David Baazov Amends Controversial Amaya Takeover Bid

Less than two weeks after businessman David Baazov had made an official offer to acquire Canadian gambling company Amaya Inc., the bid was engulfed in serious controversy. Days after the gambling operator’s former CEO and Chairman submitted papers with the US Securities and Exchange Commission (SEC), one of the investors named in the filings denied any involvement in the deal.

This turn of events could eventually result in the transaction’s failure, although Amaya’s Board is yet to review Mr. Baazov’s proposal.

In November, the businessman made it known to the public that he was interested in buying the gambling company and take it private. However, it took more than nine months until he officially filed with the SEC. It was on November 14 when Mr. Baazov presented the necessary papers to the commission. He stated in the filing that he wanted to buy the company he had himself found for C$24 per share or approximately C$3.5 billion.

At that time, the former Amaya CEO’s bid was supposedly backed by four foreign investors – Dubai-based KBC Aldini Capital Ltd., Ferdyne Advisory Inc., Head and Shoulders Global Investment Fund SPC, and Goldenway Capital SPC, with the latter two being based in Hong Kong.

Soon after, KBC Aldini Capital Chief Executive Kalani Lal told Canadian media that his company had no involvement in the proposed transaction, throwing heavy clouds over the controversial bid.

On Friday, November 25, Mr. Baazov filed amended papers to the SEC, reducing the list of financial backers to just two – Head and Shoulders Global Investment Fund SPC and Goldenway Capital SPC. The Friday filing said that the two investors would provide $3.45 billion to finance the potential acquisition deal. In comparison, the November 14 SEC papers informed commissioners that the four listed investors would provide financial backing of around $3.65 billion.

The amended filing also contained Mr. Baazov’s explanation regarding the KBC Aldini Capital issue. The businessman suggested that KBC Aldini Capital representatives had delivered the equity commitment letter without the investor’s knowledge or consent.

There was also no mention of the other previously named financial backer – Ferdyne Advisory – in the Friday filing.

The amended bid is now to be considered by Amaya’s Board. However, the chances for such a controversial offer to be approved and recommended to the company’s shareholders may not be that big. On top of that, Mr. Baazov is currently the main subject of an investigation led by the Autorité des marchés financiers, known to be Québec’s securities regulator. Although the businessman pleaded not guilty to insider trading charges, the mere fact that he has appeared on the AMF’s radar screen is indicative of the problematic nature of his takeover bid.

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