Gamehost Income Fund

Gamehost Income Fund

March 30, 2010 15:37 ET

Gamehost is Pleased to Announce Several Important Events





TORONTO, ONTARIO--(Marketwire - March 30, 2010) -


Gamehost Income Fund (TSX:GH.UN) ("Gamehost" or the "Fund") today announced that it has agreed to acquire (the "Acquisition") a further 51% interest in the Deerfoot Inn and Casino ("Deerfoot") currently held by David Will, the President of the Manager and a Trustee of Gamehost and Darcy Will, the Vice President of the Manager and a Trustee of Gamehost. When combined with the 40% interest in Deerfoot that Gamehost currently holds, the Acquisition will result in Gamehost holding a 91% interest in Deerfoot. Gamehost expects that the total consideration for the Acquisition will be $57,615,000, subject to certain adjustments. Completion of the Acquisition is subject to the satisfaction of certain conditions, including the receipt of unitholder approval at a meeting of unitholders to be held on April 30, 2010.

In accordance with certain securities laws applicable to related party transactions, an independent committee (the "Independent Committee") of the Gamehost Board of Trustees was formed for the purposes of considering and evaluating the Acquisition. The Independent Committee believes that the Acquisition will be in the best interest of Gamehost and its unitholders based on a number of factors including the following:

  • The Independent Committee has received a formal valuation supporting the purchase price
  • Deerfoot has a four year history of operations that the Fund believes is consistent with its business objectives
  • The Acquisition will position Gamehost to take advantage of the improving economy and recent increases in consumer spending
  • Management believes that the Acquisition will be immediately accretive to distributable cash per unit of the Fund on a combined pro forma basis
  • No integration risk as Deerfoot is currently managed and operated by the Fund management team

In connection with the Acquisition, Gamehost has entered into an agreement with a syndicate of underwriters led by Scotia Capital Inc. and including Mackie Research Capital Corporation, Cormark Securities Inc., and Wellington West Capital Markets Inc., pursuant to which the underwriters will purchase $55 million principal amount of extendible convertible unsecured subordinated debentures (the "Debentures") at a price of $1,000 per Debenture. The Debentures will mature on the earlier of the closing date of the Acquisition and 5 p.m. (Calgary time) on July 31, 2010 (the "Initial Maturity Date"). Upon completion of the Acquisition on or before 5 p.m. (Calgary time) on July 31, 2010 the maturity date will be automatically extended from the Initial Maturity Date to July 31, 2015 (the "Final Maturity Date"). If the Acquisition does not become effective on or before 5 p.m. (Calgary time) on July 31, 2010, the maturity date of the Debentures will remain the Initial Maturity Date. Interest will accrue from the date of issue at the rate of 6.25% per annum payable semi-annually in arrears on July 31 and January 31 of each year, commencing on July 31, 2010. If the Acquisition is not completed before the Initial Maturity Date, Debenture holders will be entitled to receive a cash payment equal to the principal amount of the Debentures held together with all accrued and unpaid interest. At the holder's option, the Debentures may be converted into trust units of the Fund at any time after the Initial Maturity Date and prior to the earlier of the Final Maturity Date and the date of redemption specified by the Fund at a conversion price of $10.65 per unit. The Debentures will be subordinated in right of payment of principal and interest to all senior obligations of Gamehost (including existing senior indebtedness of the Fund).

The Debentures will not be redeemable before and including July 31, 2013, other than in the event of a change of control. On or after August 1, 2013 and prior to July 31, 2014, Gamehost may, at its option, redeem the Debentures in whole or in part provided that the volume weighted average trading price of the trust units of the Fund on the Toronto Stock Exchange during the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of redemption is given is not less than 125% of the conversion price. On or after August 1, 2014 and prior to the Final Maturity Date, Gamehost may, at its option, redeem the Debentures, in whole or in part, from time to time at par plus accrued and unpaid interest.

The offering is scheduled to close on or about April 16, 2010 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange.

A preliminary short-form prospectus will be filed with securities regulatory authorities in all provinces and territories of Canada, other than Quebec. The securities offered have not and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction.

At the annual and special meeting of Gamehost to be held on April 30, 2010, unitholders will be asked to vote on the proposed Acquisition as well as the approval of a proposed plan of arrangement (the "Arrangement"), the purpose of which is to convert Gamehost into a corporation no later than January 2011. Following the completion of the Arrangement and assuming the completion of the Acquisition, Gamehost expects to make monthly dividend payments of $0.0733 per share ($0.8796 on an annualized basis).

About Gamehost

Gamehost is an unincorporated open-ended limited purpose trust established under the laws of the Province of Alberta. Gamehost's activities are currently confined to the Province of Alberta, Canada. Gamehost's operations include the Boomtown Casino in Ft. McMurray and the Great Northern Casino, Service Plus Inns & Suites and a strip mall all located in Grande Prairie. Gamehost is a 40% joint venture partner in Deerfoot Inn & Casino Inc. in Calgary.

Use of Non-GAAP Financial Measures

This news release contains a reference to "distributable cash", which is a financial measure that is not prescribed or required by Canadian Generally Accepted Accounting Principles ("GAAP"). 

Distributable cash does not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers. The Fund defines distributable cash as the periodic cash flows from operating activities as reported in the GAAP financial statements, including the effects of changes in non-cash working capital and any operating cash flows provided from or used in discontinued operations, less adjustments for: (a) total capital expenditures as reported in the GAAP financial statements; and (b) restrictions on distributions arising from compliance with financial covenants restrictive at the date of the calculation of distributable cash and limitations arising from the existence of a minority interest in a subsidiary. The most directly comparable measure calculated in accordance with GAAP is cash flows from operating activities as presented in the Fund's financial statements.

Income funds frequently use distributable cash to describe the amount of cash generated in a period that is available for distribution to unitholders. The Fund believes that distributable cash is a useful supplemental measure that may assist prospective investors in assessing an investment in the Fund.

Forward-Looking Statements

This news release contains certain statements which may constitute "forward-looking" statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario). The use of any of the words "anticipate", "continue", estimate", "expect", "expected", "intend", "may", "will", "project", "plan", "should", "believe" and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this news release describe the expectations of Gamehost as of the date of this news release. Our actual results could be materially different from our expectations if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, we cannot guarantee that any forward-looking statement will materialize. Forward-looking statements do not take into account the effect that transactions or non-recurring items announced or occurring after the statements are made may have on our business. We disclaim any intention or obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason, except as required by applicable law.

This news release contains forward-looking statements about the objectives, strategies, financial condition, results of operations and businesses of the Fund, including, but not limited to:

  • the Fund's use of net proceeds of the Offering;
  • anticipated dividends following completion of the Arrangement, assuming completion of the Acquisition;
  • completion of the Offering;
  • completion of the Acquisition; and
  • completion of the Arrangement.

Further information can be found in the disclosure documents filed by Gamehost Income Fund with the securities regulatory authorities, available at

Contact Information

  • Gamehost Income Fund
    Darcy J. Will
    Vice President
    (403) 346-4545
    (403) 340-0683 (FAX)