The governance of Toronto listed igaming operator Intertain Group (Intertain) has labelled New York hedge fund Spruce Point Capital Management as a “self identified short-seller of the company’s common shares”.
Intertain governance further stated that its damning 120 page dossier published last week attacking the firm’s acquisitions, governance, corporate performance reporting and financial management were simply “self-serving and misleading”.
The Canadian operator accuses Spruce Point of publishing the document in order to gain advantage on its short positions relating to Intertain’s share price performance.
On Thursday 18 December Spruce Point had published a damning dossier labelling Intertain as a “highly leveraged Canadian roll-up of the worst kind”.
The New York hedge fund cited “major red flags” against Intertain, critically pointing to the fact that the operator had “cycled through three auditors since coming public through a merger of shell companies. The company’s CFO Keith Laslop was COO/Director at Gerova, an alleged ponzi-like scheme”.
Spruce Point further attacked Intertain governance incentive plans, which they detailed rewarded company leadership with 2% fees relating to igaming acquisitions, which it claims are driving the firm’s ultra-aggressive growth plans.
To date Intertain has acquired the following igaming assets; Cryptologic (CAD $75 million), Gamesys (£450 million), Mandalay Media ($45 million), Vera&John (€90 million) and Parlay Gaming Software (CAD $3 million).
Additionally Spruce Point further notes Intertain’s lack of cohesive reporting relating to KPI performance with regards to growth metrics and its integration of acquired asset performance.
The publication of 120 page report, saw Intertain stock price lose a third of its value last week, with the Toronto TSX suspending the stock.
Intertain governance strongly refutes the mismanagement allegations made by Spruce Point. The operator highlights to investors that the hedge fund is well known for its ‘short selling, speculative and activist strategies”.
Issuing a weekend statement, Intertain governance reported that it has “established a committee of non-management directors to closely review the allegations contained within the Fund’s report.”
“Following that review, the Company will take any and all actions necessary and appropriate to protect the interests of the Company and its shareholders”.