Tabcorp to pursue demerger to create two leading gaming companies

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS 18 October 2010 Tabcorp to pursue demerger to create two leading gaming companies Summary Tabcorp will pursue a demerger of its Casinos business from its Wagering, Gaming and Keno businesses. The Wagering, Gaming and Keno businesses will continue as Tabcorp Holdings Limited. The demerger will create two market leading companies able to pursue their individual investment programs and growth opportunities. It recognises the different opportunities and investment profiles of Tabcorp s businesses. Both companies will be of a substantial size and listed on the Australian Securities Exchange (ASX). The Casinos business will have more than 8,000 employees and the Wagering, Gaming and Keno business will have more than 2,000 employees. The Casinos business is transforming its properties into world class entertainment destinations: Unique market positions in Sydney, the Gold Coast, Brisbane and Townsville Significant investment program underway to upgrade the largest properties $960 million redevelopment and expansion of Star City is on track $175 million investment to upgrade Jupiters Gold Coast announced today Potential for further expansion in Queensland, subject to concessions and regulatory approvals. Tabcorp (post demerger) is well positioned to maintain and grow its leadership position in the retail wagering and gaming markets: National leader in Wagering, with expected growth from investments in products, distribution expansion and customer loyalty. Unique position in the international wagering market through import and export of vision and pooling Attractive earnings from Gaming in Victoria to 2012 and from Keno. Ongoing presence in the Victorian market through Tabcorp Gaming Solutions Applied for 2012 Keno Licence and intends to apply for 2012 Wagering and Betting Licence in Victoria. Both companies will be led by experienced management appointed from within the current businesses. Mr Justin Milne will join the Board as a non-executive director, subject to all regulatory approvals. Mr Milne will remain on the Board of Tabcorp following the demerger. Tabcorp is today launching an underwritten accelerated renounceable entitlement offer to raise approximately $430 million. Proceeds raised provide funding certainty 1

for casino growth initiatives and ensure both entities have appropriate capital structures. Trading in the July to September quarter was positive with normalised group revenues up 4.1% on the previous financial year. Revenues from Casinos were up 7.1%, Wagering 4.1% and Gaming 0.9%. The target date for completion of the demerger is 1 July 2011, subject to regulatory approvals. Proposed demerger of Casinos business Overview Tabcorp today announced it will pursue a demerger of its Casinos business to create two separate listed entities, one focusing on Casinos, and the other on Wagering, Gaming and Keno. Tabcorp Chairman, Mr John Story said a demerger of the Casinos division recognises the different growth, investment and management characteristics of Tabcorp s businesses. Over the past decade, Tabcorp has built three strong operating divisions which are each of a substantial size and market leaders in their own right. The priorities for these businesses have started to diverge, and will increasingly do so in the future. There is now a compelling case to give investors shares in the separate businesses and by doing so provide greater investment choice and the opportunity to manage their exposure to the different assets. The demerger will create two large ASX listed entities able to pursue their separate strategies, with Casinos to benefit from material capital investments, and the Wagering, Gaming and Keno businesses well positioned within a rapidly evolving retail and online environment, Mr Story said. Tabcorp Chief Executive Officer, Mr Elmer Funke Kupper said the timing for the proposed demerger is right for shareholders, employees and other key stakeholders. We have spent several years improving the performance of our businesses and each one is now showing positive growth. Our Wagering business has proven to be a strong performer over the past 12 months and continues to adapt well to an evolving regulatory environment and an increasingly competitive marketplace, Mr Funke Kupper said. The right strategies are in place. Our Casinos business is undertaking very significant capital investments in New South Wales and Queensland, and the competitive strategies for the Wagering, Gaming and Keno businesses are showing significant promise. We now have put experienced and specialist leadership in each of our divisions and a demerger will allow the dedicated management teams to focus on their business plans, customers and industry partners, Mr Funke Kupper said. 2

Demerger outline Casinos had earnings before interest, tax, depreciation and amortisation ( EBITDA ) of $360 million in FY2010 1. Post demerger, Casinos would initially not have a credit rating and is expected to adopt a capital structure and financial policies targeting gross debt to EBITDA of between 2.5 3.0x. Casinos is expected to pay fully franked dividends of approximately 50% of normalised net profit after tax (subject to review by the Casinos Board). Wagering, Gaming and Keno delivered EBITDA of $649 million in FY2010 1. Post demerger, it is intended that Tabcorp would maintain an investment grade credit rating and target gross debt to EBITDA of around 2x. The Wagering, Gaming and Keno business post demerger intends to pay fully franked dividends of approximately 50% of net profit after tax for the initial period up to and inclusive of FY2012. After FY2012 it intends to increase the payout ratio to 80% (subject to review by the Tabcorp Board). Tabcorp s earnings in FY2013 will be impacted by the expiry of its current Victorian Wagering and Gaming licences in August 2012. Tabcorp s dividend payout ratio for FY2011 is expected to be 60% of normalised net profit after tax, compared to 70% for FY2010. The carrying value of assets and earnings of the two companies may be affected by demerger accounting adjustments that will be confirmed over the coming months. Board and management Casinos and Tabcorp (post demerger) will continue to be managed by their existing management teams. Tabcorp today announced that 2 : The Board/senior management team of Casinos will initially comprise: Mr John Story as non-executive Chairman Mr John O Neill and Mr Brett Paton as non-executive Directors Mr Larry Mullin as Managing Director and Chief Executive Officer Mr Matt Bekier as Chief Financial Officer and Executive Director. The Board/senior management team of Tabcorp (post demerger) will initially comprise: Ms Paula Dwyer as non-executive Chairman Ms Jane Hemstrich and Dr Zygmunt Switkowski as non-executive Directors Mr David Attenborough as Managing Director and Chief Executive Officer Mr Damien Johnston as Chief Financial Officer. Tabcorp also today announced that Mr Justin Milne will join the Board as a non-executive director, subject to all regulatory approvals. Mr Milne will remain on the Board of Tabcorp 1 Does not take into account additional corporate costs anticipated to arise post demerger (estimated to be approximately $10m p.a. between the two entities) 2 These appointments are subject to change; in particular if any of the current Directors or members of senior management cease to hold office at Tabcorp prior to implementation of the demerger. Where applicable, appointments are also subject to necessary regulatory approvals 3

following the demerger. Mr Milne has until recently been a senior executive at Telstra and will bring significant experience to the Board in the areas of online commerce, marketing and media. Mr Milne led Telstra s new media strategy and the growth of BigPond into the nation s leading broadband internet service provider. Casinos will similarly seek to identify appropriate candidates to join the Board as additional non-executive directors. Tabcorp s current Managing Director and Chief Executive Officer, Mr Elmer Funke Kupper, will continue to lead the company through the demerger period, and will on demerger hand over the leadership of Tabcorp to Mr David Attenborough and Casinos to Mr Larry Mullin. It is expected that Mr Funke Kupper will join the Board of Tabcorp as a non-executive director six months after ceasing his executive role. Transaction steps and timeframe The demerger will be pursued by way of scheme of arrangement. It requires approval from Tabcorp shareholders, court approval and various NSW and Queensland regulatory approvals, including Queensland Ministerial approval and approval from the NSW Casino Liquor and Gaming Control Authority. If the demerger is approved, it is expected that Tabcorp shareholders will receive a share in a new listed entity (Casinos) and retain their shareholding in Tabcorp, which will operate the Wagering, Gaming and Keno businesses. Subject to court and regulatory approvals, a scheme booklet in relation to the demerger will be sent to shareholders in April/May 2011. That booklet will contain further information about Casinos and Tabcorp (post demerger), including details on the proposed capital structures and capital management policies of both companies. Appendix A contains further details of the two entities which will be created by the demerger. Profile of Casinos Casinos will operate four of Australia s premier casino assets: Star City in Sydney, Jupiters on the Gold Coast, Treasury in Brisbane and Jupiters Townsville. Together they produce normalised revenues in excess of $1.4 billion per annum 3. Each of the casinos has long term licences and stable regulatory conditions. The Casinos business provides an attractive investment case driven by a number of significant expansion projects: In Sydney, a $960 million capital investment to expand Star City Casino is currently underway and is progressing well. This investment will create a world class entertainment destination on Sydney harbour. The project is expected to complete mid calendar year 2012. 3 Normalised for theoretical win rate in VIP business 4

Tabcorp also announced today that it will invest up to $175 million to upgrade its Jupiters Casino on the Gold Coast and create an international entertainment and resort destination. The investment will significantly expand the non-gaming facilities, including eight new restaurants and bars, a new night life venue, a refurbishment of the pool area and creation of a new spa. Subject to approvals the project includes the creation of a 'Beach Club' on the ocean's edge. In addition, the project will upgrade the Main Gaming Floor, and create a new Private Gaming Room and dedicated gaming areas for VIP customers. Construction is expected to commence in the middle of calendar year 2011, with all work scheduled to be completed in 2014. By 2016, the expansion is expected to improve EBITDA by more than $20 million p.a. and generate an expected IRR of 14%. More detail on the proposed investment is set out in Appendix B. Mr Funke Kupper said: The investments at Jupiters on the Gold Coast will significantly improve the customer offer and competitiveness of the property and improve the overall attractiveness of the Gold Coast region. It will turn Jupiters into a world class resort destination in one of the most attractive regions in Australia. The Jupiters investment will leverage the experience gained at Star City in Sydney, where our $960 million expansion project is on track. Star City and Jupiters together account for three quarters of the company s casinos revenues. The two projects therefore provide a strong foundation for the future growth of the Casinos business. In addition, Tabcorp is currently in discussions with the Queensland Government on the potential for further expansion of its Gold Coast, Brisbane and Townsville casinos, including the construction of one or two new hotels. These discussions are incomplete. If they are concluded successfully and the expansion meets acceptable investment parameters, further capital may be required by Casinos in 12 to 18 months time to fund the expansion. The Board will consider the appropriate capital management strategy for Casinos taking into consideration its performance, funding requirements and the range of funding options available to it at that time. Profile of Tabcorp post demerger Tabcorp (post demerger) will be Australia s leading Wagering, Gaming and Keno operator. It will be a substantial business with several long dated licences, stable margins and robust cashflows, with excellent earnings visibility offering a high yield. In Wagering, Tabcorp will be a national leader: Market leader in pari-mutuel, fixed odds and sportsbetting Operator of the two largest pari-mutuel pools in Victoria and NSW Strong distribution reach with more than 2,500 physical outlets, a call centre and online, mobile and Pay TV channels Sky Racing, Australia s national and international racing broadcaster Attractive growth from a series of competitive strategies and investments, particularly in fixed odds betting, sportsbetting and the online channel. Tabcorp s Victorian wagering licence will expire in August 2012. Tabcorp has been invited to apply for a new 12 year Victorian Wagering and Betting licence and intends to 5

lodge an application. Tabcorp may or may not be awarded the new licence. Irrespective of the outcome of the licence process, Tabcorp will be a market leader in the Australian wagering market with a strong, competitive and well capitalised business. Tabcorp has been in discussions with the NSW Government and Racing NSW to expand the customer offer in NSW and create new growth in the NSW market. Included in the discussions are the introduction of Trackside as a wagering product. Tabcorp has reached a conditional, in principle agreement to make a payment of $150 million to support the merger between two metropolitan race clubs and the redevelopment of the Randwick race track. Tabcorp has confirmed it is willing to make such an investment subject to a number of conditions that will create an adequate economic return on investment. To date, the conditions for the funding have not been met and they may not be met. The conditions include approval of the merger between the two metropolitan clubs, Cabinet approval and necessary changes to legislation and regulations. Tabcorp will continue to work with the NSW Government and the NSW racing industry to progress the introduction of new products that improve the customer offer, the competitiveness of the NSW wagering business and the future funding of the NSW racing industry. In Gaming, Tabcorp has a strong business that will go through a significant change in August 2012 when its current Victorian licence to operate electronic gaming machines will expire. Tabcorp has successfully launched a new business, Tabcorp Gaming Solutions, that will continue to provide gaming services in Victoria from 2012. In Keno, Tabcorp is the national leader. The Keno business has expanded successfully in NSW and Queensland and currently has over 2,600 distribution points. In Victoria, the Government is expected to issue a new Keno licence that will operate from 2012. Tabcorp has submitted an application for the new licence. Tabcorp may or may not be awarded the new licence. Trading update Tabcorp today provided a trading update for the first quarter of the financial year. On a normalised basis, group revenues grew by 4.1% compared to the prior comparative period. Each of the company s three divisions recorded positive growth: Casino revenues increased 7.1%. Star City grew revenues 8.4% and the Queensland casinos grew revenues 5.5% Wagering revenues grew 4.1% in the first quarter, with performance following last year s trends. The traditional totalisator product continues to be under pressure, and this is more than offset by growth in sportsbetting, fixed odds betting and Trackside. Growth in the first quarter was assisted by the Soccer World Cup 6

Gaming (including Keno) revenues grew 0.9% in the first quarter. This growth was recorded against a strong first quarter in the previous financial year. Compared to the last quarter of the 2010 financial year, revenues improved by 11.6%. Mr Funke Kupper said The company has made a solid start to the year with positive revenue growth in all three divisions. Star City again stood out, showing good growth at a time of significant disruption, while the Queensland casinos are showing early signs of improvement following a very difficult year in 2010. Wagering and Gaming continue to perform well in a very competitive environment, indicating that our strategies in those businesses remain on track. Entitlement Offer Tabcorp announced today that it will raise approximately $430 million through a fully underwritten accelerated renounceable entitlement offer ( Entitlement Offer ). Funds raised from the Entitlement Offer will create the appropriate capital structure for the businesses at the point of demerger: The capital structure for the two businesses will reflect the growth opportunities available to each, including the confirmed and potential Casinos investments in NSW and Queensland, as well as the opportunities available to Tabcorp (post demerger) Tabcorp (post demerger) will target credit metrics consistent with an investment grade credit rating Casinos is expected to not have a credit rating initially. Under the Entitlement Offer, eligible shareholders will be offered the opportunity to acquire new Tabcorp shares ( New Shares ) at $6.25 each on the basis of 1 New Share for every 9 existing ordinary shares. Each New Share will rank equally with existing ordinary shares from allotment. Under the Entitlement Offer, eligible shareholders under both the institutional entitlement offer and the retail entitlement offer may choose to take up their entitlement in whole, in part or not at all. As the Entitlement Offer is renounceable, New Shares equal in number to those attributable to: any entitlements not taken up by eligible shareholders; and entitlements which would otherwise have been available to Ineligible Shareholders, will be sold via two separate bookbuild processes. These processes will be undertaken in respect of each of the institutional entitlement offer and the retail entitlement offer. Any proceeds from the sale of New Shares in excess of the offer price (net of any withholding tax) under the bookbuild conducted in respect of the institutional entitlement offer will be paid proportionately to renouncing and ineligible institutional shareholders. Similarly, any proceeds from the sale of New Shares in excess of the offer price (net of any withholding tax) under the bookbuild conducted in respect of the retail entitlement offer will be paid proportionately to renouncing and ineligible retail shareholders. A number of factors will be considered as part of the bookbuild processes. No assurance as to the price that will be achieved under the bookbuild processes for the sale of the 7

New Shares can be given. There is also no guarantee that the highest price will be accepted or that any such excess over the offer price will be achieved. The issue price of $6.25 per share represents a 10.9% discount to the theoretical ex-entitlement price and a 12.0% discount to the closing price of Tabcorp shares on 15 October 2010. Please see Appendix C for important information in relation to the Entitlement Offer. 8

Summary of key dates An indicative timetable of key dates associated with the Entitlement Offer and demerger is set out below. All dates are subject to change at the absolute discretion of the Tabcorp Board, as well as due to the timing of obtaining necessary regulatory approvals required for the demerger. 18 October 2010 Announcement of demerger, Jupiters Gold Coast investment, and equity capital raising Trading halt commences Institutional entitlement offer opens 19 October 2010 Institutional entitlement offer closes (11.00am) 20 October 2010 Institutional shortfall bookbuild 21 October 2010 Trading halt lifted 21 October 2010 Record date (7.00pm) 25 October 2010 Retail entitlement offer opens 3 November 2010 Institutional entitlement offer settlement 10 November 2010 Retail entitlement offer closes (5.00pm) 15 November 2010 Retail shortfall bookbuild 19 November 2010 Retail entitlement offer and retail shortfall bookbuild settlement April/May 2011 June 2011 July 2011 Release scheme booklet for demerger Shareholder meeting to approve demerger Proposed effective date for the demerger All dates and times refer to AEDT For more information: Financial analysts: Matt Bekier, Chief Financial Officer, 03 9868 2195 Media: Nicholas Tzaferis, GM Group Corporate Affairs, 03 9868 2529 Peter Brookes, Citadel, 02 9290 3033 9

IMPORTANT INFORMATION This announcement contains certain forward-looking statements within the meaning of the securities laws of applicable jurisdictions. Forward-looking statements can generally be identified by the use of forward-looking words such as may, should, expect, anticipate, estimate, scheduled or continue or the negative thereof or comparable terminology. Any forecasts or other forward looking statements contained in this announcement are subject to known and unknown risks and uncertainties and may involve significant elements of subjective judgment and assumptions as to future events which may or may not be correct. There are usually differences between forecast and actual results because events and actual circumstances frequently do not occur as forecast and these differences may be material. Tabcorp does not give any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur and you are cautioned not to place undue reliance on forward-looking statements. This announcement does not constitute an offer, invitation or recommendation to subscribe for or purchase any securities and neither this announcement nor anything contained in it shall form the basis of any contract or commitment. In particular, this announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or to, or for the account or benefit of, any U.S. person (as defined in Regulation S under the Securities Act of 1933 (the Securities Act )) ( U.S. Person ), or in any other jurisdiction in which such an offer would be illegal. The securities referred to herein have not been and will not be registered under the Securities Act, or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, within the United States or to, or for the account or benefit of, U.S. Persons, unless the securities have been registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available. This document may not be distributed or released in the United States or to U.S. Persons. 10

Appendix A Creating Casinos entity and the new Tabcorp A demerger will create two entities with strong and established market positions: Casinos. The Casinos business operates four casinos - Star City in Sydney, Jupiters on the Gold Coast, Treasury in Brisbane and Jupiters in Townsville. The casinos attract approximately 45,000 visitors per day and together employ 8,100 staff. In the 2010 financial year, the Casinos generated revenues of $1.4 billion and EBITDA of $360 million. Star City reported revenues of $768 million and the Queensland casinos reported revenues of $604 million. In 2009, Tabcorp started a significant investment program to upgrade the casino properties and hotels. The largest investment is underway at Star City, which includes a new 5 star hotel tower, a reorientation of the property towards Sydney harbour, a significant expansion of the main gaming floor and an increase in the number of retail shops, bars and restaurants. Recently, the project expanded to include the development of a new events and conference centre and the upgrade of facilities to compete in the international VIP business. The total expansion at Star City is expected to cost $960 million. The project is on budget and on track for completion in mid calendar year 2012. As announced today, Tabcorp will invest a further $175 million to transform its Jupiters Gold Coast casino to an international entertainment and resort destination. The investment will significantly expand the non-gaming facilities, including eight new restaurants and bars, a new night life venue, a refurbishment of the pool area and creation of a new spa. Wagering, Gaming and Keno. Tabcorp is a leader in the retail gambling entertainment market in Australia. Its Wagering business operates across a network of 2,549 agencies and licensed venues, over the internet and by phone. The Wagering business includes Sky Racing, which broadcasts across 5,100 outlets and on Pay TV. Tabcorp s Gaming business operates 13,349 electronic gaming machines in 263 venues in Victoria, and Keno across more than 2,600 outlets in NSW, Queensland and Victoria. While Tabcorp will lose the rights to its Victorian gaming entitlements in 2012, its Tabcorp Gaming Solutions product offering continues to expand and has now achieved critical mass, with customers representing more than 6,000 EGMs already signed up to use TGS. Tabcorp s existing Victorian Wagering Licence and Victorian Keno authorisation (under which its Victorian Keno business is conducted) will expire in 2012. The Victorian Government has announced separate licensing processes to operate the businesses post 2012. Tabcorp has submitted an application for the Victorian Keno Licence. The Victorian Government has announced that Tabcorp has been invited to submit an application for the Victorian Wagering and Betting Licence. Tabcorp intends to submit an application. The exact terms of those licences (if awarded) and associated arrangements are still uncertain. 11

In the 2010 financial year the Wagering and Gaming businesses generated total revenues of $2.9 billion and EBITDA of $649 million. The Wagering business reported revenues of $1.7 billion and the Gaming business (including Keno) reported revenues of $1.2 billion. The businesses together employ 2,200 staff. 12

Appendix B Project Icon: Profile of the Expansion of Jupiters Gold Coast Casino The Jupiters expansion will: Improve and expand the non-gaming offer Six new restaurants Two new bars International night life venue Refurbishment of resort pool and gym area New spa facilities Beach club on the ocean s edge (subject to approval) Upgrades to surrounds and entry experience. Upgrade the gaming offer New Private Gaming Room, VIP gaming areas and VVIP gaming facilities Redeveloped Private Gaming Room Club Expanded Main Gaming Floor. The expansion is not dependent on gaming or other government concessions. The investment of $175 million represents an attractive opportunity for Tabcorp, with an expected improvement in EBITDA of more than $20 million p.a. by 2016 and an expected IRR of 14%. Construction is expected to commence in the middle of calendar year 2011, with all work scheduled to be completed in 2014. 13

Appendix C Entitlement Offer Institutional entitlement offer Existing eligible institutional shareholders will be invited to participate in the institutional entitlement offer which will open on 18 October 2010 and close at 11.00am (AEDT) on 19 October 2010. Retail entitlement offer A retail offer booklet containing information in respect of the retail entitlement offer will be sent to eligible retail shareholders on 25 October 2010 and be made available on Tabcorp s website (www.tabcorp.com.au). The contents of Tabcorp s website do not form part of the offer documents for the Entitlement Offer. Eligible retail shareholders should read the retail offer booklet in full in deciding whether to subscribe for New Shares. Any eligible retail shareholder who wishes to acquire New Shares under the retail entitlement offer will need to complete, or otherwise apply in accordance with, the personalised entitlement and acceptance form that will accompany the retail offer booklet. Retail Shareholders who have questions regarding the retail entitlement offer can call the Tabcorp Shareholder Information Line on 1300 880 923 (local call cost within Australia) or +61 2 8280 7504 (from outside Australia) at any time from 8:30am to 5:00pm (AEDT) Monday to Friday during the Retail Entitlement Offer period. Ineligible Shareholders Any Tabcorp shareholder: whose address is shown on the register on the Record Date to be a place outside of Australia, New Zealand and certain other eligible jurisdictions (as determined by Tabcorp and the Underwriter); or who is in the United States or a U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933) or acting for the account or benefit of a U.S. Person (other than those institutional Tabcorp Shareholders who are notified by Tabcorp that they are eligible to participate in the Institutional Entitlement Offer), will be an Ineligible Shareholder for the purposes of the Entitlement Offer. The number of New Shares that would otherwise have been offered to Ineligible Shareholders will be sold under the bookbuild processes described in the main body of this announcement. Any proceeds of such sales in excess of the issue price of $6.25 per share (net of any withholding tax) will be paid proportionately to Ineligible Shareholders. Refer to Entitlement Offer section in the main body of this announcement for further details on the bookbuild processes. 14

The payment of any such net proceeds may have Australian and overseas tax consequences for Ineligible Shareholders depending on their own individual circumstances. Ineligible Shareholders should seek professional tax advice regarding the taxation of any proceeds they receive. Stock Lending and Other Transactions Eligible shareholders will be entitled to apply under the Entitlement Offer for 1 New Share for every 9 existing Tabcorp shares held as at 7.00pm (AEDT) on the record date. Tabcorp has been granted a waiver by ASX so that, in determining shareholder entitlements for the Entitlement Offer, it may ignore any changes in shareholdings that occur after the announcement of the trading halt in Tabcorp's securities made earlier today (other than registrations of transactions that were effected through ITS before that announcement). Accordingly, a person who is a registered shareholder of Tabcorp at 7.00pm (AEDT) on the record date as a result of a dealing after the announcement of the trading halt (other than the registration of a transaction effected through ITS before that announcement) may not receive an entitlement under the Entitlement Offer. This means, for example, that in the event a Tabcorp shareholder has existing Tabcorp shares out on loan, the borrower will be regarded as the shareholder for the purposes of determining the entitlement (provided that those borrowed shares have not been on-sold or used to cover a short sale). 15