Gateway said in December it had agreed for a reverse merger deal with special purpose acquisition company (SPAC) Leisure Acquisition Corp. that would have allowed the gaming operator to sidestep the initial public offering (IPO) process, as reported by Reuters. A SPAC has no business operations of its own and raises money from an IPO and uses the proceeds along with borrowed funds to buy companies that are usually privately held and are seeking an IPO.
Leisure Acquisition announced the deal termination in a regulatory filing, but did not specify a reason. Gateway, Canada’s second biggest gaming company, said the Leisure Acquisition shareholder vote in March “negatively influenced their ability to complete a transaction that was favorable to all the parties”.
Gateway has over two dozen properties in British Colombia, Ontario and Alberta. Casino operators in Canada have faced closures to limit the spread of the new coronavirus. Gateway said it has re-opened select food and beverage outlets and have reached return-to-operations agreements with unions.
The SPAC deal would have helped investor Newton Glassman’s private equity firm, Catalyst Capital Group Inc, to exit its investment in Gateway. Catalyst Capital took control of Gateway in 2010.
Gateway filed for an IPO in 2018, but dropped the plan in December to pursue the SPAC deal. The company did not indicate the reason for scrapping the IPO plans.