NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES
TORONTO, Feb. 10, 2020 (GLOBE NEWSWIRE) -- Great Canadian Gaming Corporation [TSX:GC] (“Great Canadian” or “the Company”) announced today that it intends to make a substantial issuer bid (the “Issuer Bid”), pursuant to which the Company will offer to purchase for cancellation up to $500 million of its outstanding common shares (“Common Shares”) from shareholders.
The Company also announced that it has entered into an agreement with CIBC Capital Markets, Scotiabank, BMO Capital Markets and RBC Capital Markets, as joint bookrunners, on behalf of a syndicate of underwriters consisting of National Bank Financial Inc., TD Securities Inc., Raymond James Ltd., Canaccord Genuity Corp., Industrial Alliance Securities Inc., Cormark Securities Inc. and HSBC Securities (Canada) Inc. (collectively, the “Underwriters”), under which the Underwriters have agreed to purchase $180 million aggregate principal amount of senior unsecured debentures due December 31, 2026 (the “Debentures”) at a price of $1,000 per Debenture (the “Offering”).
Great Canadian is also pleased to announce that it has entered into a commitment letter (the “Commitment Letter”) with certain of its lenders to increase to $550 million (from $400 million) the capacity of the revolving facility under its Senior Secured Credit Facilities.
The Company plans to fund purchases under the Issuer Bid with a combination of cash on hand and proceeds drawn on the Senior Secured Credit Facilities.
The Debentures to be issued in the Offering will bear interest from the date of issue at 5.25% per annum, payable semi-annually in arrears on June 30 and December 31 of each year commencing June 30, 2020 and will mature on December 31, 2026.
In addition to the base Offering, Great Canadian has also granted the Underwriters an option to purchase up to an additional $27 million aggregate principal amount of Debentures, on the same terms and conditions, exercisable in whole or in part, for a period of 30 days following the closing of the Offering.
The Debentures will not be redeemable by Great Canadian before December 31, 2022, except upon the occurrence of a change of control of Great Canadian in accordance with the terms of the indenture governing the Debentures (the “Indenture”). On and after December 31, 2022 and before December 31, 2023, the Debentures will be redeemable, in whole or in part, at Great Canadian’s option at a price equal to 103.9375% of the principal amount of the Debentures redeemed plus accrued and unpaid interest. On and after December 31, 2023 and before December 31, 2024, the Debentures will be redeemable, in whole or in part, at Great Canadian’s option at a price equal to 102.6250% of the principal amount of the Debentures redeemed plus accrued and unpaid interest. On and after December 31, 2024 and before December 31, 2025, the Debentures will be redeemable, in whole or in part, at Great Canadian’s option at a price equal to 101.3125% of the principal amount of the Debentures redeemed plus accrued and unpaid interest.
On and after December 31, 2025, the Debentures will be redeemable at Great Canadian’s option at a price equal to the principal amount of the Debentures redeemed plus accrued and unpaid interest. Great Canadian will be required to provide not more than 60 nor less than 40 days’ prior notice of redemption of the Debentures.
Subject to any required regulatory approval and provided no event of default has occurred and is continuing under the Indenture, Great Canadian will have the option to satisfy its obligation to pay the principal amount of the Debentures due at redemption or maturity (together with any applicable premium) by delivering freely tradeable Common Shares to holders of the Debentures (“Debentureholders”). Any accrued and unpaid interest will be paid in cash. In such event, payment will be satisfied by delivering for each $1,000 due, that number of freely tradeable common shares obtained by dividing $1,000 by 95% of the current market price (determined in accordance with the Indenture) on the date fixed for redemption or maturity. The Debentures will not be convertible into common shares at the option of the Debentureholders at any time.
The Debentures will be direct, senior unsecured obligations of the Company and will rank: (i) subordinate to all existing and future Senior Secured Indebtedness of the Company (defined to include the Senior Secured Credit Facilities and other debt secured by a first lien on a material portion of the assets of the Company), (ii) subordinate to all existing and future secured indebtedness that is not Senior Secured Indebtedness, but only to the extent of the value of the assets securing such other secured indebtedness, (iii) pari passu with one another and, except as prescribed by law, with all other existing and future senior unsecured indebtedness of the Company, (iv) senior to any existing and future subordinated unsecured indebtedness of the Company, and (v) structurally subordinated to all existing and future obligations, including indebtedness and trade payables, of the Company’s subsidiaries. The payment of principal and premium, if any, of, and interest on, the Debentures will be subordinated in right of payment to all Senior Secured Indebtedness of the Company, as will be set forth in the Indenture under which the Debentures will be issued. The Indenture will not restrict the Company or its subsidiaries from incurring additional indebtedness or from mortgaging, pledging or charging its properties to secure any indebtedness or liabilities. None of the Company’s subsidiaries will guarantee the Debentures.
A preliminary short form prospectus qualifying the distribution of the Debentures will be filed with the securities regulatory authorities in each of the provinces of Canada. The Debentures have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
The Offering is subject to customary regulatory approvals, including approval of the Toronto Stock Exchange. The Offering is expected to close on or about March 2, 2020.
The Issuer Bid is proceeding by way of a modified “Dutch Auction” within a price range of not less than $39.00 per Common Share (the “Lower Limit”) and not more than $46.00 (the “Higher Limit”) per Common Share (in increments of $0.10 within that range). The tender process allows shareholders who wish to participate in the Issuer Bid to be able to do so through: (i) auction tenders in which they will specify the number of Common Shares being tendered at a price of not less than the Lower Limit and not more than the Higher Limit (in increments of $0.10 within that range) (“Auction Tenders”); (ii) purchase price tenders in which they will not specify a price per Common Share, but will rather agree to a specified number of Common Shares purchased at the purchase price to be determined by Auction Tenders; or (iii) proportionate tenders in which they will agree to sell, at the purchase price to be determined by auction tenders, a number of Common Shares that will result in them maintaining their proportionate equity ownership in the Company following completion of the Issuer Bid (“Proportionate Tenders”).
The Company is required to apply for exemptive relief from the relevant securities regulatory authorities in order to acquire Common Shares through Proportionate Tenders, as described above. Proportionate Tenders will only be accepted if an appropriate exemption order is obtained by the Company.
If Common Shares with an aggregate purchase price of more than $500 million are properly tendered and not properly withdrawn, the Company will purchase the Common Shares on a pro rata basis except that "odd lot" tenders (of holders beneficially owning fewer than 100 Common Shares) will not be subject to pro-ration.
The Company anticipates that the Issuer Bid will expire at 5:00 p.m. (Toronto time) on or about March 19, 2020 unless otherwise withdrawn or suspended.
The Board of Directors of Great Canadian (the “Board”) has determined that the Issuer Bid is in the best interests of the Company and its shareholders and is both an equitable and efficient way to distribute up to $500 million to its shareholders, and may provide them liquidity at a premium to current market prices.
“We would like to thank our shareholders for their commitment to Great Canadian and we are pleased to be able to offer a return of shareholder capital at a significant premium to our share price,” stated Rod Baker, Chief Executive Officer, Great Canadian.
“The substantial premium being offered rewards shareholders now, while at the same time provides shareholders potential long-term value creation as we continue to execute on our operational initiatives and extensive capital development projects required to support ongoing business needs,” added Mr. Baker.
After giving effect to the Issuer Bid, the Company expects that it will continue to have sufficient financial resources to conduct its ongoing operations and property development plans and to pursue new potential business opportunities, which may include strategic acquisitions.
The formal offer to purchase, the issuer bid circular, letter of transmittal and other related documents (the “Offer Documents”) containing the terms and conditions of the Issuer Bid and instructions for tendering Common Shares are being mailed to shareholders on February 13, 2020. These documents will be filed with applicable Canadian securities regulatory authorities and made available without charge on the Company’s SEDAR profile at www.sedar.com and on the Company’s website at www.gcgaming.com Shareholders should carefully read the Offer Documents prior to making a decision with respect to the Issuer Bid. Any questions or requests for assistance in tendering Common Shares to the Issuer Bid may be directed to Computershare Trust Company of Canada, as depositary for the Issuer Bid.
This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell Common Shares. The solicitation and the offer to buy Common Shares are only being made pursuant to the Offer Documents. Neither the Company nor the Board will make any recommendation to shareholders whether to tender or refrain from tendering their common shares to the Issuer Bid. Shareholders are strongly urged to consult their own financial, tax and legal advisors and to make their own decisions whether to tender or refrain from tendering their common shares to the Issuer Bid and, if so, how many Common Shares to tender.
ABOUT GREAT CANADIAN GAMING CORPORATION
Founded in 1982, Great Canadian Gaming Corporation is an Ontario based company that operates 25 gaming,
entertainment and hospitality facilities in Ontario, British Columbia, New Brunswick, and Nova Scotia. Fundamental to the Company’s culture is its commitment to social responsibility. “PROUD of our people, our business, our community” is Great Canadian’s brand that unifies the Company’s community, volunteering and social responsibility efforts. Under the PROUD program, Great Canadian annually supports over 1,400 charitable and non-profit organizations across Canada. In each Canadian gaming jurisdiction, a significant portion of gross gaming revenue from gaming facilities is retained by our crown partners on behalf of their provincial government for the purpose of supporting programs like healthcare, education and social services
This press release contains certain “forward-looking information” or statements within the meaning of applicable securities legislation. Forward-looking information is based on the Company’s current expectations, estimates, projections and assumptions that were made by the Company in light of historical trends and other factors. Forward-looking statements are frequently but not always identified by words such as “expects”, “anticipates”, “believes”, “intends”, “estimates”, “potential”, “targeted”, “planned”, “possible” or similar expressions or statements that events, conditions or results “will”, “may”, “could” or “should” occur or be achieved. All information or statements, other than statements of historical fact, are forward-looking information, including statements that address expectations, estimates or projections about the future, the Company’s strategy for growth and objectives, expected future expenditures, costs, operating and financial results, expected impact of future commitments, the impact of conditions imposed on certain VIP players, the impact of unionization activities and labour organization, the Company’s beliefs about the outcome of its notices of objection and subsequent appeals challenging the Canada Revenue Agency’s reassessments and its tax position on its facility development commission prevailing, the Company’s expected facility investment commission amounts and the Company’s projected future investments to obtain facility investment commission, the terms and expected benefits of the normal course issuer bid, the Company’s expected share of BC horse racing industry revenue in future years, the Company and its affiliates meeting threshold revenue growth amounts in the Ontario gaming industry in future years, the Company’s projected timeline for future development, and expectations and implications of changes in legislation and government policies, volatile gaming holds, the effects of competition in the market and potential difficulties in employee retention and recruitment. Such forward-looking information is not a guarantee of future performance and may involve a number of risks and uncertainties.
Although forward-looking information is based on information and assumptions that the Company believes are current, reasonable and complete, they are subject to unknown risks, uncertainties, and a number of factors that could cause actual results to vary materially from those expressed or implied by such forward-looking information. Such factors may include, but are not limited to: compliance with the terms of new operational services agreements with lottery corporations; changes to gaming laws and regulations that may impact the operational services agreements; pending, proposed or unanticipated regulatory or policy changes (including those related to anti-money laundering legislation or policy that may impact VIP play), volatile gaming holds, the effects of competition in the market; the development of properties in Ontario and transitioning of operations to the Company and affiliates; the Company’s ability to obtain and renew required business licenses, leases, and operational services agreements; unanticipated fines, sanctions and suspensions imposed on the Company by its regulators; impact of global liquidity and credit availability; actual and possible reassessments of the Company’s prior tax filings by tax authorities; the results of the Company’s notices of objection and subsequent appeals challenging reassessments received by the Canada Revenue Agency; the Company’s tax position on its facility development commission prevailing; adverse tourism trends and further decreases in levels of travel, leisure and consumer spending; competition from established competitors and new entrants in the gaming business; dependence on key personnel; the timing and results of collective bargaining negotiations and potential labour disruption; adverse changes in the Company’s labour relations; the Company’s ability to manage its capital projects and its expanding operations in jurisdictions where it operates; the risk that systems, procedures and controls may not be adequate to meet regulatory requirements or to support current and expanding operations; potential undisclosed liabilities and capital expenditures associated with acquisitions; negative connotations linked to the gaming industry; the risk associated with partnership relationships; First Nations rights with respect to some land on which the Company conducts operations; future or current legal proceedings; construction disruptions; financial covenants associated with credit facilities and long-term debt; credit, liquidity and market risks associated with our financial instruments; interest and exchange rate fluctuations; demand for new products and services; fluctuations in operating results; economic uncertainty and financial market volatility; technology dependence; privacy breaches or data theft; integration of acquired properties in Ontario; and changes to anti-money laundering procedures and protocols including additional requirements for determining source of funds. The Company cautions that this list of factors is not exhaustive. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. These factors and other risks and uncertainties are discussed in the Company’s continuous disclosure documents filed with the Canadian securities regulatory authorities from time to time, including in the “Risk Factors” section of the Company’s Annual Information Form for fiscal 2018, and as identified in the Company’s disclosure record on SEDAR at www.sedar.com.
The forward-looking information in documents incorporated by reference speaks only as of the date of those documents. The Company believes that the expectations reflected in forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct. Readers are cautioned not to place undue reliance on the forward-looking information. The Company undertakes no obligation to revise forward-looking information to reflect subsequent events or circumstances except as required by law. The forward-looking information contained herein is made as of the date hereof, is subject to change after such date, and is expressly qualified in its entirety by cautionary statements in this press release.
The Company has included non-International Financial Reporting Standards (“non-IFRS”) measures in this press release. Adjusted EBITDA, as defined by the Company, means earnings before interest and financing costs (net of interest income), income taxes, depreciation and amortization, share-based compensation, business acquisition, restructuring and other, gain on sale of land, and foreign exchange gain. Adjusted EBITDA is derived from the Condensed Interim Consolidated Statements of Earnings and Other Comprehensive Income, and can be computed as revenues less human resources expenses and property, marketing and administration expenses plus the share of profit of equity investments relating to principal operating entities. Unless otherwise noted, Adjusted EBITDA for the current and comparative periods exclude the results of discontinued operations. The Company believes Adjusted EBITDA is a useful measure because it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, service outstanding debt, and fund future capital expenditures. Adjusted EBITDA is also used by investors and analysts for the purpose of valuing the Company. Items of note may vary from time to time and in this press release include pre-opening costs, restructuring severance costs, impairment reversal of long-lived assets, facility development commission revenues previously deferred at Casino Nanaimo, other and the related income taxes thereon.
Readers are cautioned that these non-IFRS definitions are not recognized measures under International Financial Reporting Standards (“IFRS”), do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to net earnings determined in accordance with IFRS or as indicators of performance or liquidity or cash flows. The Company’s method of calculating these measures may differ from methods used by other entities and accordingly our measures may not be comparable to similarly titled measures used by other entities or in other jurisdictions. The Company uses these measures because it believes they provide useful information to both management and investors with respect to the operating and financial performance of the Company.
GREAT CANADIAN GAMING CORPORATION [TSX:GC]
39 Wynford Drive
North York, ON
For investor enquiries:
Ms. Tanya Ruskowski
Executive Assistant to the Chief Executive Officer and the President, Strategic Growth & Chief Compliance Officer
For media enquiries:
Mr. Chuck Keeling
Executive Vice-President, Stakeholder Relations & Responsible Gaming