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 woman wears a face mask and shield to curb the spread of COVID-19 while walking in North Vancouver, B.C., on Wednesday, January 6, 2021. THE CANADIAN PRESS/Darryl Dyck
57 new cases of COVID-19 in Interior Health region

Thirty people in the region are in hospital, 16 of whom are in intensive care

The TNRD is undertaking a Master Trails Plan for the community of Blue River. (Darcy Lawrey / Pexels Photo)
TNRD to develop trails plan for Blue River

A survey is available for public input on the TNRD website.

From left: Councillor Lucy Taylor, Councillor Barry Banford, Councillor Bill Haring, Mayor Merlin Blackwell, Councillor Lynne Frizzle, Councillor Lyle Mckenzie and Councillor Shelley Sim. (District of Clearwater photo)
District of Clearwater council approves tax rate increases for 2021

The 2021 tax rate bylaw will see adoption May 6.

Ian and Roger Nadeau are shown in front of one of their Thompson Valley Charters coaches. (TVC photo)
Hwy 5 Kamloops to Edmonton bus run delayed until May 20

Thompson Valley Charters delays start of new route to abide by BC Health travel advisory

A vial of the AstraZeneca COVID-19 vaccine is shown at a facility in Milton, Ont., on Wednesday, March 3, 2021. The White House says it is making plans to share up to 60 million doses of the Oxford-AstraZeneca COVID-19 vaccine. THE CANADIAN PRESS/Carlos Osorio - POOL
65 new cases of COVID-19 in Interior Health

The total number of cases in the region is now at 11,075 since the pandemic began

Jose Marchand prepares Pfizer COVID-19 vaccination doses at a mobile clinic for members of First Nations and their partners, in Montreal, Friday, April 30, 2021. The National Advisory Committee on Immunization is coming under fire after contradicting the advice Canadians have been receiving for weeks to take the first vaccine against COVID-19 that they’re offered. THE CANADIAN PRESS/Ryan Remiorz
Trudeau says he is glad he got AstraZeneca, vaccines are only way out of pandemic

‘The most important thing is to get vaccinated with the first vaccine offered to you’

B.C.’s provincial health officer, Dr. Bonnie Henry. THE CANADIAN PRESS/Jonathan Hayward
Dip in COVID-19 cases with 572 newly announced in B.C.

No new deaths have been reported but hospitalized patients are up to 481, with 161 being treated in intensive care

Solar panels on a parking garage at the University of B.C. will be used to separate water into oxygen and hydrogen, the latter captured to supply a vehicle filling station. (UBC video)
UBC parkade project to use solar energy for hydrogen vehicles

Demonstration project gets $5.6M in low-carbon fuel credits

FILE – A student arrives at school as teachers dressed in red participate in a solidarity march to raise awareness about cases of COVID-19 at Ecole Woodward Hill Elementary School, in Surrey, B.C., on Tuesday, February 23, 2021. THE CANADIAN PRESS/Darryl Dyck
B.C. ‘should be able to’ offer 1st dose of COVID vaccine to kids 12+ by end of June: Henry

Health Canada authorized the vaccine for younger teens this morning

A woman in the Harrison Mills area was attacked by a cougar on Tuesday, May 4. B.C. Conservation Officers killed two male cougars in the area; the attack was determined to be predatory in nature. (File photo)
2 cougars killed following attack on woman in Agassiz area

Attack victim remains in hospital in stable condition

A woman wears a face mask and shield to curb the spread of COVID-19 while walking in North Vancouver, B.C., on Wednesday, January 6, 2021. THE CANADIAN PRESS/Darryl Dyck
B.C. CDC updates info, acknowledging small respiratory droplets can spread COVID-19

Large droplets, not aerosols had been fixture of public health messaging for many months

A picture of Shirley Ann Soosay was rendered from a postmortem photographer and circulated on social media. (DDP graphic)
B.C. genealogist key to naming murder victim in decades-old California cold case

In July 1980, Shirley Ann Soosay was raped and stabbed to death

Mary Kitagawa was born on Salt Spring Island and was seven years old when she was interned along with 22,000 B.C. residents in 1942. (B.C. government video)
B.C. funds health services for survivors of Japanese internment

Seniors describe legacy of World War II displacement

Most Read