Intertain report "false and misleading"
Committee tasked with investigating allegations raised by Spruce Point Capital says there is "no basis for concern"
An independent committee tasked with investigating a raft of allegations regarding Intertain’s ?423m acquisition of Gamesys’ Jackpotjoy brands has found the allegations to be “false and misleading”, the operator said this afternoon.
Intertain saw its share price plummet 20% after New York hedge fund Spruce Point Capital published a 120-page report raising a number of questions over Intertain’s acquisitions of Mandalay Media, Vera&John, and Gamesys’ Jackpotjoy brands, as well as the firm’s corporate governance.
At the time, Intertain said the report was “misleading and self-serving” with Spruce Point a short seller of the firm and set to benefit from a drastic fall in its share price. Regardless, it requested a full investigation by non-management directors and retained Voorheis & Co and Stockwoods, plus Deloitte as an advisor.
The report said the firm’s acquisition of Jackpotjoy had “more holes than Swiss cheese” and alleged Intertain has not set aside funds to cover upcoming earn-outs from its earlier acquisition of Mandalay Media and Vera&John, while it was also particularly critical of Intertain’s management incentive plan.
But the independent committee, which has yet to fully complete its investigation, said there was no basis for concern regarding any of Intertain’s acquisitions, and that no changes to Intertain’s previously disclosed financial figures were required.
“The Jackpotjoy brands, which represent Intertain’s most significant acquisition to date, continue to perform, on a consolidated basis, in line with the expectations of Intertain’s management at the time the acquisition was negotiated and completed,” the firm said.
“The principal criticisms levelled by the short seller regarding the Jackpotjoy brands, including in regards to their EBIT margins and their market leading position in the UK online bingo-led market, were false and misleading,” the statement added.
The committee did however recommend changes to Intertain’s corporate process and controls, and the financial and governance functions and controls at the operator in order to address inadequate documentation, approvals and record keeping relating to payments previously made by Intertain.
“The committee and the board are committed to promptly implementing those changes and improvements required to appropriately address these matters,” Intertain added.