Amaya Inc. has cut a deal with a major creditor that sees the Canadian online gambling company extend the maturity on a key debt obligation, pre-empting the need for a dilutive equity raise.
The $197.7-million (U.S.) debt, which was due to be paid on Feb. 1., stems from Amaya's $4.1-billion (U.S.) acquisition of Rational Group in 2014. Under a previous agreement, Rational Group, the owner of PokerStars, had reserved the right to compel Amaya to issue shares to pay down its debt.
Amaya, based in Pointe-Claire, Que., said it now intends to pay down the obligation in cash over the course of 2017. The announcement helped to remove some uncertainty over the company's debt repayment schedule, with investors bidding up the stock on Monday. Shares in Amaya closed at $19.25 apiece on the Toronto Stock Exchange, an increase of 1 per cent.
"Based on our operations and performance in 2016, we are confident in our ability to repay the balance of the deferred purchase price in a timely manner," Rafi Ashkenazi, chief executive officer of Amaya, said in a news release on Monday.
Amaya has agreed to pay late fees to Rational Group that will range from the 30-day London Interbank Offered Rate plus 85 basis points (roughly 1.6 per cent), to 30-day Libor plus 135 basis points (roughly 2.1 per cent).
Amaya recently came through a turbulent period in which David Baazov, its founder and former CEO, launched a controversial attempt to take the company private. In November, Mr. Baazov announced he had financing lined up from four overseas equity funds to buy out shareholders at a premium of just more than 30 per cent.
The bid eventually collapsed after Mr. Baazov said that "certain shareholders" wanted more money than he and his investors were willing to pay. Prior to the proposal's demise, an investigation by The Globe and Mail raised questions about the financial wherewithal of the four overseas equity sponsors initially named as backers of his bid.
In August of last year, Mr. Baazov stepped down as CEO of Amaya after insider trading charges were brought against him by Quebec's securities regulator, the Autorité des marchés financiers. None of the charges, which include stock manipulation in connection with Amaya's acquisition of Rational Group, have been proven in court. If convicted, Mr. Baazov faces a sentence of up to five years.