In connection with a previous declaration made by Ontario-based Contagious Gaming last December 08, 2014, the Canadian company announced last week that it has finalized the Share Purchase Agreement related to the Reverse Take Over (RTO) acquisition of Malta-based Chelbis Company Ltd. and Isle of Man-based Chelbis Company Ltd. for CA$4,050,000.
In addition to the agreed Share Purchase Price, Contagious Gaming has concurred to pay earn-outs based on the future performance of the UK bingo company for the years 2015 and 2016, as means of further incentivizing Chelbis Excutives. Chelbis offers online bingo within regulated markets, in accordance with the new licensing conditions of the UK Gambling Commission and pursuant to UK’s Gambling (Licensing and Advertising) Act 2014. Contagious Gaming’s business model, on the other hand, works in conjunction with the new British regulatory regime.
The purchase agreement settlement scheme comprises cash payments totaling CA$1,260,000 and the issuance of common shares valued at CA$0.80 per share with a total value of CA$2,790,000. Of the CA$1,260,000 cash payment, CA$720,000 will be paid upon closing, while CA$270,000 will be settled on December 31, 2015. The remaining CA$270,000 is to be settled within six months after Dec.31, 2015.
Earn-out payments will be equal to the Net Income that Chelbis will realize for the 12-month periods ending December 31, 2015 and December 31, 2016. Mode of payment in settling the earn-out consideration is at the discretion of Contagious Gaming, which could be either in cash and paid within 60 days after completion of Chelbis’ year-end audited financial statements, or through the issuance of common stocks. The value of which, will be based on a 10-day volume weighted average price of common stocks being traded at TSX or at the TSX Venture Exchange, and determined before the delivery of the year’s audited financial statements.
All payment stipulations are subject to adjustments and certain conditions including regulatory approval of the sale.
Contagious Gaming also made known that it granted Chelbis Board of Directors, officers, employees and consultants, a total of 3,900,000 in incentive stock options value dated September 2014, which is in accordance with the RTO proposal approved by shareholders in August 2014. The exercise of the purchase option is valid up to September 19, 2019 at CA$0.40 per share.
The CEO and Director of Contagious Gaming, Peter Glancy, shared his views about the Chelbis acquisition, commenting that it will materially increase shareholder value. He is optimistic that Chelbis’ online bingo business will diversify the firm’s revenue stream, and will provide continuing cash flow. The deal will allow them to capitalize on the interaction between the two gaming firms to achieve the goal of increasing margins and reducing expenditures. He is looking forward to the completion of the acquisition deal and in welcoming the Chelbis people as new shareholders of Contagious Gaming.
Madhu Avalur, the CEO of Chelbis, likewise expressed eagerness in joining the Contagious Gaming team, voicing his excitement in being able to create synergies and leverage the Ontario-based firm’s gaming platform and collection of game contents, in their drive to increase shareholder value.