WPT Enterprises, Inc. (NASDAQ: WPTE) has announced that Peerless Media Ltd., a subsidiary of PartyGaming Plc, has agreed to purchase substantially all of WPTE’s operating assets other than cash, investments and certain excluded assets. Peerless Media will pay WPTE $12.3 million and will pay WPTE an ongoing 5% participation in gaming and other revenues generated by the assets. WPTE noted that its board of directors received the offer after privately held investment group, Gamynia Limited, and WPTE announced an asset acquisition agreement earlier this month, which was terminated after further consideration of the Peerless Media’s financial proposal. The Gamynia deal was valued at $9.075 million plus a percentage of future revenues earned by Gamynia.
The company noted that PartyGaming has been an important partner for years and it believes that PartyGaming will be an excellent brand manager. Also noted in the terms of the deal were that certain payments made by PartyGaming to the company prior to the close will be credited on a dollar- for- dollar basis against the purchase price paid at the closing date.
Be advised that this is an asset purchase agreement rather than a going-private merger. WPTE will sell its television library, including all related intellectual property rights, brand names, trade names, certain assumed contracts and tangible personal property. But WPTE will retain its cash and cash equivalents, investments in debt securities and put rights, certain other investment and litigation assets. WPTE will retain the future license revenues from certain existing sponsorship deals for Season Seven of the World Poker Tour.
Where this gets interesting is that WPTE noted that net cash proceeds from this asset sale will be retained by WPTE, and it noted that it plans to use the cash to develop or acquire a ‘non-poker related business.’ This may sound as though it is new, but most of the terms other than price and certain retentions are the same. WPTE said in its prior deal that it was going to be developing or acquiring a non-poker related business and it also said in the prior Gamynia deal that no proceeds were going to be paid out to shareholders.
This also does not translate to a big payday for WPTE shareholders who might be hoping for a large return of capital payout. WPTE said specifically that it does not currently intend to distribute any proceeds from the asset sale to its stockholders.
There are closing conditions and stockholder approvals that have to come about as this asset purchase transaction is subject to specified closing conditions… The obligation of Peerless Media to complete the transaction is subject to the absence of changes or circumstances that are materially adverse to its financial condition, as will as assets, business or results of operations and other customary closing conditions.
WPTE’s obligation to complete the asset sale is also subject to shareholder approval of the asset sale transaction and other customary closing conditions. as far as closing date, WPTE and Peerless Media expect to complete the transaction in the fourth quarter of 2009. While the company has to receive a majority to approve the transaction, WPTE did note that “certain significant company stockholders” with 39% of the interests have entered into voting agreements committing to vote in favor of the asset sale to Peerless Media.
WPTE is rather tiny now for a company. Its market cap was $21.6 million after closing down almost 1% today at $1.05. Its 52-week trading range is $0.15 to $1.95. The company loses money, so its cash value is not as pertinent as it is with money-making companies. Its June balance sheet ended with cash and investments of $21.3 million and total assets were listed as $26.56 million. The total liabilities were listed as $5.419 million.
Unfortunately, its revenues have fallen off sharply. Revenues were $29.26 million in 2006, when it made more than $7.7 million for the year. But it lost $9.6 million on revenues of $21.7 million in 2007; and it lost $14.449 million on revenues of $15.48 million in 2008.
WPT Enterprises, Inc. is easily one of the more recognized names in televised gaming and entertainment with tournaments since 2002 when it launched the World Poker Tour television show. The World Poker Tour is now broadcast globally and is currently filming its eighth season for broadcast on Fox Sports Net’s national sports network in the United States. WPTE also offers a unique online subscription and sweepstakes-based poker club, ClubWPT.com, which operates in 38 states across the U.S.
If you can recall all of the funny online poker commercials for PartyPoker, then you know who PartyGaming is….
JON C. OGG
AUGUST 24, 2009
Top Gaining Stocks
Top Losing Stocks