Was David Baazov Being Entirely Truthful About Involvement With KBC Aldini?

One Of The Funders For David Baazov’s Amaya Bid Denies Any Knowledge Of The Deal

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Update 11/22/16 9:00 p.m EST: Amaya has released the following statement: 

Amaya Inc. (NASDAQ: AYA; TSX: AYA) confirms that it is aware of today’s media report regarding David Baazov’s proposal that he publicly reported on November 14, 2016.  Amaya, with the assistance of its advisors, continues to carefully assess Mr. Baazov’s proposal, including the information contained in the media report, but has no further comment at this time. Amaya intends to provide updates if and when necessary in accordance with applicable securities laws.

Amaya founder David Baazov looks like he’s in trouble again. KBC Aldini Capital Ltd has said that it is not part of the funding group for Baazov’s bid for Amaya.

The Chief Executive, Kalani Lal, told Canadian newspaper the Globe and Mail (paywall), that his firm has no involvement in the deal, and that it has filed a complaint with the Securities and Exchange Commission (SEC).

KBC Aldini listed in doc accompanying SEC filing

Baazov announced his new bid of CA$24 per share right after Amaya issued its Q3 earnings. Shortly thereafter, his filing with the SEC was published, with the details of the bid.

  • The bid SEC filing can be seen here.

In the accompanying, SC13D/A document, Baazov states:

“In connection with the Proposal (as defined in Item 4 to this Amendment), the Reporting Person has entered into binding equity commitment letters (the “Equity Commitment Letters”) with each of Head and Shoulders Global Investment Fund SPC – HS Special Event Segregated Portfolio, Goldenway Capital SPC- Special Event SP, Ferdyne Advisory Inc. and KBC Aldini Capital Limited (collectively, the “Equity Financing Sources”). Pursuant to the Equity Commitment Letters, comprising aggregate commitments equal to $3.65 billion, each of the Equity Financing Sources has committed to contribute capital to a to-be-formed special-purpose vehicle led by the Reporting Person (“BidCo”) for the purpose of acquiring Amaya.”

In denying that it has any involvement in the deal, KBC is in effect, alleging that Baazov has made a false statement to the SEC.

That is a very serious allegation.

The initial announcement resulted in a sudden rise in Amaya’s share price of around 18 percent. Less than an hour after the Canadian press published the comments by KBC, the stock had fallen by almost 6 percent.

A false filing brings penalties on its own, but any suspicion that the filing was made in an attempt to manipulate the stock market makes matter much more serious.

An honest error?

SEC filings for a multi billion dollar deal are not written casually. They are usually submitted by and checked by lawyers—an error should be a rare thing.

The name KBC Aldini looks individual enough not to be a simple misspelling, although there is a KBC bank, and it has subsidiaries that could be involved in funding Baazov’s deal.

There is always the outside possibility that KBC Aldini’s CEO is not telling the truth, but again this seems extremely unlikely.

The awful possibility is that the filing was itself a lie. But even that seems incredible.

The Amaya board would not have accepted the SEC filing on its own as evidence of a bid. It would have demanded that Baazov show some proof of his source of funds, usually in the form of a bank letter.

At the time of writing Amaya had not made a statement regarding the news, but it must surely be demanding an immediate explanation from Baazov.

As the news breaks, the prospects of a successful bid for Amaya by David Baazov look slim. In a short time there should be public statements from Amaya and perhaps Baazov that will clear up this amazing turn of events.

Investors will keep pummeling the stock until a statement is made.

Image credit: WSJ.com

- A former founder of Poker Industry Pro and Head of Content at PokerNews publisher iBus Media, Joss Wood is a graduate in English from the University of Birmingham. Joss also holds a master’s degree in Organisational Development from the University of Manchester. His career path has taken him from the British Army, through business and finance to seven years as a successful professional poker player.
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