TO BE ACQUIRED BY ORANGE CAPITAL
Gaming Nation Inc. (FAN.V) has entered into an arrangement agreement with OC Special Opportunities Fund LP, a private investment fund, managed by Orange Capital Ventures GP LLC. Under the arrangement agreement, and with the unanimous support from Gaming Nation's board of directors (the "Board"), Orange Capital will acquire all of the issued and outstanding shares of Gaming Nation, other than certain shares held by members of management and the Board, for CAD$0.95 in cash per share. The purchase price represents a 90% premium to the unaffected closing share price of CAD$0.50 on February 22, 2017, the day prior to the announcement of the Company's strategic review process. The price per share implies an aggregate fully-diluted equity value for Gaming Nation of approximately CAD$44 million.
Peter Luukko, Chairman of the Board of Gaming Nation, said, "After a comprehensive review of strategic alternatives, and with the support from shareholders representing 45% of Gaming Nation's outstanding shares, we believe Orange Capital's offer is in the best interests of the Company. In addition to the significant premium, we believe there are other benefits to privatization and we look forward to working closely with Orange Capital to complete this transaction."
"Gaming Nation represents an exciting investment opportunity for our investment partnership, and we look forward to working with Gaming Nation's management and employees," said Daniel Lewis, Managing Partner of Orange Capital.
The cash purchase price represents a 90% premium to the unaffected closing share price of CAD $0.50 on February 22, 2017, the day prior to the announcement of the strategic review process.
The Arrangement is not subject to a financing or due diligence condition.
At the request of Orange Capital, to reinforce Gaming Nation's senior management team's full commitment to the Company's long-term success, Gaming Nation's CEO, Scott Secord, together with certain members of Gaming Nation's senior management team and Board (Blair McGibbon, Richard Crowe, Peter Luukko and Patrick Burke) (collectively, the "Rollover Shareholders") have agreed to exchange an aggregate of 2.3 million shares (representing the majority of their shareholdings) for units of Orange Capital or an affiliate thereof.
In addition, certain significant shareholders of Gaming Nation have entered into voting agreements with Orange Capital and have agreed to vote all of their shares (including shares issuable upon the exercise of options and warrants) in favour of the transaction. Together with the Rollover Shareholders, 20.8 million shares representing 45% of the fully diluted shares outstanding are subject to the voting agreements, including shares held by the Company's largest shareholder.
Gaming Nation's Board formed a special committee (the "Special Committee") to negotiate and review the transaction. The Special Committee and the Board have unanimously recommended that the shareholders vote in favour of the transaction.
The Arrangement Agreement provides for a termination fee of CAD $2,000,000 payable by the Company if the Arrangement Agreement is terminated in certain circumstances and a reverse termination fee of CAD $4,000,000 or CAD $2,500,000 payable by Orange Capital if the Arrangement Agreement is terminated in certain circumstances. Orange Capital has placed CAD $4,000,000 into escrow with an escrow agent.
Following closing, Gaming Nation's shares will be de-listed from the TSX-V and no longer traded publicly.
The transaction will be implemented by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (Ontario). The implementation of the Arrangement will be subject to shareholder approval at a special meeting of shareholders of Gaming Nation (the "Special Meeting"). The Arrangement will constitute a "business combination" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions. The Arrangement will therefore require the approval of the holders of a majority of the shares cast at the Special Meeting excluding those shares held by the Rollover Shareholders, in addition to approval by 66 2/3% of all votes cast at the Special Meeting. The transaction is also subject to the approval of the Ontario Superior Court of Justice and the TSX Venture Exchange, in addition to certain regulatory approvals and closing conditions customary for a transaction of this nature.
The Board's recommendation of the transaction is the result of the Special Committee's strategic review process that began in February 2017. The Board, based on the recommendation of the Special Committee and after receiving legal and financial advice, unanimously recommends that the shareholders vote in favour of the transaction.
Canaccord Genuity is serving as financial advisor to Gaming Nation and provided a fairness opinion to the Board. Stikeman Elliott LLP is acting as legal counsel to Gaming Nation. Trimaven Captial Advisors was the financial advisor to Orange Capital. Norton Rose Fulbright Canada LLP is acting as legal counsel to Orange Capital.
Additional Information About the Proposed Transaction
A description of the various factors considered by the Board in its determination to approve the transaction, as well as other relevant background information, will be included in the management information circular to be sent to the Company's shareholders in advance of the Special Meeting. The management information circular, the Arrangement Agreement, the plan of arrangement and certain related documents will be filed with the Canadian securities regulators and will be available on SEDAR at www.sedar.com.
The Company also advises that its normal course issuer bid and associated automatic share purchase plan has concluded.
About Orange Capital
Orange Capital Ventures GP, LP is a New York based investment manager in private and public equity and debt. Mr. Daniel Lewis, founder and Managing Partner, was the Managing Partner and Chief Investment Officer of Orange Capital, LLC, from 2005-2016. Orange Capital, LLC was an event driven investment fund with over $1 billion in assets under management. Mr. Lewis also served as a Director Trustee of InnVest Real Estate Investment Trust. Other principals of Orange Capital include Ankur Dharia and Rhea Persaud, who were both previously employed by Orange Capital, LLC.
About Gaming Nation Inc.:
Gaming Nation Inc. (TSX VENTURE: FAN) provides technology and information platforms to the sports and entertainment industry. The Company's platforms include 5050 Central, an electronic real-time raffle system, BD Sport Group, providing in-stadium betting in the UK football market, and sports information websites Fantasy Guru, Fantasy Guru Elite and Pick Nation.