Mr. Manu Sekhri reports QUANTUM INTERNATIONAL INCOME CORP. ANNOUNCES TWO ADDITIONAL ACQUISITIONS IN THE GEORGIA GAMING MARKET
Quantum International Income Corp. has entered into separate letter agreements with Triple 7's Amusement LLC and Lucky Star Amusement, in each case, dated Jan. 17, 2017, pursuant to which the corporation, or its designated affiliate, will acquire 100 per cent of the businesses of the targets, which are each highly profitable skill-based digital gaming terminal operators based in the U.S. state of Georgia. Lucky Star and Triple 7 assemble, distribute, own and operate over 110 skill-based digital gaming terminals in over 20 locations and over 130 skill-based digital gaming terminals in over 25 locations throughout Georgia, respectively. Both Lucky Star and Triple 7 terminals are fully licensed and governed by the Georgia State Lottery and offer players a variety of skill-based coin-operated amusement machines.
The letter agreements between the corporation and the targets were the result of separate negotiations between the corporation and the vendors in respect of each of the targets. Each of the acquisitions is an arm's-length transaction and will be completed under the expedited acquisition process of the TSX Venture Exchange.
"We are thrilled at the opportunity to add the Lucky Star and Triple 7 assets to Quantum's gaming interests," commented Manu K. Sekhri, chief executive officer of the corporation. "We are continuing to aggressively pursue our consolidation strategy in Georgia and the access to acquisition capital through our existing facility with Trive Capital accelerates this plan."
Triple 7's unaudited gross revenue was $3.06-million (U.S.) and Lucky Star's was $1.34-million (U.S.), respectively, for the year ended Dec. 31, 2016. Readers are cautioned that the foregoing information was provided to the corporation by the targets as is based, according to the vendors, on reports from the Georgia Lottery Corp. The information has not been audited or otherwise verified by the corporation and this should not be relied upon. There can be no certainty that the foregoing information will remain unchanged after having been audited.
Completion of the acquisitions is subject to a number of conditions, including, but not limited to, the negotiation and execution of separate definitive purchase-and-sale agreements between the corporation and the vendors, and the completion of due diligence of each of the targets to the corporation's satisfaction in its sole discretion. Each PSA will contain provisions customary for transactions of this nature, including payment of purchase price, transaction structure, representations, warranties, covenants, closing conditions, indemnities and non-competition provisions in favour of the applicable target. The corporation currently expects that it (or its designated affiliate) will acquire 100 per cent of the assets of each of the targets, but the definitive structure for the acquisitions to be set out in the PSAs is subject to change based on relevant corporate, tax, regulatory or securities law considerations.
The purchase price for the acquisition of the Triple 7 assets is expected to be $5.73-million (U.S.). The purchase price for the acquisition of the Lucky Star assets is expected to be $2.26-million (U.S.). While a portion of each such purchase price is expected to be satisfied through the issue to the vendors of common shares of the corporation, the corporation does not expect any such issuance of common shares to result in the creation of a new insider (as such term is defined in the policies of the TSX Venture Exchange) of the corporation.
The corporation expects to finance the cash portion of the purchase price of the acquisitions with the previously announced available financing of up to $20-million (U.S.) from Trive Capital.
Completion of the acquisitions, including for greater certainty the issuance of any common shares of the corporation as consideration, is subject to the approval of the TSX-V. The corporation has until May 16, 2017, to complete the transactions but expects to do so before then.
We seek Safe Harbor.