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

A man wearing a face mask to prevent the spread of COVID-19 walks past a mural in Vancouver on Monday, Nov. 30, 2020. THE CANADIAN PRESS/Marissa Tiel
212 new COVID-19 cases in Interior Health over the weekend

A total of 490 cases remain active; 15 in hospital

This is the third year Raymond Imbeau and Barbara Kitz have picked up cans in the backcountry and donated the proceeds to COSAR. (Central Okanagan Search and Rescue)
Kelowna couple cleans forests for Central Okanagan Search and Rescue

Raymond Imbeau and Barbara Kitz donated $3,200 to COSAR

Lights will be on display for the annual Candy Cane Lane in Rutland until Jan. 1. - Mackenzie Britton/Capital News
Kelowna’s Candy Cane Lane to celebrate a decade of holiday lights

The event will run from Dec. 1 to Jan. 1, 2021

The video was used for (KGH Foundation - YouTube)
Okanagan filmmaker, poet win at L.A. Film Awards

Spoken word artist Shane Koyczan wrote and filmmaker David Nault produced the commercial

The Mission will be opening a temporary winter shelter starting on Dec. 1. (Kelowna’s Gospel Mission)
Gospel Mission’s winter shelter opens in downtown Kelowna

The temporary winter shelter will be in the former Kelowna Daily Courier offices

A B.C. Ambulance Service paramedic wearing a face mask to curb the spread of COVID-19 moves a stretcher outside an ambulance at Royal Columbia Hospital, in New Westminster, B.C., on Sunday, November 29, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. records deadliest weekend of COVID-19 pandemic with 46 deaths; more than 2,300 cases

Provincial health officer Dr. Bonnie Henry provides COVID-19 update

Join Rob Dinwoodie and bandmates for a Cowboy Christmas, Dec. 11 and 12 at Vernon and District Performing Arts Center. Seating is cabaret style on the stage for an intimate concert. (Contributed)
North Okanagan cowboys go virtual for Christmas

Cowboy Christmas streamed Dec. 11-25

Vernon is getting in the Christmas spirit with many homes decorating with lights and extras. (Caitlin Clow - Morning Star)
Christmas lights tour mapped out by Vernon realtor

More than 20 of the community’s best lit houses make up annual tradition

Kettle bells sit aligned in an indoor fitness studio. (PIxabay.com)
1 COVID-19 case at a B.C. fitness studio leads to 104 more infections, 6 school exposures

According to case data released by Fraser Health, one case of the novel coronavirus carries a big impact

Vehicles drive past a display thanking essential workers in Burnaby, B.C. on Sunday, Nov. 29, 2020. THE CANADIAN PRESS/Marissa Tiel
B.C. changing COVID-19 case reporting as virus spread continues

Manual counting takes more time, leads to errors

Salmon Arm RCMP say some patrons have been harassing local businesses over mask requirements. (Lachlan Labere-Salmon Arm Observer)
Police urge respect after Salmon Arm businesses report being harassed over mask rules

Wearing of masks in businesses and public spaces is currently mandated by the province

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

Salmon Arm RCMP officers attended two public COVID-19 demonstrations held in Salmon Arm on Saturday, Nov. 28.  (File photo)
Organizer of Salmon Arm COVID-19 demonstration fined $2,000 by RCMP

Police said some participants weren’t aware of the public health order prohibiting gatherings

Black Press Media and BraveFace have come together to support children facing life-threatening conditions. Net proceeds from these washable, reusable, three-layer masks go to Make-A-Wish Foundation BC & Yukon.
Put on a BraveFace: Mask fundraiser helps make children’s wishes come true

From Black Press Media + BraveFace – adult, youth and kid masks support Make-A-Wish Foundation

Most Read