Tangelo Games Clarifies About Proposed Transaction to Become a Private Company

Developer of social and mobile gaming for desktop, iOS and Android platforms, Tangelo Gaming (TSXV:GEL) provided information about its proposed transaction to become a private company.

The company said that the sale to GoGel is the only available alternative that will provide value to its shareholders. It was noted that GoGel will acquire all the outstanding shares of Tangelo for CS$0.025 per share in cash.

As quoted in the press release:

“Over the past two years, given the Company’s financial obligations and changing industry landscape, Tangelo, with the assistance of its legal and financial advisors, has carefully reviewed and considered potential alternatives available to the Company, including detailed discussions with potential strategic partners and financial investors,” said James Lanthier, Chief Executive Officer of Tangelo. “After our comprehensive review and consultation process, the Company concluded that the sale to GoGel represents the best available alternative to shareholders.”

At the beginning of 2016, when it became apparent that the Company could not raise the equity needed to partially pay down or retire the balance of its term loan, Tangelo’s management began a review of strategic alternatives.

This exhaustive process resulted in the Company entering into over 30 non-disclosure agreements and eight different non-binding proposals with prospective strategic and financial investors.

Other than the proposal from GoGel, however, all of the proposals required significant concessions from TEC, in respect of repayment under the term loan, or equity raises that were unachievable given the Company’s capital structure.

Given Tangelo’s debt obligation to TEC, the Company’s only alternative to the arrangement agreement with GoGel is to seek creditor protection, where common shareholders would most likely receive no consideration. The Company is eager to avoid this scenario.

Based, in part, on a fairness opinion from Echelon Wealth Partners Inc. (see details below), the Board believes that the proposal that it has agreed to with GoGel is fair, and more importantly, is the only workable alternative that preserves value for common shareholders. The cash purchase price under the agreement represents a 71% premium to Tangelo’s closing share price of C$0.015 on July 10, 2018, the last trading day prior to the announcement of the arrangement agreement.

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