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David Baazov, president and chief executive officer of gaming company Amaya Inc, looks on prior to their annual general meeting in Montreal, June 22, 2015. REUTERS/Christinne Muschi/File photo

Christinne Muschi/Reuters

When David Baazov, founder and former chief executive officer of Canadian online gambling company Amaya Inc. unveiled his $24 a share proposal to buy Amaya on Nov. 14, it all seemed pretty straightforward.

Mr. Baazov had tabled a shareholder-friendly offer that was 31 per cent above the latest closing price of Amaya's shares. Unlike his previous Jan. 31 attempted bid, which had almost no information on funding, Mr. Baazov said he had "binding equity commitments" from four overseas entities for $3.65-billion (U.S.) Mr. Baazov said he just needed 5 business days to firm things up completely. After Mr. Baazov's announcement, Amaya shares jumped more than 14 per cent to close at nearly $21 on the Toronto Stock Exchange. While investors were bidding the shares sharply higher on news of the planned bid, the trading showed they left a fair chance the deal would not get done. After all, it wasn't clear how exactly Mr. Baazov and his backers were going to pull off the hefty financing required.

Nearly three weeks later, it still isn't. Two of the original four firms named as part of the equity syndicate on proposed deal are no longer involved.

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And some observers are raising questions about the ability of the two remaining to raise the required funds, and whether the deal will actually be completed.

The size and scale of Mr. Baazov's proposed privatization of Amaya is the kind that multibillion-dollar private equity firms and investment banks typically make. In fact, in 2014, when Amaya bought Rational Group and its PokerStars operation for $4.9-billion (U.S.), that deal was financed by some of the best known financial institutions in the world, including Deutsche Bank AG, Barclays Bank PLC, Macquarie Capital, and GSO Capital Partners, the credit wing of The Blackstone Group.

For the currently proposed deal, Mr. Baazov's remaining partners are two little-known Hong Kong outfits: Head and Shoulders and Goldenway Group. If they were to equally share the financing for Mr. Baazov's $3.45-billion (U.S.) amended proposal to acquire Amaya, they would each be responsible for more than $1.7-billion (U.S.).

SpringOwl Asset Management LLC, a New York-based hedge fund company and owner of more than a million shares in Amaya, on Thursday sent a strongly worded letter to Amaya Inc.'s board urging it to sever all ties with Mr. Baazov and to not entertain his proposal.

"It is time for the company to full move on from the undue influence of former CEO David Baazov. Among other things we are not supportive of the self-interested, unsubstantiated potential transaction," wrote Jason Ader, CEO of SpringOwl in the letter.

"Given Mr. Baazov's current legal situaton and the lack of clarity … we believe the Baazov offer, if pursued, has significant risks to closing."

"We will continue to engage constructively with SpringOwl," said a statement provided by Amaya spokesperson Eric Hollreiser.

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In March, Mr. Baazov was charged with multiple counts of illegal insider trading, including stock manipulation, by the Autorité des marchés financiers (AMF), Quebec's securities regulator. None of the charges, in connection with the Rational Group deal, has been proven in court.

Riyaz Lalani, a spokesperson for Mr. Baazov, insists his Amaya proposal will succeed. "Mr. Baazov is highly confident in the ability of Head & Shoulders and Goldenway to finance the proposed transaction," the spokesperson wrote in an e-mail to The Globe and Mail on Thursday.

Head and Shoulders and Goldenway are small, privately held firms, virtually unknown outside their domestic market.

Founded in 1999, Head and Shoulders Financial Group Ltd. is based in Hong Kong but incorporated in the Cayman Islands. The firm's main English-language website lists operations that include wealth management, corporate credit and brokerage services.

Head and Shoulders Financial is also the parent of the Head and Shoulders Global Investment Fund SPC and the HS Special Event Segregated Portfolio, entities named by Mr. Baazov as key equity sponsors along with Goldenway.

Since it's a private company, Head and Shoulders' financials are not publicly available, with one exception: Earlier this year, Head and Shoulders attemped to go public in Hong Kong, and as part of a regulatory requirement was required to disclose detailed financials. For a time, the documents were posted on the website of the operator of the Hong Kong stock exchange, but were deleted after the IPO was aborted.

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On Thursday, Andrew Webb, a Hong Kong-based corporate governance advocate and former investment banker, posted the documents on his financial data and news site Webb-site.com. Mr. Webb says he posted the financials "in the interests of transparency" given that funds owned by Head and Shoulders are a key financial backer in the Amaya takeover transaction. The documents reveal a company that is a small player in the world of financial services.

As of Dec, 31. 2015, Head and Shoulders Financial had $615-million (Hong Kong) in assets under management, or roughly $79-million (U.S.). Head and Shoulders has 22 employees worldwide according to the document.

Head and Shoulders Global Investment Fund SPC had assets under management of $58-million (U.S.) as of the end of last year, and posted a one-year return of negative 19 per cent. HS Special Event Segregated Portfolio had no assets, according to the filing.

"Head and Shoulders is one of the [Amaya] backers that is supposed to have a lot of resources. Well, it doesn't," said Mr. Webb in an interview from Hong Kong on Thursday.

"Unless it has grown massively since then, they would not be in a position to finance [the deal]," he said.

In the same filing, Stanley Choi is named as a controlling shareholder of Head and Shoulders Financial. He is also chair of Head and Shoulders.

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"Head & Shoulders has more than sufficient capital committed with our LPs [limited partners] for our commitment to the Amaya transaction," Mr. Choi wrote in an e-mail to the Globe on Thursday. Mr. Choi declined to identify who those end investors are.

Apart from his business dealings, Mr. Choi is also known as a competitive poker player. In 2012, he won the Macau High Stakes Challenge, earning a $6.4-million (U.S.) jackpot.

Goldenway Group, the other equity sponsor for the proposed Amaya transaction, like Head and Shoulders, is privately held and not subject to the widespread disclosure rules of a public company. The firm's main English-language website lists four business arms: securities, precious metals, foreign exchange and asset management.

According to Mr. Webb, the Hong-Kong based financial services industry veteran, Goldenway is not well known in China and it is not a major player in finance. "I never heard of Goldenway," he said.

There are traces of the company to be found in publicly disclosed documents. For a few years, Goldenway's precious metals and foreign exchange arm was publicly traded on the over-the-counter market (OTC) in the United States. A filing with the U.S. Securities and Exchanges Commission (SEC) for the period ending Dec 30, 2013, showed assets of $57-million (U.S.) for Goldenway Inc.

Goldenway also has a foreign exchange and trading operation in Britain called Goldenway Global Investments. A regulatory filing showed revenue of $1.04-million and assets of $1.5-million as of the end of fiscal 2015, according to Bloomberg data.

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In an interview with the Globe and Mail last week, Wai Lam (Ricky) Lai, director with Goldenway Group, said the firm's investment in Amaya is being handled through Goldenway's private equity wing. Goldenway has the ability to invest at least $800-million (U.S.) in the gambling company, he added.

But in an e-mail to the Globe on Thursday, Mr. Lai suggested Goldenway doesn't have firm financial commitments from its investors yet.

"All the investment structure details and participants are not yet finalized," Mr. Lai wrote in the e-mail.

"Goldenway Capital SPC-Special Event SP would be one of the investors. There will be probably more than three entities eventually."

Amaya shares tumbled last week when The Globe reported some unexpected developments in Mr. Baazov's proposed takeover. First, the chief executive of KBC Aldini Capital Ltd. of Dubai, one of the originally named backers on the deal, said the firm had nothing to do with the Amaya deal. Mr. Baazov later announced "the equity commitment letter purported to be delivered to Mr. Baazov on behalf of KBC was delivered without KBC's knowledge or consent."

The Globe also reported that Ferdyne Advisory Inc., another originally named backer, was stricken from a British Virgin Islands registry in 2013 for non-payment of fees and no longer appears to be a going concern. Ferdyne was not listed as part of the amended Amaya takeover plan.

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Canaccord Genuity Group Inc. is the financial adviser to Mr. Baazov and Canaccord's CEO Dan Daviau is named in a filing as the chief point person on the deal. Canaccord has declined requests for comment. Goodmans LLP, legal adviser to Mr. Baazov, has not responded to requests for comment.

Shares in Amaya closed at $19.12 apiece on Friday, about $5 below the offer price, showing investors remain unsure.

Still, nobody can rule out the possibility that a deal gets done. The two Hong Kong entities may have other means they haven't disclosed to raise the billions required from other investors.

But many also wonder, if there are other investors behind the deal, who are they? Why the big mystery?

With a file from Nicolas Van Praet

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