Intertain’s independent commitee refutes Spruce Point ‘Short-Seller’ attack

Keith Laslop & John Kennedy FitzGerald

Responding to a 120-page dossier published by Spruce Point Capital Management last December, which criticised the governance of Toronto TSX listed Intertain Group (Intertain).

A special independent committee appointed by Intertain governance has deemed the report to be “Self-serving and to contain numerous factual inaccuracies and mischaracterizations of company data”

The committee made up of corporate independent directors, with the counsel of Toronto law firms Voorheis & Co and Stockwoods LLP reviewed the dossier which had labelled the operator as “highly leveraged Canadian roll-up of the worst kind”.

Last December Spruce Point had publicly cited a number of ‘Red Flags’ against the operator’s governance raising concerns of the firm’s leadership reward scheme, which paid a 2% fee attached on corporate acquisitions undertaken by its CEO John Kennedy FitzGerald and CFO Keith Laslop.

Spruce Point further attacked the operator, claiming that the company lacked coherent performance reporting, with further contention pointed at CFO Laslop  who was accused of  previously being involved in a an alleged ponzi-like scheme during his tenure as COO of defunct Gerova Finance.

At the time, Intertain governance had moved quickly to dismiss the report, stating that it had been a victim of ‘short-seller’ tactics by the Spruce Point who had taken a number of positions against its common shares.

Intertain governance further stated that it would take any necessary action to protect the interest of its corporate assets and shareholders.

Releasing its independent committee response, the company highlighted that all its acquired brands apart from InterCasino had seen significant growth in 2015.

Furthermore the independent committee had made a number of recommendations regarding the reporting of Intertain’s merged assets, which have complicated performance metric reporting. Intertain’s committee were further advised by auditor Deloitte, who were retained as an independent advisor to the committee.

To date Intertain has acquired the following igaming assets; Cryptologic (CAD $75 million), Gamesys (£450 million), Mandalay Media ($45 million), Vera&John (€90 million) and Parlay Gaming Software (CAD $3 million)

Since the publication of its December dossier on Intertain, Spruce Point have not publicly disclosed any further acquisitions regarding the company and its operations.

Click here to view Intertain official response


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