment in Camelot                     a subsidiary. In effect, except for this
     through certain UK holding companies.                     voting right and a corresponding de
     The holding companies of Camelot                          minimis economic interest, OTPPB is
     Global Services Limited and Camelot                       the sole owner of Camelot. Fourmoront
     Group are wholly-owned by OTPPB,                          is owned by a former OTPPB officer.
     except for a de minimis interest owned
                                                               The Offeror will be similarly organized
     by Fourmoront Corporation, an Ontario
                                                               as the Camelot companies. The Offeror
     corporation (“Fourmoront”).
                                                               will be owned by a subsidiary of
     Fourmoront owns seven out of ten
                                                               OTPPB, Premier Lotteries US, with
     shares of a special class of shares that
                                                               Sevenmoront Corporation, an Ontario
     have a de minimis economic interest
                                                               corporation ("Sevenmoront"), owning a
     (less than 1%) but do have the right to
                                                               special class of Premier Lotteries US
     vote for the appointment of directors of
                                                               shares with a de minimis economic
     the respective holding companies.
                                                               interest and the right to cast seventy
     Fourmoront holds the special class of
                                                               percent of the votes for the
     shares in connection with the Ontario
                                                               appointment of directors of Premier
     Pension Benefits Act, which restricts
                                                               Lotteries US.
     OTPPB from owning more than 30% of
     the shares that vote for the directors of

14   Camelot Illinois Response to RFP Illinois Lottery Private Manager
2. Compliance

Camelot Illinois will be the Private                  All of the arrangements between
Manager under the Private                             Camelot Illinois and Camelot Global
Management Agreement, with Illinois                   Services Limited have been
headquarters, employees, operations,                  documented in a LOI found within
and assets. On a day-to-day basis,                    Appendix C1.
Illinois-based employees will be
                                                      OTPPB will not manage or supervise
managing the Illinois Lottery and
                                                      the management of the lottery
carrying out all of the duties and
                                                      operations, but will have nominees on
responsibilities of the Private Manager.
                                                      the Board of Directors of Premier
Camelot Illinois will have all of the skills,
                                                      Lotteries US. OTPPB will, through
expertise, resources and experience of
                                                      Premier Lotteries US, provide the
Camelot’s lottery business through
                                                      capital required for Camelot Illinois to
intercompany agreements with Camelot
                                                      assume and perform the obligations of
Global Services Limited. Camelot
                                                      the Private Manager under the PMA.
Illinois will also have the right to use the
                                                      OTPPB has the financial strength to
Camelot name in Illinois through a
                                                      support Camelot. The fund’s
license agreement with Camelot Group
                                                      investments are well diversified using
Limited.
                                                      an asset mix of equities (public and
Appendix B contains the additional                    private), inflation-sensitive investments
information required to comply with                   (real-return bonds, real estate,
Article 20 and Article 50 of the Illinois             infrastructure, and timber land, and
Procurement Code completed for                        commodities), fixed income and
Camelot Illinois.                                     absolute return strategies. OTPPB
                                                      manages risk carefully reflecting the
Figure 1 shows the inter-company
                                                      plan’s maturity and decreasing risk
agreements between Camelot Illinois
                                                      tolerance, and focus on outperforming
and Camelot Global Services Limited.
                                                      the markets in which it invests. Since
For tax purposes, the pricing under the
                                                      1990, the OTPPB investment team has
inter-company agreements will be at fair
                                                      generated $19.2 billion more than
market value established pursuant to
                                                      market benchmarks.
transfer pricing studies (in this
circumstance it has been agreed on a                  Appendix C2, C3 and C4 contains the
cost plus 10% basis), which is a                      financial reports for Camelot Group
common way to allocate costs and                      Limited, Camelot Global Services
revenues among affiliates wholly-owned                Limited and OTPPB.
by a common parent.




                                      Camelot Illinois Response to RFP Illinois Lottery Private Manager   15
     2. Compliance


     KEY MANAGEMENT TEAM
     Camelot will provide a team of                            The Board of Directors will at all times
     experienced managers, directors and                       be made up of individuals with
     employees to deliver Camelot’s                            experience in the Lottery business
     obligations under the PMA. Camelot is                     comparable to the initial directors and
     currently in discussions with Jeff Perlee                 who can provide strategic guidance and
     to serve as the Managing Director of                      oversight for the benefit of Camelot
     Camelot Illinois. These discussions are                   Illinois and the Illinois Lottery.
     subject to contract and Jeff has been
     working with Camelot in preparing this                    Camelot Illinois would also have an
     response to the Illinois Lottery Private                  Advisory Board. The role of the Advisory
     Manager RFP. The Managing Director                        Board will be to provide strategic advice
     will have senior management                               to the Managing Director and
     responsibilities for day to day operations                management team of Camelot Illinois
     and will be the principal point of contact                on matters relating to the needs of
     with the State of Illinois.                               Illinois stakeholders and the Business
                                                               Plan. The Advisory Board will be
     Camelot Illinois will be a member-                        populated during Step 2 of the RFP
     managed limited liability company, with                   process.
     Premier Lotteries US as the managing
     member. Camelot Illinois will not have                    The Multi-Jurisdictional Personal
     a separate board of directors. The Board                  Disclosure Forms for each of the above
     of Directors of Premier Lotteries US will                 mentioned Directors and Officers can
     have the power and authority to                           be found within Appendix A1-5.
     supervise the management of Premier                       The following people and organizations
     Lotteries US, and Premier Lotteries US                    have agreed to act as referees in
     will have the power and authority to                      accordance with Section 3.2.1
     manage the affairs of Camelot Illinois.                   (attachment C) of the RFP, letters of
     The Board of Directors of Premier                         reference from each of these entities
     Lotteries US will consist of the                          can be found in Appendix C5a-e and
     following individuals:                                    C6a-c

     Individual               Title
     Lee Sienna               Chairman
                              Group Chief
     Dianne Thompson
                              Executive
                              Group Chief
     Nigel Railton
                              Financial Officer
     Andre Mousseau            Director




16   Camelot Illinois Response to RFP Illinois Lottery Private Manager
2. Compliance


CAMELOT’S REFERENCES
Company/Organization                            Main Contact
World Lottery Association                       Arch Gleason
c/o Kentucky Lottery Corporation                WLA President
1011 West Main Street                           502-560-1551
Louisville, KY 40202                            arch.gleason@kylottery.com

Relevance to this project
The World Lottery Association (WLA) is the leading member-based global organization of
state lottery and gaming organizations. It represents over 90 countries located on 5
continents and its members earned revenues in excess of $180 billion. WLA’s vision is to be
recognized as the global authority on the lottery business, to uphold the highest ethical
principles, and to support their members in achieving their vision for their own communities.
This reference shows Camelot’s global leadership within the WLA community and its
adherence to the standards outlined in WLA’s vision.
Company/Organization                            Main Contact
National Lottery Commission                     Mark Harris
101 Wigmore Street                              Chief Executive
London W1U 1QU                                  National Lottery Commission
United Kingdom                                  +44(0)207 016 3400
Relevance to this project
The National Lottery Commission is responsible for licensing and regulating the UK National
Lottery. Its role is to protect the integrity of the UK Lottery, protect players and maximize
funds to good causes. They also run the competition for the license and select the operator
of the UK Lottery. This reference demonstrates the record Camelot has of exceeding the
expectations and standards of a Government Lottery Regulator.
Company/Organization                            Main Contact
California State Lottery                        Joan Borucki
600 North Tenth Street                          Chief Executive
Sacramento, CA 95811                            916-323-7095
                                                jborucki@calottery.com
Relevance to this project
The California State Lottery selected Camelot Global Services as a strategic business partner
to aid them with their business transformation project (Project Renew) which has as its goal
increasing profits to the State Education Fund. This reference demonstrates the
transferability of Camelot’s skills as well as recognizing Camelot’s unique commercial ability
to improve returns to education while maintaining the ability to remain vendor neutral from a
lottery technology perspective.
Company/Organization                            Main Contact
Uthingo Management (Pty) Ltd                    Dr Oupa Monamodi
16th Floor SABC Radio Park                      Chief Executive Officer
Auckland Park                                   Uthingo Management (Pty) Ltd
Johannesburg                                    oupamonamodi@iburst.co.za
Relevance to this project
Uthingo were the first ever operator of the South African National Lottery and Camelot was
a shareholder and key business partner. This reference demonstrates the transferability of
Camelot’s skills.




                                       Camelot Illinois Response to RFP Illinois Lottery Private Manager   17
     2. Compliance

     Company/Organization                               Main Contact
     Association of Convenience Stores Limited          James Lowman
     Federation House, 17 Farnborough,                  Chief Executive
     Hampshire GU14 8AG                                 +44 (0) 1252515001
     United Kingdom
     Relevance to this project
     The Association of Convenience Stores is a UK Trade body that represents 33,500 small
     shops and retailers in the UK. This reference demonstrates Camelot’s experience and
     success at engaging with retail partners, particularly smaller lottery retailers.


     OTPPB REFERENCES
     Company/Organization                               Main Contact
     State Street Canada                                Stephen Korczak
     State Street Financial Centre                      VP Relationship Management
     30 Adelaide Street East                            +1 647-259-1347
     Suite 1100
     Toronto, Ontario, M5C 3G6
     Relevance to this project
     This reference demonstrates OTPPB is financially stable and operates with high levels of
     integrity.
     Company/Organization                               Main Contact
     RBC Financial Group                                Joceline Beaudry
     Insurance & Financial Markets                      Senior Relationship Manager
     320 Front Street West, 8th Floor                   +1 416-974-3916
     Toronto, Ontario M5V 3B6
     Relevance to this project
     This reference demonstrates OTPPB is financially stable and operates with high levels of
     integrity.
     Company/Organization                               Main Contact
     Canadian Coalition for Good Governance             David F. Denison
     1200 Adelaide Street West,                         Chair of the Board
     Suite 2500, Toronto, Ontario, M5H 1T1              +1 416-868-6940
                                                        ddenison@cppib.ca
     Relevance to this project
     Representing the interests of institutional investors, the Canadian Coalition for Good
     Governance promotes good governance practices in Canadian public companies. OTTPB is
     not only an active member but is one of the original founding members of the CCGG. This
     reference demonstrates the commitment shown by OTTPB to conforming to and promoting
     the highest standards of corporate governance.




18   Camelot Illinois Response to RFP Illinois Lottery Private Manager
2. Compliance

Response to:
Section 3.2.2.- Question:
Demonstration that the Offeror has at
least $20 million in unencumbered cash
resources. This can be demonstrated
through liquidity on its balance sheet, a
letter from an Eligible Institution stating
that it is willing to extend a line of credit
(not dependent upon this transaction),
or the posting of collateral:
Attached as Appendix A6 is a letter
issued by the Royal Bank of Canada
(“RBC”) stating that, through its U.S.
subsidiary, it is willing to extend a $20
million line of credit to Camelot Illinois,
and that such commitment is not
dependent upon the private manager
transaction. In confirmation of the RFP
requirements (i) RBC’s U.S. subsidiary is
a depository institution or trust company
that is insured by the Federal Deposit
Insurance Corporation; (ii) the long term
unsecured debt obligations of which are
rated at least “AA” by Fitch and S&P
and “Aa2” by Moody’s; and (iii) RBC
has no equity interest in Camelot,
Camelot Illinois, or OTPPB.




                                       Camelot Illinois Response to RFP Illinois Lottery Private Manager   19
     2. Compliance

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20   Camelot Illinois Response to RFP Illinois Lottery Private Manager

				
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