Leisure Acquisition Scraps Gateway IPO Deal

By Ben Hamill - July 20 2020
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Leisure Acquisition Scraps Gateway IPO Deal

It certainly seems as if Canadian casino operator giant Gateway Casinos & Entertainment’s prospects of listing on the New York Stock Exchange in association with special purpose acquisition vehicle Leisure Acquisition Corp., are fast beginning to wane. In fact, the latter has now officially called off the deal as a result of what Leisure Corp. describes as months of inaction.

The New York-based Leisure Corporation during December of last year announced its intentions to merge into a subsidiary of Gateway’s parent holding company, describing back then the deal to have been worth well in excess of US$1.1 billion in raw commercial value.

Initially set to be finalised by no later than April 2020, the deadline was ultimately extended when Gateway was pushed to close every last one of its casinos because of the global health crisis. But since Leisure Acquisition Corporation, according to the agreement with its own internal shareholding structure, must either find a business endeavour to take over by December 1st, or return all invested cash to its shareholders, the entire deal has now fallen quite flat on its face. And along with it, Gateway’s immediate hopes of publicly listing.

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Gateway’s Long-Term Goal

Gateway has of course long been seeking to sell shares to the public domain. The company already in November 2018 filed for an initial U.S. public offering. It at the time of the initial filing said that it expected to raise about CA$400 million.

But then in December 2019, Gateway officially withdraw its IPO application and registration, and announced that it would be pursuing the deal with NY-based Leisure Acquisition Corporation instead. By going about it in a more direct way by merging with a US-registered vehicle company, the Canadian casino giant would save a great deal of time and money by essentially circumventing the entire IPO registration process.

Negative Vote Was The Undoing

As for what had set the entire process down a path leading to nowhere, it is the opinion of Gateway-backing Catalyst Capital Group spokesperson Dan Gagnier, that the negative vote cast by Leisure Corp. shareholders at the height of a global crisis in March, is to blame. The March-vote, says Gagnier, proved an exceptionally negative influence on Gateway’s ability to complete a deal that would ultimately have proved beneficial to everybody involved.

Even so, said Gagnier, Gateway is and remains a franchise perfectly capable of creating long-term value for its stakeholders, and will without a doubt, find more and new ways in which to achieve exactly this again in the future.

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