Q3 2020 Great Canadian Gaming Corp Earnings Call
Good morning, ladies and gentlemen, and welcome to the Great Canadian Gaming Corporation Investor Relations third quarter 2020 results conference call. At this time all lines are in listen only mode. Following the presentation. We will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please press star zero for the operator this call is being recorded.
On Wednesday November 11, 2020.
I'd now like to turn the conference over to Terrence Doyle. Please go ahead.
Thanks, Chris and good morning, everyone and welcome to break Canadian gaining Corporation's conference call to review the company's financial results for the third quarter ended September Thirtyth 2020.
Joining me on the call. This morning is why Baker, the company's Chief <unk>, Chief Executive Officer, and Jon Rousseau, The company's General Counsel and Screechy privacy officer.
Like to remind listeners that the latter portion of this call is reserved for institutional investors and analysts and media related inquiries can be directed to Chuck Chuck healing Executive Vice President stakeholder relations and responsible gaming he can be reached at 77887 for 494 too.
Before we begin I must caution all listeners that this conference call may contain forward looking statements that reflect management's expectations regarding the company's.
Future. These statements, which will be identified by words, such as anticipate believe except or similar expressions.
Are based on information currently available to the company.
Investors should not place undue reliance upon these statements, which involve significant risks uncertainties and assumptions.
These statements are made as of this call and the company assumes no obligation to update or revise them to reflect new events or circumstances.
Unless otherwise indicated all financial information in this call is presented in Canadian dollars and it's in accordance with international financial reporting standards, where IRS.
Except for adjusted EBITDA and free cash flow, which are non IRS terms defined in the company's mdna.
Unless otherwise noted all financial information for the comparative period excludes the financial results of the U.S. region and they have been presented as discontinued operations. After Great American Gaming Corporation was sold on June 27 2019.
I will now pass the call to Rod for a review of the Great Canadian financial results for the quarter. He will then provide an update on the company's business and outlook Rob.
Thank you Terence.
Good morning, everyone and thank you for joining us today.
I'm pleased to begin the conference call with acknowledging last night's announcement, the great. Canadian has entered into a definitive agreement to be acquired through funds managed by Apollo Global Management, Inc.
All it was offered $39 per share cash.
Represents 59% premium to 30 day Vwap as of November nine 2020.
The transaction will be structured plan of arrangement under the business corporations active British Columbia weather related information circular will soon be available for the special meeting of shareholders to be held on December 20, Threerd 2020.
Well the thing of this transaction is expected to occur in the second quarter of 2021.
This transaction represents a significant milestone for great Canadian.
Crystallize it immediately for our shareholders long term value a great Canadian.
I'm now going to comment on our current results.
Companies safely reopened gaming properties under restricted operating conditions in Ontario, and New Brunswick on September 28, 2020 and.
Nova Scotia on October 15, 2020.
Having a spring back small complement of team members in these provinces.
Health and safety of our team members and our gas remain our first priority. Accordingly, we will continue to follow the direction or provincial governments and local health authorities, which can fluctuate rapidly.
Will require the company to adjust the operating environment a bit sites in the future as conditions evolve.
This may also include mandated temporary suspensions like those we experience with some of our properties such as casino Woodbine can see no new Brunswick, which temporary closed again on October nine 2020 with casino in New Brunswick reopened again on October 20, Threerd 2020.
We anticipate continued volatility with the opening and closing of select properties at the mandate provincial health authorities evolves.
The temporary suspension of all of the company's gaming facilities for almost the entire third quarter resulted in decreases in revenues expenses adjusted EBIT da shareholders net earnings free cash flow and total cash flows when compared to the same period in the prior year.
As a result of the temporary suspension of operations, we have placed folks and marching our free cash flow and additional IRS measure.
During the third quarter of 2020, the company had negative free cash flow of $54.8 million, which was primarily due to 62.2 million in capital expenditures related to our capital developments in Ontario.
They get a free cash flow for the third quarter of 2020 wasn't improvement from negative free cash flow of 123.4 million in the second quarter of 2020, which included capital expenditures of $98.6 million.
Negative free cash flow was funded with borrowings from the company's credit facilities and the remaining from available cash balances.
It's just started the temporary suspension period on March 16, 2020, we have worked on managing our working capital down to a level that reflects our current state of operations.
In the second quarter 2020, our negative working capital change reflected the unwinding of payables.
Launches from their pre closure period with these expenses now settled our capital balances remained steady over the third quarter 2020.
The company took measures to significantly reduce its operating expenses to mitigate the decline in revenues during the temporary suspension period.
In the third quarter of 2020, approximately half of the human resource expenses consisted of costs relating to remaining personnel required to support the business during the temporary suspension period at an eligible government assistance.
And the remaining half consisted of to continuation of employer paid benefits primarily for team members on temporary suspension.
Over half of the properties marketing and administration expenses were related to direct property operating costs, including property taxes insurance utilities and maintenance with the remainder related to administrative costs, including license subscription and professional fees.
In conjunction with the reopening of our Ontario gaming properties, we entered into an amended casino operating service agreements or coast agreements with the Ontario Lottery and gaming Corporation that allows each bundle to operate under an interim compensation model that's intended to compensate the.
Company for it services over the duration of the pandemic and a period of subsequent ramp up of operations.
During this period the interim fee arrangement includes the cost of married based six feet payments and an additional variable component fee based on a fixed percentage of gross gaming revenue.
The fixed percentage is unique to each bundle and it's similar to the historical percentage of gross gaming revenue earned by each bundle prior to the closure.
The interim fee arrangement will continue in effect for 36 months plus the period of time in which the 50 guests maximum restriction and any required temporary reached its pensions are in place or earlier, if gross gaming revenue succeed agreed performance targets that reflect.
Pre pandemic revenue levels.
On the termination of the interim fee arrangement historical coast to compensation models applicable to each gaming bundle will apply.
Right the impact at the parent that Mexico has had on our construction projects. We continue to move forward with our GE capital development programs, primarily our PICC Grand Casino resort and casino would die integrated resort developments, which will be primarily funded by our capital expenditures credit facility.
We continue to assess the timing for the launch of these developments. However, we do not anticipate any impact to our total planned capital spend.
As we continue to encourage expenditures related to these development programs. We are encouraged by the partial reopening of our gaming facilities, which will assist us in improving our cash flow profile for the remainder of 2020 and beyond subject to our gaming properties remaining open.
Great Canadian remains proactive and maintaining capital structure, while minimizing cash outflows, taking measures to reduce operating expenses as appropriate.
I was at September Thirtyth 2020, Great Canadian continues to remain stable capital and liquidity positions with cash balance of $471.9 million and 1.052 billion.
Available Undrawn credit on its credit facilities subject to applicable covenants.
Company is entered into agreements with its lenders to temporarily waived compliance with its financial and operational covenants under certain of its credit facilities.
As of September 32020, we were in compliance with all applicable covenants. We are currently in preliminary discussions to extend our waiver period their banking partners, who continue to provide ongoing support to our business.
If there are properties in Ontario, and Atlantic now partially reopened we continue to closely monitor results to obtain a better understanding of our near term financial outlook.
Based on preliminary results after opening Ontarios positive adjusted EBIT da has incrementally increased while the atlantic's adjusted EBITDA has improved to approximately a breakeven level.
As restrictions slowly get lifted overtime, we will also be able to bring back additional team members that unfortunately remain temporarily suspended we.
We thank you team members for their perseverance patience during this challenging time and look forward to Buck in the back soon.
Terence we can now invite questions. Thank you.
Thanks, Rod and before we begin today's question and answer session I would like to remind everyone that questions will be preserved for institutional investors and analysts.
I would also like to reiterate the company's Investor Relations philosophy, which encourages investors and analysts to utilize this public conference call as their principal medium for speaking to break Canadian Senior management, Chris We can now go to the acuity. Thanks.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone you will hear three tone prompt acknowledging or request and your questions will be pulled in their order. They are received should you wish to decline from the polling process. Please press star followed by two if you are using a speaker phone please lift the handset.
Before pressing any keys.
Your first question comes from sub Con RBC capital markets sub a hot please go ahead.
Hi, Thanks, and good morning.
No I'm learning just from the announcement from last night are you able to share whether there was maybe a process run or this was the inbound outbound just trying to get an understanding of how.
The opera came to be.
Oh sure I can give you a little bit of color on that this was oh, an unsolicited approach to the company that.
The board and management are felt was credible and obviously the party is extremely credible in first class a and then in light of that approach and but frankly, the appropriate fiduciary duties and obligations at the board. In addition to I believe our company.
Doing the right thing for shareholders.
We determined that it was credible and it was determined to pursue it.
See if it could end up in an appropriate offer being developed for shareholders.
And fast forward over a few a very intensive months that has brought us to the resolution that we announced last evening.
Okay. So I guess I guess could surmise from that that maybe there weren't any other offers at this point or just sort of maybe the best golf are you kind of saw out there based on a I guess or discussions.
So are we.
We did not Brian.
In order to develop this opportunity a larger.
Larger process in.
Involving other participants at.
At this point in time, I would tell you without getting into details that.
Over the past number of years, we had had a other interactions with parties.
That have not resulted in a press release like last night.
So this is not the first go round for great Canadian and your current management team and board, but in terms of this last finite period of time.
This was a proactive outreach.
By the Apollo group that we worked with.
To develop this opportunity, which which if you ask me about it I'd love to give you my own view as the CEO and a member of the board for the past 10 plus years. In addition to the fairness opinions from the two advisors Oh, we think this is a very very.
Great financial opportunity for shareholders that are fully reflects the long term prospects of great. Canadian obviously, we're in a very very difficult period of time right now, but this is a very very strong offer and reflects what we think are all of the potential of the business.
Obviously factoring in what's going to be a very difficult and uncertain period for some amount of time here.
Okay. So that's maybe a following up on that and maybe give me an opportunity to elaborate a little bit on that I guess, maybe if you can share some color on how you sort of you know negotiated to this $39 share price I guess, obviously, it's a very uncertain backdrop and a lot has changed but just trying to get an understanding you know how you got sort of a ride that there's probably something.
Got to maybe share some clarity of thought on that so.
So I I can't get into the details I can tell you that the board in an appropriate fashion structure.
A special committee of independent directors, which did not include myself.
Included all of the other directors and they worked yeah intimately and supported by management.
In information sharing and discussions.
To get to where we talk to you today I would tell you and I don't want to get into details and it's not appropriate to get into details because it's the outcome that is I think relevant for shareholders.
This was a a process that involves.
Significant interactions and negotiations.
To get to what I personally believe and in my role as CEO and a member of the board a very strong <unk> and an appropriate representation of full value for shareholders for upgrade Canadian.
Oh, you know all the other nuances in terms of who did why and how it went and all that kind of stuff I actually think it would be inappropriate for me to speak on behalf of the special Committee in those respects publicly at this point in time.
Okay, Great and then one of the questions Durbin getting adjusting driven involved with the company for quite some time just anything you can share on you know whether if this offer does.
I'll close on the transaction you know do you kind of continue to remain involved what is sort of your involvement and your kind of a few trying to be I think folks are just trying to get an understanding of you know whether you would be sort of you know involved in acute strategy any financial I mean do you know what is sort of you know your involvement though once the deal closes do continue to run it are you doing.
Now Mike.
Right right I totally get the question and it's extremely fair question.
And I think it's important that shareholders understand this.
You got me situation sometimes.
It looks like there's a third party to its coming in but management.
I have some roll direct or indirect or offered some kind of opportunity.
I'm you'd want to be very clear.
That no one in management, including me have had any conversations whatsoever with the Paulo in terms of our future. We're not a part of their bid we haven't nobody has come to us and said promise anything.
We remain a working at the pleasure of shareholders and our shareholders are all the people that are listening to US right now and we have been singularly focused on representing our shareholders as very best we can.
In this process as we've tried to do in all respects of running their business for them since I've been around.
And rest assured that our focus has been singularly on the great Canadian side of things and I think that it's frankly, the most appropriate thing for shareholders. So in the future after closing whether a friend.
For instance, I'm, CEO, <unk> or not or have another role or not frankly that will be up to the shareholder at that point in time and I have zero visibility on that as there have been no conversations whatsoever on how that might potentially a work under that scenario.
The area and I think that's what's appropriate in the circumstances <unk> shareholder should be understanding of that fact.
Oh, that's great color I really appreciate that and then maybe I'll just wrap up with a question on just the I guess the day to day business.
I got it looks like you continue to spend quite a bit on capex and given how things have evolved between sort of Q2 and Q3 you.
You know normal course operation how are you thinking about capex and the pace of Capex should we assume that there is a call. It one to two quarter delay based on corporate and then now you're sort of back on track. How are you thinking about the rollout of Capex now.
So I think as Weve message, even starting last quarter.
You know in a period, where you were.
Three cope is going to generate hundreds of millions of dollars of EBITDA and free cash flow in order to fully support our capital program. We've been faced with a negative significant negative cash flow environment. So the delta between the two have been very extreme thus far this year.
And as for all of you that are aware of our operations and the provinces, where we are domiciled.
Although cold it will improve at some point in time, it's actually.
In in a more difficult trending environment right now.
And look size it was announced I get all of that and I think so there's some good medium term prospects for the world and <unk> that being said.
We are going to have this as I mentioned in my prepared remarks.
Very modest operations very uncertain in flux operations for quite some time here.
And so.
In light of that we have continued with our projects.
But as we've mentioned, we've reduced our capital programs and.
And we are still considering those time frames, whereby we feel we may be in a position.
To get back to a more normal development timelines. So those are still uncertain and it would be frankly, I think almost reckless advice to message Board believe at this point in time, we are understanding of how things will be evolving frankly well into two.
2021, so I don't have a very good answer for you other than we're watching it every day and we're trying to live within our means and appropriately continued to move things forward.
Got it with the right balance it makes sense for the very difficult operating environment that we continue to find ourselves in.
Okay, that's what I could say, maybe just squeeze in one last one I forgot about this earlier, but you obviously have a 50% partner on the GTF bundle and presumably maybe that's likely given some heads up on this given the nature of the transaction is.
Is there any indication I guess would they they're a JV partner I guess do they just continue to remain involved with the.
The GTR start regardless of who owns the equity.
So you know we have a partner there for sure. We also have another partner this is a transaction or the great Canadian level. So everything below the great Canadian level remains as is.
[laughter] sorry, you have one more question.
Because I read your note from last night I just wanted to clarify in the joint release with Apollo There was a mention that you referred to in your note and I just wanted to clarify things because I think it could it could cause some misunderstanding.
I think there was some commentary from Apollo being a global first class alternative asset our investment manager about after the transaction closes there may be other investors brought into their fold.
And you link that up to our current public shareholders I think that's an erroneous linkup or the reference in the press release was being a global alternative investment manager they have very deep and significant.
LP investors and relationships domiciled in all countries I believe they have some in Canada as well and on.
Many of their transactions, they not only invest directly in a private equity or opportunities through their funds directly but they also invite lps to come in and invest directly as well. So I believe that reference that they made in their release was.
To their existing Lps and not our public company shareholders. I believe you may have potentially inferred in your note last night, so I want to make clear that.
There has been no outreach from them to any of our shareholders they've been under it and D.A.
That's not that doesn't that is not what was contemplated in their release last night.
Okay I appreciate that color, yeah, I thought I read that as perhaps taking the car in some of the current holders and having them be partners and I guess based on your commentary. This implies that if this transaction closes I'm. This is a private entity.
Other private investors are there partners Lps as you mentioned could at that point, then get involved as owners as Eric [noise] correct.
Okay. Thanks, a lot I really appreciate all got no problem. Thank you.
Thank you. Your next question comes from Derek delay Canaccord Derek. Please go ahead.
Yes, Hi, Hi, Rod Dan Congrats on the transaction I just wanted to follow up on that last point, though where.
With within Great. Canadian obviously, you do have some bundle partners, putting a meaningful line on the DTA with their kids like was there a consultation process with a with that partner as it relates to this transaction.
So as I mentioned and I want to be clear. This is a transaction that the great Canadian level, we have all of our documenting and governance and our operating role in all of our bundles, including the two bundles, where we have other partners and a dozen in.
Packed any of that.
Okay.
Can you just maybe walk us through sort of the timeline and the next steps for closing.
Transaction I believe you mentioned Q2 with the shareholder vote in December and some regulatory approval, but maybe a little bit more.
Retail and that would be helpful. Yes. So so this is a plan of arrangement. So it is it going to be a shareholder vote and especially the meeting will be called Ah. If you go on SEDAR, you'll actually see the Computershare last night.
Posted it.
With a record date of November 17.
And meeting date of December 20, Threerd. So we are beavering away on developing a circular for that meeting, which will obviously expand more fully on the process to date to how we got here. So you know I didn't want to get ahead of things too much right now verbally.
Because the lawyers are are dropping out appropriately so all shareholders a within the next two weeks will be proceeding or the full circular on this transaction.
That has that you don't get that.
The history and the build up to it and the particulars as well as they appropriate fairness opinions from both Scotia and see a B C.
And that will lead up to the shareholder vote on December 20, Threerd and then Oh, we have a numerous approvals.
There are the non gaming specific ones like investment, Canada and competitions Bureau.
Which we don't foresee there being any challenges and then we've got our regular gaming.
Gaming approvals as well, which frankly, we don't see there being any challenges as well obviously Apollo is a first class global well known organization and in addition to that and sprint and in particular, they have a very.
Deep experience and knowledge and understanding of gaming and regulatory processes involving <unk> gaming, yeah, including and maybe it's not a good thing to bring up but they do have some prior involvement through a former Investee company in Ontario, So they've already been through the process in certain risk.
At least in Ontario, so they get it and understand it. So we have that process as every participant in gaming in all jurisdictions needs to go through the regulatory approval process, including me and every single one of our employees, let alone organizations. So that process will take a bit of time, but it is our car.
Our expectations that we should be through and have secured all of those processes at some point in Q.
Q2 of 2021, realizing that it's difficult to have a crystal ball to pin down.
An exact date at this point in time, but I don't foresee any challenges or other than a regular process in time that its involved for all parties to appropriately conduct the work that things do.
Okay. Thank you very much okay. Thank you there thanks.
Thank you, ladies and gentlemen, as a reminder, should you have a question. Please press star one on your Touchtone phone you're.
Your next question comes from Sanjay Sen Bloomberg Sanjay. Please go ahead.
Rod this is a terrible and ridiculous deal.
It is taking billions of dollars of shareholder value long term shareholder value in a Canadian controlled monopoly and giving it to foreigners.
You you cannot have a company, which is this cheap.
We try and $4 a free cash flow in 2019, which has enormous growth potential ahead, who would buy in Pickering.
Pickering is already complete so there's nothing to other not unlock it.
So it is enormous growth potential ahead that $4 20 pounds materially higher.
A monopoly on one of the fastest growing by population cities in North America No. Other city have a gaming monopoly like that we have that.
You know all that is why you spent $350 million in 2018, and 2019 buying back the stock at about $45 and you were going to buy back half a billion.
At.
North of $39. So $45. This year, so now you're proposing to sell this business to the foreigner for $39.
You knew this you know the value we don't understand why you want to sell the company that's such a depressed price when covert is a once in a 100 year storm.
Bloomberg San owns 14% of this company and will be not voting and supporting me, we will vote against the transaction.
The equity value of the business has not been hurt tea season Bunny much cash.
Weve turned the corner Pfizer has a vaccine Eli lilly's antibody treatments have been authorized the U.S. regional casinos, which are open on making more money today than they were a year ago.
Colgate is a natural disaster, we struck this company a once in 100 years start and it going.
And this stock is what over $100.
In a few years' time, and we need to hold on for that.
You yourself said on the May 5th Conference call. This is a tremendous and unique franchise.
So we don't understand how this board and this management can propose giving away this asset when they were approached by Apollo at the bottom of the market without running any kind of auction without saying, we don't need you guys. We can run this business for the long term and create load to shareholder value that way and you talk about that.
Sure Sanjay I'm happy to I'm, the same person that I think you've known since I've been here and my entire and singular focus has been on creating shareholder value for all shareholders, including you as I believe you know and frankly that hasn't changed and that hasn't changed.
Through the representation of this offer that's on the table, which is a very good offer I I totally understand and you sound.
<unk>.
Upset and you have your views on that and I can understand that and thank you very much for sharing them.
There there are.
There's a lot of things that have transpired for sure and some are short term and then there's the long term and I did speak to the long term of the business and look.
We have good assets and that's one of the reasons why somebody is very interested in buying our business for the very long term and I understand your position on this and.
I think this is a spectacular often for shareholders and I know you think as you said a $100 in a bunch of years and whatnot.
So I heard that I think your I'd Miss understanding the delta on not only what has occurred over the short period here, but I think there's many things that are not fully understood.
In terms of our capital program, the money Thats going in and the incremental EBITDA less that this business can potentially generate in the future as we are in the earlier years of Ontario, as an example, and I think you're well aware of this we were very fortuitous.
And Lucky and some good execution, we were able to turn on some.
That's very significant incremental business activity, particularly at places like would find but others as well with table games within seven months of closing.
And 5000 slot machines instead of you know 3500 with a bunch of them that were.
Down a lot of the time and and frankly, we're able to create.
Very significant less in gaming revenues.
Point in time, when we were able through our threshold commitments to a more fully participate in the sharing of the GE are in those early days. Unfortunately as you go further and there's been much.
Conversation and discussion around thresholds in the future and the several billion dollar capital program that had to be invested post those early days when we generated those very significant returns based on very little capital in their early days we have.
At the very significant commitments to build out these assets, which we are in the process. So as you are well aware of.
And frankly, I know you've made commentary in the past about the huge lift we're going to get on the capital because we're smart capital providers and so we're going to make a bunch smart EBIT da on those incremental up to $2 billion of capital.
And frankly that was a little bit erroneous because a lot of the return is already been generated so its a disproportionately lower returns on the future of that capital and so I understand what you're saying I don't think you had it the best understanding and are not at all.
Understanding the risk adjustment of the business and the future and when you look at all of it including many many other factors.
And there are many other factors and I don't want to frankly caused consternation for shareholders every business as we all know has many thing to that they're working on at any point in time that.
That are very good.
Yes, you know maybe neutral and some that are narrow, but deep holes or or difficult to deal with that there.
There's a there's a confluence of all of those and so I'm disappointed that you had this view and it sounds its emotional and and I actually I feel terrible about that on a personal level, but rest assured your board and management.
I have done this in a very thoughtful and professional and fiduciary appropriate fashion with nothing at all in this for me personally or the board other than doing what is absolutely the right thing for shareholders not only at this point in time, but fully factoring in all of the potential for your business.
That's why this has been brought forward. This is not a seller on the cheap to send Americans in fact.
If you know me I would not sell to anybody parents, so I wouldnt sell to anybody and our board would definitely not sell to anybody and we've always run our business for the long term for the marathon and never put our balance sheet into position, where we've been forced to do something that we otherwise wouldn't want to do because it wasn't in shareholders interest and we have not done.
Not in the circumstance, we don't have to do this deal but this deal is being brought forward because as the absolute right thing for our shareholders and frankly, you and the others should take this right. If if that is all true that the earnings power of the business had come with a big leap upfront and there was very little else coming explained. This to me you told me.
Once that when you make an investment you don't do it for percentages you do it for multiple 123 tripled. So when you are buying back $900 million worth of stock at $45. You were not expecting a 50 dollar stuff you would think it was $100 stock. So if you honestly believed that there was no further big lift in EBITDA why were you buying.
Back in stock at $45 for 900 million when you knew it was what 39.
I first of all Sanjay I never said 100, I've never said anything to you about any stock price ever just to be clear when I thought about.
All right sounds like it back in the <unk> and secondly, when you have a balance sheet and you're trading at reasonable value and you've got the liquidity and you can buyback accretive fleet overtime, which we've done for many years.
Got it and you can afford it and it's the right thing to do as a use of of extra liquidity that you're going to do that and look I didn't say there was no uplift I said, we have a journey of multiple billions of dollars and things going on and look if it's a surprise to you or anybody that we may trends.
Actions and delivered very significant.
Very significant triple the size of the company, while putting $32 million of equity in these entities and that was it and and and there was.
I don't see healthy conversations about it was a competitive process and the old. She at all are going to give us all the way I mean this is it.
I think it was very very I understood that.
Watson transaction that was going to be too good to be true and then to extrapolate it forward from there.
Okay, well just to reiterate we will be voting, our 14% against the deal like I'm sure many others as well.
Okay, well you know I am I have to tell you I'll be happy with that the corporation I'm I'm disappointed to hear that and I'm.
Disappointed that you're viewing this opportunity, which I think is a very good opportunity for shareholders negatively.
And clearly with shareholders are doing that then from my perspective, that's a clear both that.
I'm not doing my job properly for shareholders. So that will take it under advisement as well it can be if you want if you want to do another job I'm sure. We can find someone else did run the company.
I understand I'm just saying.
All that I've ever done frankly has been to try and do my best for shareholders and if that's not happening and I think the shareholders should be heard on that so I tried to answer.
When this process is over I'm sure, we all will be and and then we will have a management, which maximizes shareholder value.
Hey.
Thank you for your comments Sanjay appreciate them.
Thank you. Your next question comes from Eli Samaha Madison <unk> Partners. Your line. Please go ahead.
Hi, This is Eli I agree with everything Sanjay just said we own over 2.3 million shares I think you should run a process and I think this transaction materially undervalues the company and we have no intention of voting for it.
That.
Okay. Thank you. Thank you. Your next question comes from Chris Colvin breach and that capital Chris. Please go ahead.
Yes somewhat are completely echoing the prior comments to reiterate I have never heard of a public company not running an auction process. After receiving an unsolicited bid that's point number one point number two you were selling this or apollo's bid implies six and a half times fiscal 19 EBITDA.
When you deduct for lease payments U.S. companies without monopolies much weaker barriers to entry and slower growth trade for 10 to 15 times that implies a great Canadian is where 70 to $110 per share.
Third as also echoed by Sanjay you attempted to by half a billion dollars or 20% of the company it up to $46 per share just nine months ago.
In the fourth comment I guess I would be very curious to hear when Apollo approach you because just three months ago. You had the last earnings call and I think anyone that listen to that call will say that the commentary, we're certainly not positive hence the stock fell from 30 to about $24. So I think share.
Older seem to know when Apollo approach, you and the context for the earnings call. So my firm has been a long term shareholder. This is a material portion of our fund and we will also be the voting against this awful deal.
Okay.
So I don't know if there was any questions there or not.
But it was after the call.
In terms of when we were approached.
And that will come out in the circular, but we did run a full process within the past two years to sell this business. So.
And that will come out as well as in the circular.
You said earlier that you did not run a process after receiving this bid correct.
Correct, we did not run a process in the last two months, we ran a process a full process the global process within the past two years frankly off of those very good early results that I had mentioned it to Sanjay because we felt.
With that kind of velocity.
That point in time, if we were able to attract somebody on that basis that would very much be in shareholders' best interest and nobody showed up to party.
Nobody.
Thank you, ladies and gentlemen, as a reminder, should you have a question. Please press star one on your Touchtone phone.
There are no further questions at this time. Please proceed.
Thanks, Chris and thanks, everyone for your participation this morning.
Before we conclude I would like to remind listeners that forward looking statements were made during this call for those who joined midway I encourage you to listen to the replay of this call to hear my earlier comments regarding these forward looking statements. This.
This replay will be available through the Investor relations sections of our website at Www Dot GC gaming Dot Com. This concludes our call. Thank you.
Thank you ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.