As part of an agreement forged between World Poker Tour Enterprises (WPTE) and Gamynia Limited earlier this month, WPTE officials may be subject to a $1 million penalty should the company call off the sale.
On August 3rd, a filing to the Securities and Exchange Commission (SEC) obtained by Poker News Daily notes, “If Buyer terminates this Agreement… within five (5) Business Days after the date of such termination, Seller shall pay the amount of One Million Dollars (US$1,000,000)… by wire transfer of immediately available funds to one or more accounts specified by Buyer in writing.” As revealed in an SEC filing on Tuesday by WPTE, the company had received an “alternative acquisition proposal.” No details of the second WPTE bid were given, although information should be released in the near future.
If Gamynia Limited were to back out of the deal, it would be subject to the $1 million termination fee. Gamynia Limited agreed to purchase several of WPTE’s assets for $9.075 million plus 4% of Gross Gaming Revenue, 5% of Sponsorship Revenue, and 5% of other Miscellaneous Revenue. Gamynia Limited must pay the subsequent revenue monthly, no later than 15 days after the start of each calendar month. Gross Gaming Revenue is defined as money derived from the use of WPTE trademarks in live or online games. Gamynia Limited has solicited the involvement of Hardway Investments, which works with Playtech and Titan Poker, among other internet gambling clients.
As per the terms of the SEC filing, the WPTE agreed to hand over trademarks, brand names, and logos for its popular poker tournaments, including the company’s massive television library. Graphics, artwork, and designs will also be absorbed by Gamynia, which has an address listed on SEC forms in Cyprus. Gamynia will also purchase domain names and intellectual property currently owned by the WPTE.
WPTE will retain its cash and accounts receivable balances as of the closing date. In addition, the WPTE will keep “all rights of Seller with respect to the China Venture, whether arising before or after the Closing Date.” WPTE officials shuttered WPT China in May after the business unit had lost nearly $1 million during the first quarter of 2009. The $9.075 million sale price must be paid via bank wire within 72 hours of the expected date of closing.
On Tuesday, WPTE filed a terse statement to the SEC that read, in part, “The Company’s Board of Directors has received an alternative acquisition proposal and is following the process required by the Purchase Agreement. Until the process required by the Purchase Agreement is completed, the Company will delay the filing of a preliminary proxy statement with the SEC.” No information about the second buyer or what prospective terms would entail was given.
In its original filing outlining the sale, WPTE officials included the following provision applying to two of its executives: “Mr. Rohin Malhotra and Mr. Adam Pliska will each receive 18 months of severance if a sale of the Company’s assets to two specific potential buyers closes in 2009. Gamynia Limited is one of the two specific potential buyers.” The text is part of an amendment to the SEC filing and indicates that WPTE officials likely knew about the second bid when the original sale was announced.
After jumping nearly 20% on Wednesday with the news of a second buyer, shares of WPTE, which are traded on the NASDAQ Stock Exchange under the same four-letter acronym, were trading at $1.01 to close the day, down $0.08, or 7.35%. Prior to Wednesday, the stock had spent the last 10 days trading below $1.
WPTE officials could not comment on rumors of a second buyer due to SEC regulations. Thomas Flahie, the Chief Financial Officer (CFO) of WPTE, told Poker News Daily that he plans to file a proxy form to shareholders that will likely include the details of the second offer. Then, the shareholders will vote “Yay” or “Nay” on the Gamynia sale. We’ll keep you posted on the latest developments right here on Poker News Daily.
