Posts Tagged ‘Amaya’
In a case that is now dragging on into its second year regarding a transaction from 2014, former Amaya Gaming Chief Executive Officer David Baazov now has a date set for his trial on insider trading charges.
In proceedings held last week in the Quebec Court, Judge Claude Leblond scheduled the start of Baazov’s trial for a November 20 start date. Counting in holidays, the lawyers concluded that the trial will take about 13 weeks as the prosecution plans an extensive case. The attorneys for the Autorité des marchés financiers (AMF), the province of Quebec’s equivalent of the U. S. Securities and Exchange Commission, have called the case against Baazov and two defendants the “largest insider trading investigation in Canadian history” and plan to call around 50 witnesses.
Other than the sheer number of witnesses (including some that potentially could testify via videoconference), there are other problems that are lengthening the potential trial. The trial will be conducted in French (Quebec’s provincial language) because, as explained by the Toronto Globe and Mail, the case is a penal proceeding under Quebec’s securities act. Leblond has stated that an attempt to seat a bilingual judge will be taken and that the case will have all proceedings translated as close to simultaneously as possible. The evidence in the case, strangely enough, will be presented in English.
There is no list of witnesses at hand, but employees from Amaya’s investment bank, Canaccord Genuity Securities, are expected to be called. Additionally, at least one “informant” not named previously in court documents will be called to testify, although there is no information as to whether than informant will testify anonymously or not.
The case dates back to 2014 in what was – and still is – the largest online gaming transaction in the industry’s history. The #1 online poker website in the world, the privately owned PokerStars, was approached by Amaya Gaming and Baazov early in the year about a potential buyout of the family ownership behind PokerStars, the Scheinbergs. Negotiations moved quickly and, by June, the $ 4.9 billion transaction was complete for the online operations and all other pertinent properties.
What the AMF were concerned about was the period prior to the actual completion of the transaction. In unveiling their case a year ago, the AMF alleged that Baazov and two other men, Benjamin Ahdoot and Yoel Altman, utilized the information they had regarding the potential deal to make stock trades “while in possession of privileged information.” Along with the trio, three companies – Diocles Capital, Sababa Consulting and 2374879 Ontario – are also charged with insider trading and attempting to alter the fair market price of Amaya’s stock. Baazov also faces a communication of privileged information charge along with the other two charges.
There seems to be at the minimum smoke where the alleged fire is located. Prior to the sale, Amaya Gaming stock was trading around $ 7.50 per share on the NASDAQ boards but, as the information emerged that the deal was imminent, the share price soared over $ 35, nearly a five-time increase. Even today, the stock for Amaya is still trading around $ 15 ($ 14.50, to be exact).
Baazov has had a tumultuous history since the allegations came out in 2016. Since the charges were brought against him, Baazov has looked to stay in charge at Amaya Gaming before eventually taking a “leave of absence” that became permanent at the end of last year. He has also entertained the notion of buying PokerStars from Amaya Gaming and taking it back into private ownership. In December, that potential deal fell through, even though Baazov and his investors were offering more than what the stock was worth at that time ($ 24 per share, a 30% increase over its board price).
Even with the trial date set, there is still the potential for the AMF and the defendants to strike a deal and avoid any court proceedings. This is a fact that isn’t being ignored by either side as the attorneys are not making any statements to the press regarding the case that could affect any deal discussions. If convicted of the charges they face, Baazov and company would face stiff fines and potentially lengthy jail time.
After receiving feedback from the players regarding their inaugural event in the Bahamas, officials with PokerStars and Amaya Gaming have made some adjustments to their upcoming stop in Panama. Of interest to most players will be the more than $ 600,000 in guarantees to the tournament schedule, but other factors may drive player interest to head for Central America.
Most of the guaranteed money will be going to one tournament. The PokerStars National Championship – the organization that took over many of the national tours that PokerStars used to operate, including the Latin American Poker Tour – now will have a $ 400,000 guaranteed prize pool for its contestants. With a $ 1100 buy in, it is obvious that PokerStars is trying to drive some interest in this tournament, which replaced the LAPT Main Event.
Three other lower buy-in tournaments will have guarantees placed on them. The PokerStars Cup, a $ 440 buy in event, will have a $ 150,000 guaranteed prize pool. The $ 220 PokerStars Open will have a $ 50,000 guaranteed tournament, while a $ 120 buy in event on the schedule will feature a $ 20,000 guarantee. There are also two $ 120 super satellites for the National Championship that guarantee ten seats and two “freebuy” (no buy-in) satellites for the PokerStars Cup that will guarantee ten seats to the event (the “freebuy” tournaments will feature $ 20 rebuys).
Other aspects of the PokerStars Championship Panama have been adjusted by Amaya Gaming and PokerStars to be more player-friendly. The exhausting 90-plus tournament schedule that was run at the PokerStars Championship Bahamas has been scaled down for Panama, going from the originally scheduled 56 tournaments (that will run from March 10-20 in Panama City at the Casino Sortis Hotel, Spa & Casino) to a more realistic 46 events. The High Roller events will get some special treatment in the form of a “shot clock” – a clock to enforce quicker action – for both the $ 25K High Roller and the $ 50K Super High Roller. Finally, for almost every tournament late registration will be allowed until after Level 8 of the tournament.
The PokerStars Championship Bahamas – the renamed PokerStars Caribbean Adventure, for all intents, for a brand-new tour that used to be the European Poker Tour – suffered a bit under its new auspices. The 92-tournament schedule over a nine-day period was deemed to be far too many by both the players and the staff. Additionally, the expanded payout system, which saw 20% of the field paid instead of the usual 10-15% (the World Series of Poker instituted a 15% payout system last summer), was something that players grumbled over. The total numbers that attended in the Bahamas suffered as a result.
For the $ 5000 PokerStars Championship Bahamas Main Event, a 738-player field was in attendance. While that may sound good for a $ 5000 tournament, this was actually a massive drop from the 928 players that showed up for the tournament just last year (a 20.5% drop in attendance, to be exact) and a far cry from the “glory days” of the PokerStars Caribbean Adventure, when 1529 players attended the 2010 PCA (won by Harrison Gimbel). Both High Roller events saw reductions in the number of players (121 with 38 rebuys in 2017 for the $ 25K High Roller versus 173 and 52 in 2016; 41 and 13 in the $ 50K Super High Roller in 2017 versus 44 and 14 just a year earlier), and side events were reportedly sparsely attended.
The first leg of the new tour was the “familiar” part of the schedule and the traditional Bahamas start wasn’t immediately viewed as a bellwether for the new PokerStars Championship. The true indicator of the potential success of the new tour was always going to be the Panama stop (and its next stop in the Asian gaming capital of Macau). With the changes that they have implemented, Amaya and PokerStars officials hope they have now created a tournament stop that will demonstrate the validity of their logic to change from the EPT (and their relevant national tours) to the PokerStars Championship with the true indicator – massive player numbers.
Former Amaya, Inc. CEO David Baazov has ended his bid to purchase his former company and take it private. His offer was for CAD $ 24 per share, a 30 percent premium over Amaya’s stock price on November 11th, the date the offer was made. The total deal would have been worth nearly CAD $ 3.5 billion.
In a micro-statement on Tuesday, Amaya confirmed that the deal was off, saying, “Amaya Inc. (NASDAQ: AYA; TSX: AYA) confirmed today that discussions with its former Chief Executive Officer, David Baazov, regarding the offer to acquire Amaya by an entity to be formed, have terminated.”
Baazov also issued a statement to the media, explaining, “It became evident that the share price premium demanded by certain shareholders exceeded the price at which my investors and I would be willing to complete a transaction.”
It seems that the mention of “certain shareholders” might be a reference to SpringOwl Asset Management’s CEO Jason Ader, who wrote a letter to Amaya’s current CEO earlier this month objecting to Baazov’s offer, even going so far as to encourage the company to stop associating with its former boss altogether.
In the letter, Ader was very critical of Baazov himself, citing the insider trading scandal of which Baazov is currently the center and a $ 870 million judgment against Amaya in the Kentucky domain name seizure case, among other reasons.
The insider trading case goes back to when Amaya bought PokerStars parent Rational Group for $ 4.9 billion in June 2014. In March of this year, the Autorité des marchés financiers (AMF), Quebec’s financial regulator charged Baazov and others with insider trading, saying he engaged in “aiding with trades while in possession of privileged information, influencing or attempting to influence the market price of the securities of Amaya inc., and communicating privileged information.”
Baazov took a look of absence from Amaya shortly after the charges were made and eventually resigned in August.
In September, the AMF further accused Baazov and his cohorts of directing a kickback scheme to reward each other for insider information which led to trading profits. Kickbacks consisted of things like cash, checks, a $ 13,000 Rolex watch, and even allegedly a ten percent profit distribution for the people involved in the PokerStars acquisition.
When the announcement was made earlier this week that the deal had fallen apart, Amaya’s share price tumbled before the market’s open. On Monday, Amaya’s stock closed at USD $ 14.45 per share, but opened on Tuesday at USD $ 13.40, a drop of more than 7 percent. But as often happens, it rebounded over the course of the day, finishing at USD $ 14.25, down less than 2 percent.
Even though Baazov seemingly took a shot at Ader in his statement, it almost certainly wasn’t just Ader who didn’t like the deal. Beyond the dubiousness of Baazov’s involvement, the funds to buy Amaya were coming from an odd web of foreign investors. It would have been a complicated, highly leveraged transaction and was probably not worth the risk.
Less than two weeks ago, William Hill and Amaya Gaming confirmed rumors that they were discussing a potential merger. A so-called “merger of equals” would have actually been classified as a reverse takeover, as the smaller company, William Hill, would technically acquire the larger, Amaya. On Tuesday, both companies announced that the talks have ended and no deal will be made.
The writing appeared to be on the wall Thursday night when Parvus Asset Management, William Hill’s largest shareholder, controlling 14.3 percent of the company, sent an open letter to William Hill’s board panning the proposal. William Hill chairman Gareth Davis and interim chief executive Philip Bowcock met with Parvus co-founders Mads Eg Gensmann and Edoardo Mercadante a couple days earlier, but when Davis and Bowcock did not buy the Parvus duo’s reasoning for their dislike of the deal, Eg Gensmann and Mercadante took their concerns straight to the Board.
“We strongly encourage that the board and management stops wasting valuable time and shareholder resources pursuing this value-destroying deal,” they wrote.
“Instead the board and management must focus on maximising value for William Hill owners, rather than Amaya shareholders, by considering all alternative options available, including a sale of William Hill.”
Eg Gensmann elaborated to Reuters, saying that two major concerns were exchange rates that favored Amaya and that William Hill’s cash flow situation was better than Amaya’s. He felt that William Hill strengthening its poker business was not nearly as significant as Amaya strengthening its sports betting business.
“Effectively, you’re buying an overvalued asset using an undervalued currency,” he said.
Former William Hill CEO Ralph Topping backed Parvus, telling the Financial Times, “I fully support what Parvus are doing, because they are good people. When this deal was announced I was left scratching my head. Both [Amaya and William Hill] have a lot to sort out in their own business. I’m very anxious on the future of William Hill.”
In a press release, William Hill did mention the discussions with Parvus Asset Management:
At the time of the announcement on 10 October 2016, various exploratory due diligence and other workstreams were underway but far from complete. After canvassing views from a number of William Hill’s major shareholders, the Board has decided that it will not pursue discussions with Amaya. Accordingly, the Board has informed Amaya that it is withdrawing from discussions and wishes Amaya well for the future.
The Group has continued to focus on the four priorities set out by Interim CEO Philip Bowcock – online, technology, efficiencies and international – to deliver value for shareholders and will also continue to consider strategic alternatives where they have the potential to create shareholder value.
While it sounds like it was William Hill that nixed the deal, Amaya Chairman Divyesh (Dave) Gadhia provided the usual generic spin, saying in a press release, “Amaya is a strong and growing company with experienced management and a proven strategy to deliver profitable growth and shareholder value. Together with our financial advisors, we evaluated a wide range of strategic alternatives to maximize shareholder value and have concluded that remaining an independent company is in the best interest of Amaya’s shareholders at this time. The Board has full faith in Amaya’s management to execute on its strategy and objectives.”
Ending speculation of what would be a monumental shift in the online gaming and poker industry, this afternoon Amaya Gaming, the parent company for PokerStars, and the powerful online and live betting shop William Hill admitted that they are currently in discussion regarding a merger of the companies.
In a joint announcement meant to potentially squelch any potential rumor-mongering, the two companies said, “The Boards of William Hill and Amaya Inc. (have noted) the recent press speculation and confirm that they are in discussions regarding a potential all share merger of equals. The potential merger would be classified as a reverse takeover under the Listing Rules of the Financial Conduct Authority and is not subject to the City Code on Takeovers and Mergers.” In essence, this states that the smaller company – William Hill – would be the one taking over the larger company – Amaya Gaming.
“Amaya has been undertaking a review of its strategic alternatives since February 2016,” the statement continued. “Over recent months, the Board of William Hill has been evaluating options to accelerate William Hill’s strategy of increasing diversification by growing its digital and international business.” The statement does close with a bit of an attempt at staunching the speculation of a deal being imminent, saying, “These discussions are ongoing and there can be no certainty that an agreement will be reached.”
If there isn’t a deal in the works, then the two companies have put together some powerful financial organizations (which would facilitate the move) all for naught. Backing up William Hill are such financial companies as Citigroup Global Markets, Ltd. and the Macquarie Capital entities in both the United States and Europe. In Amaya Gaming’s corner is Barclays Bank, who is handling their end of the negotiations.
If the deal were to reach fruition, it would mark another seismic shift in the online gaming and poker worlds in general and also have an effect on the internet bookmaking operations outside of the United States. Amaya Gaming, as the owner of PokerStars, has aggressively moved into the U. S. through the New Jersey online gaming industry and has also been at the fore of trying to earn passage of regulation in the state of California. William Hill, which has been in the bookmaking business since 1934 and opened up its first online book in 1998, has constantly tried to find other outlets to go with its bookmaking operations. The resulting combination would bring a definitive answer to what is the largest online gaming operation in the industry.
It is a remarkable change from what occurred only a couple of years ago. In 2014, Amaya Gaming was but a minor player in the online gaming world but, with one humongous deal, changed the course of the company. Amaya negotiated the purchase of the Rational Group in June 2014, the group that owned the two largest online poker rooms in the world at that time (PokerStars and Full Tilt Poker). The $ 4.9 BILLION buyout was unheard of at the time and it would change the course of online poker definitively and online gaming also.
Since that purchase, Amaya Gaming has been attempting to maximize its profits from its purchase to appease its stockholders, but many on the poker community have accused it of giving up on customer service and amenities that its poker offerings once gave to its most valued players. The company also saw the mastermind behind the takeover of PokerStars and Full Tilt Poker (Full Tilt Poker was disbanded this spring, with PokerStars taking in their players), David Baazov, lost his position as Chief Executive Officer of Amaya Gaming after being charged with insider trading regarding the deal between Amaya and the Rational Group.
At this time, no further information has been offered by either entity in the discussions. Poker News Daily will continue to monitor the situation.