The once ailing World Poker Tour has been undergoing something of a resurgence in the past few weeks. As I reported a fortnight ago, the tour’s parents company WPT Enterprises Inc. had agreed to sell the majority of their assets to mysterious investment company Gamynia Ltd. Although it seemed that the deal was complete for all but a few formalities, the presence of a new bidder has thrown a spanner in the works.
The news came packaged in a Form 8-K, a type of release required by the Securities and Exchange Commission (SEC) to inform shareholders of any important company events. The WPT stated that they had received an “alternative acquisition proposal,” and were going through the necessary procedures. No details about the bid have been released, with even the identity of the new party kept secret.
Under the terms of the Gamynia deal, the WPT brand and the vast majority of the related assets were to be sold for $9 million. In addition, WPTE would receive 4% of future gaming revenue and 5% of sponsorship revenue from non-gaming activities. Gamynia revealed little of their plans for the brand, but did announce that they were entrusting the WPT to Hardway Investements – who can name Playtech and Titan Poker among their current clients. There also seemed to be a willingness to move further into the online poker market. The WPTE was due to keep their $21 million liquid assets which they were to invest into non-poker related concerns.
The Form 8-K detailing the Gamynia agreement also included details of a $1 million break clause should either party elect to back out of the deal before it completed. If this new bid is accepted, the WPTE would be liable to pay that fee, which has lead to speculation that the size of the new deal must be substantially larger. At the time of the Gamynia announcement, some industry observers had commented that $9 million seemed like a relatively low price.
The team at Poker News Daily uncovered an interesting paragraph from the original Form 8-K which casts a new light on the unexpected announcement. Concerning two of WPTE’s executives, the form stated that: “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.” [emphasis added]. It appears that the WPTE may have been aware of a second bid in the works even as they were agreeing the original sale.
Although the identity of the new bidder is still unknown, some clues may be obtained by looking at those firms who were linked with the firm a few months ago. When the idea of a sale was first seriously floated there were strong rumours that online gambling firm Bwin was preparing a proposal. It was also suggested that Full Tilt Poker and PokerStars both had eyes for the WPT. The full facts should be released in the coming weeks, giving shareholders the information they need to vote on whether to go through with the Gamynia deal.