Intertain hits the Jackpot in London

Intertain hits the Jackpot in London

Friday, January 27, 2017
Bingo operator completes listing switch

JackpotJoy, the former Toronto-listed Intertain, enjoyed a positive debut as a listed entity on the London Stock Exchange with a welcoming 2.5 percent rise in the share price which rose 616.5p on the day.

The official launch of the stock in London was accompanied by the release of a prospectus which came with further controversies for the company whose London debut had been delayed by factors relating to the earnout payments to the former owner of the JackpotJoy brand Gamesys and by Credit Suisse ending its role as listing sponsor.

According to the prospectus, Intertain and now JackpotJoy is set to make ‘success fee’ payments for the achieving the listing to consultant Yoel Altman who was charged last year as part of the investigations of the Quebec Securities regulator into insider trading at Amaya.

Altman was previously paid C$3m for advising on Intertain’s main acquisitions of JackpotJoy, Mandalay Media (the owner of the Costa Bingo brand) and Intercasino. He has also received C$1.5m for helping with the London listing and is set to receive a further C$3.5m.

The JackpotJoy float had been delayed since it was announced it would be seeking a listing switch in September last year. This followed an internal review and the appointment of former Sportingbet head honcho Andy McIver as chief executive and ex-Gala Coral chairman Neal Goulden as chairman.

The company is thought to have run into trouble after questions arose over the level of the earnout due to Gamesys. The path to listing was smoothed after a payment of £160m was made in December and according to the prospectus a further maximum of £375m will be due at regular intervals between now and 2020.

Connected with the December payment, JackpotJoy also entered into a debt agreement with Macquarie Capital that raised £160m late last year. As of September the company said net debt stood at C$365.8m.

In the year to December, 2016, the company estimates EBITDA came in at between C$175m and C$195m.

The prospectus also made clear the dependence of the business on Gamesys for key platform services and gaming content. It said that Gamesys has “substantial control over the Jackpotjoy business during the Jackpotjoy earnout period” including control over the strategic plan and budget. It points out that JackpotJoy may not be able to continue to operate the business upon termination of the operating agreements, albeit these were extended last year.

Totally Gaming says: JackpotJoy has listed after a protracted pregnancy period that included the loss from the listing ticket of one of its advisers and questions regarding the high dependency on Gamesys for the JackpotJoy business. But regardless, as the earnings estimates for 2016 prove, at heart the company is a very profitable business albeit with the caveat that issues regarding the imposition of gross profits tax on bonuses in the UK later this year clouds the picture slightly.

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