Intertain report âfalse and misleadingâ
Committee tasked with investigating allegations raised by Spruce Point Capital says there is âno basis for concernâ
An independent committee tasked with investigating a raft of allegations regarding Intertainâs CAD$800m acquisition of Gamesys Jackpotjoy brands has found the allegations to be âfalse and misleadingâ, the operator said this afternoon. [private]
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 Intertainâs acquisitions of Mandalay Media, Vera&John, and Gamesysâ Jackpotjoy brands, as well as the firmâs corporate governance.
At the time, Intertain said the report was âmisleading and self-servingâ 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 firmâs acquisition of Jackpotjoy had âmore holes than Swiss cheeseâ 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 Intertainâs 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 Intertainâs acquisitions, and that no changes to Intertainâs previously disclosed financial figures were required.
âThe Jackpotjoy brands, which represent Intertainâs most significant acquisition to date, continue to perform, on a consolidated basis, in line with the expectations of Intertainâs management at the time the acquisition was negotiated and completed,â the firm said.
âThe 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,â the statement added.
The committee did however recommend changes to Intertainâs 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.
âThe committee and the board are committed to promptly implementing those changes and improvements required to appropriately address these matters,â Intertain added.