Quantum International Income Corp. Completes Transformational Transaction in Georgia Gaming Industry
Toronto, Ontario (FSCwire) - Quantum International Income Corp. (the "Corporation" or "Quantum") (TSXV: QIC) is pleased to announce that it has closed (i) the previously announced acquisition by one of the Corporation's wholly-owned subsidiaries (the "Acquisition") of a controlling interest in the business of Lucky Bucks, LLC ("LBI"), (ii) the advancement to a wholly-owned subsidiary of the Corporation by an affiliate of Trive Capital (the "Lender") of US$11,000,000 pursuant to a first lien senior secured loan (the "Loan") to fund the Acquisition, and (iii) the private placement of 21,942,522 common shares of the Corporation to the Lender for gross proceeds of US$1,500,000 (the "Equity Investment"). In connection with the Loan, the Lender has also agreed to make available up to US$20,000,000 of additional financing for future acquisitions by the Corporation that are approved by the Lender.
"The acquisition of Lucky Bucks provides Quantum and its shareholders a highly profitable platform and a clear path for incremental growth in the Georgia gaming market. The financial commitment from Trive Capital validates what we see as an immediate opportunity to scale Lucky Bucks’s operations and greatly enhance growth opportunities. With Anil Damani continuing with Lucky Bucks as Chief Executive Officer, Quantum expects to be able to leverage the operational expertise of the existing management of Lucky Bucks," said Manu K. Sekhri, Chief Executive Officer of Quantum.
Expected Benefits of the Acquisition
- Provides for the acquisition of a leading operator of electronic gaming machines in the Georgia market
- Allows for immediate scale in revenue and adjusted EBITDA
- Creates the leading acquisition platform in the Georgia market
- Anticipated by management to be immediately accretive to cash flow and earnings per share
"I am excited to continue operating the business of Lucky Bucks in partnership with Quantum. The partnership with Quantum will enable Lucky Bucks to accelerate our growth plans in Georgia by adding depth to our team and capital to expand our business. We expect to be a market leader." said Anil Damani, founder and Chief Executive Officer of LBI.
The total purchase price for the Acquisition was US$13,500,000. On the closing of the Acquisition, the Corporation paid the vendor US$10,000,000 in cash and issued the vendor 43,885,045 common shares of the Corporation. The remaining US$500,000 of the purchase price is payable to the vendor in cash at the end of the first year following the closing of the Acquisition. In connection with Acquisition, the Corporation paid James Boyden a fee of $100,000 by issuing him 1,116,071 common shares of the Corporation.
(1) This information is derived from unaudited financial statements of Lucky Bucks Inc. (such entity being the predecessor to LBI prior to its conversion into a limited liability company). EBITDA (or earnings before interest, taxes, depreciation and amortization) figures are presented as a proxy for analyzing the cash flows from operations. EBITDA is a non-IFRS financial measure that represents IFRS net income attributable to Lucky Bucks Inc. before (i) interest expense net of interest income, (ii) provision for income taxes, (iii) depreciation and amortization, (iv) gain on sale of a business or contribution of a business to an unconsolidated entity, and (v) equity in the gains or losses from investment in an unconsolidated entity. The Corporation believes that providing this non-IFRS financial measure to investors helps investors evaluate LBI's operating performance, profitability and business trends in a way that is consistent with how management evaluates such performance.
The terms of the Loan were previously disclosed by the Corporation in its news releases dated August 17 and October 11, 2016. In connection with the Loan, the Corporation issued the Lender warrants to purchase 1,500,000 common shares of the Corporation at an exercise price of $0.1344 per common share until April 21, 2019 (the "Warrants"). The Corporation also paid World Equity Group, Inc. ("WEG") US$500,000 as consideration for the services provided by WEG in connection with the Borrower receiving the Loan.
The net proceeds of the Equity Investment will be used to investigate future acquisitions by the Corporation and for general working capital purposes.
All securities issued in connection with the Acquisition, the Loan, and the Equity Investment were issued on a private placement basis and are subject to a statutory four month hold period expiring February 22, 2017.
More information on Quantum International Income Corp. is available at www.quantumincomecorp.com.