Minority investors quick to reject proposed sale of Great Canadian Gaming to Apollo

Great Canadian Gaming stock ended the day at $38.90, up $9.99 or nearly 35 per cent

The Great Canadian Gaming Corp. logo is shown in a handout. The company says it has signed a deal to be bought by a U.S. private equity firm that values the casino operator at $3.3 billion. THE CANADIAN PRESS/HO

The Great Canadian Gaming Corp. logo is shown in a handout. The company says it has signed a deal to be bought by a U.S. private equity firm that values the casino operator at $3.3 billion. THE CANADIAN PRESS/HO

Great Canadian Gaming Corp.’s chief executive officer faced a barrage of questions Wednesday from some of its minority shareholders who oppose the casino operator’s acceptance of a $3.3 billion takeover announced the previous evening.

Apollo Global Management Inc. has agreed to pay $39 per share for the company — a price that’s about 35 per cent above Great Canadian’s recent value but well short of what some investment managers argue it is worth.

Great Canadian CEO Rod Baker, who has led the company for about a decade, said its independent directors had done a thorough job of analyzing Apollo’s offer but acknowledged they hadn’t approached other potential investors before unanimously recommending the deal.

“This is a very, very strong offer and reflects, we think, all of the potential of the business — factoring in what’s going to be a very difficult and uncertain period for some amount of time,” Baker said.

Great Canadian Gaming stock ended the day at $38.90, up $9.99 or nearly 35 per cent. It was the stock’s highest close since early March, a few days before the World Health Organization declared COVID-19 had become a pandemic.

The company runs 25 gaming, entertainment and hospitality facilities, primarily in Ontario and British Columbia, but has suspended most of its operations because of COVID-19-related public health restrictions.

Apollo said in its announcement that Great Canadian would remain headquartered in Toronto, led by a Canadian management team, but Baker said neither he nor his team has had any communications with the U.S. firm.

Earlier Wednesday, the company reported a $49-million net loss for the three months ended Sept. 30, of which $36.5 million or 66 cents per share are attributable to its common shareholders.

Revenue dropped 87 per cent from a year earlier to $43.1 million from $341.1 million and cash generated by Great Canadian’s operating activities shrank to $27.6 million from $99.5 million a year earlier.

Despite the impact of more than six months of reduced activity since the COVID-19 pandemic hit Canada early this year, Baker said Great Canadian can operate on a reduced level without Apollo but he recommends shareholders accept its offer.

He was criticized during the call by Bloombergsen Investment Partners, a Toronto-based investment firm that owns about 14 per cent of Great Canadian’s equity.

According to financial data firm Refinitiv, Bloombergsen is one of Great Canadian’s largest minority shareholders and Great Canadian is one of Bloombersen’s largest holdings in a portfolio worth about US$1.1 billion as of Aug. 31.

“This is a terrible and ridiculous deal,” said Sanjay Sen, president and co-founder of Bloombergsen.

“We will vote against this transaction. The equity value of the business has not been hurt, (it) isn’t burning much cash, we’ve turned the corner (on COVID) … (and) the U.S. regional casinos that are open are earning more money today than they were a year ago,” Sen said.

Baker said he recognized that Sen was upset but assured him the Apollo deal is in the best interest for shareholders and said Sen should understand that Great Canadian’s future growth may not be as strong as it has been in the past.

“This is not a sell-out on the cheap to some Americans,” Baker said.

“We don’t have to do this deal but this deal is being brought forward because it’s the absolute right thing for our shareholders. And, frankly, you and the others should take this.”

With no majority or controlling shareholder, Bloombergsen wouldn’t have enough votes to block the deal at a shareholder meeting to be held in December.

However, minority shareholder groups can sometimes combine forces to push for better terms or to block deals they oppose.

Representatives of two U.S.-based minority shareholders, Madison Avenue Partners and Breach Inlet Capital investors, said on the call that they would also vote against the Apollo deal.

Among other things, the investors said Great Canadian should have looked for alternatives to the Apollo offer, which was announced late Tuesday ahead of the company’s scheduled third-quarter financial report issued Wednesday.

David Paddon, The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

gambling

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Anita Huberman, CEO Surrey Board of Trade. (File photo: Tom Zytaruk)
Surrey Board of Trade calls for ‘immediate’ government help for businesses shut down

‘Don’t punish all businesses for the sins of a few,’ CEO Anita Huberman says

The 3D Digital Breast Tomosynthesis Mammography machine, new to the Surrey Breast Health Clinic at the Jim Pattison Outpatient Care and Surgery Centre. (submitted photo)
New 3D breast-cancer technology in Surrey ‘has already helped so many women’

Digital breast tomosynthesis new to Surrey Breast Health Clinic

Helen Watson, posing for a photo for her 100th birthday, turned 105 on Saturday (Nov. 21). (File photo)
South Surrey Spanish Flu survivor marks 105 years

Helen Watson has packed a lot into life – including being in two pandemics

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, Nov. 23, 2020. (B.C. government)
B.C. daily COVID-19 cases hits record 941 on Tuesday

Further restrictions on indoor exercise take effect

(Ashley Wadhwani/Black Press Media)
Refuse to follow B.C.’s mask mandate? Face a $230 fine

Masks are now required to be worn by all British Columbians, 12 years and older

Prime Minister Justin Trudeau speak to the media about the COVID-19 virus outside Rideau Cottage in Ottawa, Friday, Nov. 20, 2020. THE CANADIAN PRESS/Adrian Wyld
Canada’s inability to manufacture vaccines in-house will delay distribution: Trudeau

First doses of COVID-19 vaccine expected in first few months of 2021, prime minister says

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Beaver Creek RCMP Cpl. Robert Drapeau, left to right, Gary Bath, Lynn Marchessault, Payton Marchessault, Rebecca Marchessault and Tim Marchessault pose in this recent handout photo near the Canada-U.S. border crossing near Beaver Creek, Yukon. A family reunion trip for the woman from Georgia that left them stranded ended on a bright note when Bath drove them to the Alaskan border following an appeal for help. THE CANADIAN PRESS/HO, Gary Bath *MANDATORY CREDIT*
Help from B.C. man allows American family to reunite in Alaska

Lynn Marchessault drove from Georgia to the Alaska border to join her husband, who serves in U.S. military

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

There are 32 active outbreaks in seniors' homes in the Fraser Health region.
MAP: See the locations of 32 active COVID-19 outbreaks in Fraser Health seniors’ homes

There are 32 active outbreaks in assisted-living, long-term care homes and seniors’ rental buildings

(Pixabay.com)
Man, 28, warned by Kootenay police to stop asking people to marry him

A woman initially reported the incident to police before they discovered others had been popped the question

Winston Blackmore (left) and James Oler (right) were sentenced on separate charges of polygamy this week in Cranbrook Supreme Court.
No more charges expected in Bountiful investigation, special prosecutor says

Special prosecutor says mandate has ended following review of evidence from Bountiful investigations

Most Read