The week leading up to the Good Friday break has not been kind to Toronto TSX listed Amaya Inc, who saw its share price drop 20%, closing on Thursday 24 March at CAD $15.4.
Following last week’s allegations of five counts of insider trading made against CEO David Baazov by the Quebec Securities Regulatory Authority (AMF), multiple financial analysts have downgraded Amaya’s trading outlook to ‘negative’.
The AMF has charged Baazov with distributing confidential data/information to close business associates leading up to Amaya’s $4.9 billion acquisition of Rational Group assets (PokerStars and Full Tilt Gaming), with a view to influence the firm’s TSX market price.
The Canadian securities regulator has stated that Baazov and associated parties are liable to substantial fines as well as 5-year prison terms if found guilty.
The AMF charges against Baazov come as the CEO plans an ambitious management buyout of Amaya Inc at CAD $21 per common share (CAD $2.8 billion cash-offer). An Amaya special committee under the guidance of Barclays Capital are currently reviewing Baazov takeover proposal.
Since its June 2014 acquisition of Rational Group assets, Amaya Inc share price performance (initial TSX IPO on June 2010) has been labelled by market analysts as a ‘rollercoaster’.
The uncertainty regarding Baazov’s leadership has led New York-based ‘big-three’ financial advisors Moody Investment Services to revise its outlook on Amaya trading, stating that the gambling operator is a ‘high credit risk’ to investors.
Issuing a statement Moody commented that Baazov’s legal predicaments were responsible for Amaya’s negative downgrade.
“The charges along with the legal process that follows could negatively affect the execution of the company’s operations and growth strategies, particularly given that Mr. Baazov is significantly involved in the development and execution of Amaya’s business strategies.”