Intertain to pursue comprehensive UK-centred strategic initiatives to enhance shareholder value
Jul 26, 2016, 07:02 ET
INTENTION TO LIST ON LONDON STOCK EXCHANGE
INTENTION TO LIST EXCHANGEABLE SHARES ON TORONTO STOCK EXCHANGE
SENIOR MANAGEMENT SEES SIGNIFICANT OPPORTUNITY TO BUILD ON STRONG CORE ASSETS
TORONTO, July 26, 2016 /CNW/ - The Intertain Group Limited ("Intertain") (TSX:IT; OTCQX: ITTNF), the largest online bingo-led operator in the world, today announced its intention to pursue the comprehensive UK-centered strategic initiatives to enhance shareholder value (the "UK Strategic Initiatives") previously disclosed by Intertain. The UK Strategic Initiatives include a proposed London listing of the ordinary shares of a newly-incorporated London-headquartered UK corporation that would become the parent holding company for the Intertain group ("ListCo"). Intertain intends that the ordinary shares of ListCo would be admitted to the Official List of the UK Listing Authority ("UKLA") and to trading on the standard listing segment of the Main Market of the London Stock Exchange plc (the "London Listing"). Intertain is continuing to establish the eligibility of ListCo for listing in London.
Intertain expects to facilitate the UK Strategic Initiatives by way of a court-approved plan of arrangement (the "Arrangement"), which would provide for each existing common share of Intertain to be exchanged for one ordinary share of ListCo. Intertain also intends to allow certain Canadian resident shareholders to elect to receive exchangeable shares under the Arrangement instead of ListCo ordinary shares, also on a one-for-one basis. Intertain intends to apply to have these exchangeable shares listed on the Toronto Stock Exchange (the "TSX").
The Intertain board of directors (the "Board") does not currently intend to complete an offering of ordinary shares of ListCo in connection with the initial implementation of the UK Strategic Initiatives. However, Intertain is actively exploring its debt financing options in connection with that process as part of its ongoing evaluation of the alternatives available to meet its earn-out obligations, which are currently expected to substantially fall due in June 2017.
Neil Goulden, Chairman of the Board, commented, "We are very excited at the opportunities presented by the UK Strategic Initiatives proposed for Intertain. We believe that a London Listing will result in a fuller and more appropriate valuation of Intertain's business, as these strategic initiatives are a key part of a range of initiatives intended to significantly realign Intertain's share price with the company's fundamental business results and prospects. We also believe that they best position Intertain for long-term growth and success, which furthers our objective of enhancing shareholder value."
Speaking about the opportunity presented by the UK Strategic Initiatives, Andrew McIver, Chief Executive Officer, added, "Since my appointment, I have gained a deeper understanding of Intertain's businesses, its strong set of core assets and its talented team of managers and operators. This has reinforced my view that Intertain is a company that continues to be undervalued by the market. I believe that the UK Strategic Initiatives provide us with a significant opportunity to realize that value by giving us a platform to further develop Intertain's core assets, whether by organic growth, expansion into new geographic markets or otherwise, for the long-term benefit of Intertain and its shareholders and other stakeholders. I am excited to be leading the Intertain team as we build on our existing market-leading position in the online gaming industry going forward."
Determination to Pursue the UK Strategic Initiatives
Intertain's strategic review process (the "Strategic Review"), first announced in March 2016, has resulted in Intertain receiving preliminary and refined proposals from highly-credible strategic parties offering to acquire all of the shares of Intertain. Other proposals to acquire material business units of Intertain have also been received. Discussions in connection with this process continued following the outcome of last month's UK referendum on European Union membership, and the market disruption that resulted in the UK and elsewhere, but no definitive proposals have been received by Intertain from these potential interested third parties.
After careful consideration of a range of factors, including Intertain's recent financial and operating performance, the views expressed by significant shareholders and operating partners of Intertain during the course of the Strategic Review and the status of the third party sale process, the Board has unanimously accepted the recommendation of the Board's special committee of independent directors (the "Special Committee") and determined to pursue the UK Strategic Initiatives, including the London Listing.
The Board believes that continuing to operate as a standalone business under the strong leadership of Intertain's recently appointed Chairman of the Board, Neil Goulden, and its new operationally-focused Chief Executive Officer, Andrew McIver, offers a significant opportunity to maximize the potential long-term value for Intertain's shareholders and other stakeholders going forward. The Special Committee will continue to oversee the Strategic Review, which is now focused on implementing the UK Strategic Initiatives, and will continue to work closely with the other members of the Board and management of Intertain.
The Board intends to provide shareholders the opportunity to consider and vote on the Arrangement to facilitate the UK Strategic Initiatives at a shareholders meeting expected to be held in mid- to late-September 2016. Intertain also intends to hold an analysts' day in early September 2016, following the mailing of the management information circular in connection with the meeting, to discuss the UK Strategic Initiatives, including the anticipated composition of ListCo's board of directors and other matters, in more detail.
Significant Opportunities from London Listing
Intertain believes that the UK is the natural home for its listing, particularly following its acquisition of the Jackpotjoy business, and that the key advantages of a London Listing for the Intertain group remain substantially unaffected by the outcome of the UK referendum on European Union membership on June 23, 2016.
Intertain expects that a London Listing would provide it with access to a large, liquid and international market that is home to a significant number of Intertain's global gaming industry peers and a majority of its online gaming peers. As a result of this concentration of relevant gaming industry players, the London market is expected to afford the Intertain group greater exposure to a large analyst community with extensive sector experience and to increase the Intertain group's profile and status among UK- and European-based investors, who also have extensive sector knowledge and familiarity. All of this is anticipated to result in a broader and deeper market for ListCo's shares, contributing over time to a fuller and more appropriate valuation of the Intertain group's business.
Implementation of the UK Strategic Initiatives
Intertain expects to facilitate the UK Strategic Initiatives by way of the Arrangement under the Ontario Business Corporations Act. Upon completion of the Arrangement, Intertain would become an indirect subsidiary of ListCo, with ListCo being entitled to exercise 100% of the voting rights in Intertain.
Intertain currently anticipates that the Arrangement would provide for each existing common share of Intertain to be exchanged for one ordinary share of ListCo. Intertain intends to allow certain Canadian resident shareholders to elect to receive exchangeable shares as consideration for their Intertain shares, also on a one-for-one basis. The exchangeable shares would permit these eligible Canadian resident shareholders to participate in the Arrangement on a tax-deferred basis. Intertain expects that the terms of the exchangeable shares would provide that each exchangeable share will be exchangeable into one ListCo ordinary share, that they would carry rights that are, as nearly as practicable, economically equivalent to the ListCo ordinary shares, and that each holder of exchangeable shares would have the ability to direct one vote per exchangeable share held at any shareholders meeting of ListCo. Intertain intends to apply to have the exchangeable shares listed on the TSX.
The Board does not currently intend to complete an offering of ordinary shares of ListCo in connection with the initial implementation of the UK Strategic Initiatives in light of prevailing market conditions and its current share price. However, Intertain is actively exploring its debt financing options in connection with the initial implementation of the UK Strategic Initiatives as part of its ongoing evaluation of the alternatives available to meet its earn-out obligations, which are currently expected to substantially fall due in June 2017.
Completion of the Arrangement would be subject to shareholder approval and certain other conditions. In addition, completion of the London Listing would be subject to the approval of the UKLA and the listing of the exchangeable shares on the TSX to the approval of the TSX. There can be no assurance that any such approvals will be obtained or that such other conditions will be satisfied, or that any debt financing will be completed.
Shareholders with questions regarding the implementation process for the UK Strategic Initiatives are encouraged to contact Kingsdale Shareholder Services at: 1-866-581-1513 (toll-free in North America), by calling collect at 1-416-867-2272 (outside of North America) or by email at [email protected].
Advisors to Intertain
Canaccord Genuity and Credit Suisse International are acting as financial advisors to the Special Committee.
Osler, Hoskin & Harcourt LLP is acting as counsel to the Special Committee. Cassels Brock & Blackwell LLP and Clifford Chance LLP are acting as Canadian and UK/US counsel, respectively, to Intertain in connection with the UK Strategic Initiatives. Kingsdale Shareholder Services is acting as strategic and communications advisor to Intertain. Davis Polk & Wardwell LLP and McCarthy Tétrault LLP are acting as UK/US and Canadian counsel, respectively, to Credit Suisse International.
About The Intertain Group Limited
Intertain is an online gaming company that provides entertainment to a global consumer base. Intertain currently offers bingo and casino to its customers using the InterCasino (www.intercasino.com), Costa (www.costabingo.com), Vera&John (www.verajohn.com), Jackpotjoy (www.jackpotjoy.com), and Botemania (www.botemania.es) brands. For more information about Intertain, please visit www.Intertain.com.
THIS RELEASE AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM AUSTRALIA, JAPAN OR ANY JURISDICTION WHERE SUCH DISTRIBUTION WOULD BE UNLAWFUL OR WHICH WOULD REQUIRE ANY REGISTRATION OR LICENSING WITHIN SUCH JURISDICTION OR TO ANY OTHER PERSON.
The shares (including the exchangeable shares) anticipated to be issued pursuant to the Arrangement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and the shares (including the exchangeable shares) issued in the Arrangement are anticipated to be issued in reliance upon the exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Cautionary Note Regarding Forward-Looking Information
This release contains certain information and statements that may constitute "forward-looking information" within the meaning of Canadian securities laws. Often, but not always, forward-looking information can be identified by the use of words such as "expects", "intends", "anticipates", "estimates", "plans", "continues", "potential" and "believes" or the negative of such words or other variations or synonyms for such words, or state that certain actions, events or results "may", "could", "should", "would", or "will" be taken, occur or be achieved.
Forward looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance, achievements or developments to be materially different from those anticipated by Intertain and expressed or implied by the forward-looking information. Forward-looking information contained in this release includes, but is not limited to, statements with respect to: (i) the operations, business, financial condition, expected financial results, performance, valuation, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of Intertain, including the potential impact of the UK referendum on EU membership; (ii) the UK Strategic Initiatives, including their potential outcomes and ability to enhance shareholder value and provide a platform to develop Intertain's core assets; (iii) the London Listing and its potential outcomes, including to (a) provide access to a large, liquid and international market, (b) afford the Intertain group greater exposure to a large analyst community with sector experience, (c) increase the Intertain group's profile and status among UK- and European-based investors, (d) result in a more appropriate valuation of Intertain, and (e) position Intertain for long-growth and success; (iv) the nature and ability of Intertain to effect the London Listing, including the admission of the ordinary shares of ListCo to the Official List of the UKLA; (v) the nature and ability of Intertain to realize the potential benefits related to the London Listing; (vi) the use of the Arrangement to facilitate the UK Strategic Initiatives if Intertain proceeds with the UK Strategic Initiatives; (vii) the structure of the proposed Arrangement, including the use of exchangeable shares and their terms; (viii) the listing of the exchangeable shares on the TSX; (ix) the decision not to offer ordinary shares of ListCo; * the belief that continuing to operate as a standalone business offers a significant opportunity to maximize the potential long-term value for Intertain's shareholders and other stakeholders; (xi) the agenda, subject matter and timing of the Intertain shareholders meeting; (xii) the holding of an analysts' day; and (xiii) Intertain's earn-out obligations and evaluation of available financing alternatives. These statements reflect Intertain's current expectations related to future events or its future results, performance, achievements, developments, actions and future trends affecting Intertain. All such statements, other than statements of historical fact, are forward-looking information.
Such forward-looking information is based on a number of assumptions which may prove to be incorrect, including, without limitation, that the Intertain Risk Factors will not cause actual results, performance, achievements or developments to differ materially from those described in the forward-looking information. Such forward looking information could also be materially affected by risks, including, but not limited to: (i) that UKLA, TSX and other regulatory approvals may not be obtained on the terms anticipated by Intertain or at all and/or that Intertain may not obtain some or all of the benefits it expects to receive as a result of implementing the UK Strategic Initiatives (including the London Listing) in whole or in part; (ii) approvals, including shareholder approvals and the approval of the court, required to complete the UK Strategic Initiatives may not be obtained on terms anticipated by Intertain, or on terms that are favourable to Intertain or at all; (iii) that the costs of management time and money may adversely affect Intertain's business; and (iv) that market volatility or changes in the share price of Intertain do not adversely affect Intertain's ability to implement the UK Strategic Initiatives, including its ability to proceed with a debt financing on terms acceptable to Intertain or at all should Intertain choose to do so. The foregoing risk factors are not intended to represent a complete list of factors that could affect Intertain. Additional risk factors are discussed in Intertain's annual information form dated March 30, 2016 under the heading "Risk Factors". All such risk factors are referred to collectively as the "Intertain Risk Factors".
Although Intertain has attempted to identify important factors that could cause actual results, performance, achievements or developments to differ materially from those described in the forward-looking information, there may be other factors that cause actual results, performance, achievements or developments not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results, performance, achievements or developments are likely to differ, and may differ materially, from those expressed in or implied by the forward-looking information contained in this release. Accordingly, readers should not place undue reliance on forward-looking information. While subsequent events and developments may cause Intertain's expectations, estimates and views to change, Intertain does not undertake or assume any obligation to update or revise any forward-looking information, except as required by applicable securities laws. The forward-looking information contained in this release should not be relied upon as presenting Intertain's expectations, estimates and views as of any date subsequent to the date of this release. All of the forward-looking information in this release are expressly qualified by this cautionary note.
This release speaks as of the date hereof and has not been independently verified and no representation or warranty, express or implied, is given by or on behalf of Credit Suisse International ("CSI") or any of its respective directors, officers, employees, agents, affiliates or advisers as to, and no reliance should be placed on the fairness, accuracy, reliability, completeness, appropriateness, validity, quality, reasonableness, truth or correctness of the information or opinions including any statements, estimates and financial outlooks contained and/or referred to in this release or in any other written or oral communication made available in connection with this release; and no responsibility or liability is assumed by any such persons for such information or opinions or for any errors, omissions or misstatements contained herein.
CSI, which is authorized by the Prudential Regulation Authority (the "PRA") and regulated by the Financial Conduct Authority and the PRA in the United Kingdom, is acting exclusively as sole financial adviser to Intertain and no one else in connection with the UK Strategic Initiatives, and will not be responsible to anyone other than Intertain for providing the protections afforded to clients of CSI nor for providing advice in relation to the UK Strategic Initiatives, the content of this announcement or the matters referred to herein. Neither CSI nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of CSI in connection with this announcement, any statement contained herein or otherwise.
This release contains summary information only and does not purport to be comprehensive and is not intended to be (and should not be used as) the sole basis of any analysis or other evaluation.
SOURCE Intertain Group Ltd.
For further information: Investor and Media Contact: General: Amanda Brewer, Vice President, Corporate Communications, The Intertain Group Limited, Tel: +1 416 720-8150, [email protected]; UK media: Finsbury, James Leviton, Andy Parnis, Tel: +44 207 251 3801; North American media: Kingsdale Shareholder Services, Ian Robertson, Executive Vice President, Communication Strategy, Tel: +1 416 867-2333, Mobile: +1 647 621-2646, [email protected]
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