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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
