Amaya Provides Update on Rational Group Deferred Payment
After evaluating the multiple non-dilutive options available to the company, Amaya has decided to pay the remaining balance of the deferred purchase price over the course of 2017 from unrestricted cash on its balance sheet and cash flow from operations. Amaya believes this is the least expensive and most flexible financing option at this time as it avoids, among other things, incurring additional term debt, amendment fees and associated costs and expenses.
"We believe that our current plan speaks to the strong cash flow generation of our business model and will allow us to continue investing in the success of our business while meeting our pre-existing contractual obligations to the former owners," said Rafi Ashkenazi, Chief Executive Officer of Amaya.
"Based on our operations and performance in 2016, we are confident in our ability to repay the balance of the deferred purchase price in a timely manner."
In connection with its current plan, Amaya has entered into an agreement with the former owners of the Rational Group whereby the former owners have agreed not to enforce during 2017 their right under the original merger agreement to cause Amaya to use commercially reasonable efforts to issue equity to finance any outstanding balance of the deferred purchase price. In addition, under the original merger agreement and as previously disclosed, the former owners agreed not to enforce the payment of the deferred purchase price prior to the maturity or repayment of the acquisition financing.
In exchange for the new agreement, on February 1, 2017, Amaya will pay in advance three-months of non-refundable late payment fees related to the unpaid balance of the deferred purchase price at the rates outlined in the merger agreement (monthly rate equal to 30 day LIBOR plus 85 basis points until August 1, 2017 and then 30 day LIBOR plus 135 basis points thereafter), with such fees to be credited against any late fees incurred during such three-month period. Any additional fees that may be incurred on the outstanding balance beginning on May 1, 2017 will also be calculated at the rates outlined in the merger agreement.
As previously announced, Amaya paid $200 million of the deferred purchase price in November 2016, resulting in approximately $2.3 million in savings towards the outstanding balance.