Correction posted 10/5/2011 8:06 PM EST.
In light of some widespread rumors that are running rampant across the internet regarding the acquisition agreement between Groupe Bernard Tapie (GBT) and Full Tilt Poker, Subject: Poker has contacted several of our sources to get clarity.
There is indeed a tentative agreement to purchase Full Tilt Poker that’s been signed by all parties. As is to be expected, it’s a provisional agreement, where certain contingencies must be met. The agreement was executed on September 30, when the previously reported letter of intent was due to expire.
In an interview with Behnam Dayanim, an attorney for GBT Managing Director Laurent Tapie, Dayanim stressed that the Groupe is focusing on moving forward to complete the sale and maintains its aim to see that Full Tilt customers are repaid the account balances that are due to them.
Bernard Tapie, Laurent’s father and owner of GBT, said in an interview with Agence French Presse that his company was only willing to finance 5%-10% of the sale on its own. Mr. Dayanim insists that is not true at all. While there are outstanding issues that need to be resolved, not the least of which is an agreement with the US Department of Justice, he says that rumors that the Groupe will continue with the sale only by having additional investors come aboard with a majority interest are entirely false. Subject: Poker can confirm that the documents that we have seen suggest that GBT plans to buy the large majority of Full Tilt itself.
GBT may, however, look for some smaller amount from other sources. For example, the Groupe is considering allowing some current owners of FTP to retain some ownership in the relaunched company in exchange for further investment or forgiveness of debt. If this were to happen, however, Mr. Dayanim is quick to point out that these shares would amount only to a small minority interest at best, and that the owners of such shares would not have votes or say in any decision-making processes or have any link to the management of the company whatsoever. However, such a deal would have to be accepted by any future regulator of Full Tilt.
Dayanim also discussed the possibility of giving players, especially those with a sizable account balance, the option to convert their balances into equity in the new company. Dayanim says that, if such a plan came to fruition, these shares would have to be held for some minimum specified period of time, and at some future time, they could be sold back to the company at market value, in addition to some additional incentive. This potential plan would have to pass muster in a number of ways; in particular, it would need the approval of the US Department of Justice and securities regulators, as well as the future regulator of Full Tilt.
The elder Tapie also mentioned in his interview that the International Stadiums Poker Tour, a new poker tournament company that is partially owned by GBT, is a key part of the deal. Mr. Dayanim says that, though the Groupe does own part of the ISPT, the poker tour is not mentioned in its agreement with Full Tilt Poker.
Dayanim admits that the Groupe regrets that the AGCC revoked the licenses of Full Tilt Poker last week, but he says he is hopeful with that such a revocation does not automatically rule out the new company being relicensed there. Dayanim explained that the AGCC’s familiariarity with Full Tilt Poker makes it the obvious choice for the potential new regulatory body. Indeed, the AGCC’s statement announcing the revocation of FTP’s licenses says, “The revocation of FTP’s licences does not, as has been suggested, prevent a reactivation of the business under new ownership and management.”
Last but not least of course, an agreement with the DOJ is paramount to finalizing any deal. Mr. Dayanim met with the DOJ in New York for some preliminary conversations on October 3. Both sides are now considering issues raised during that meeting, and Dayanim says another sit-down for further discussion will take place soon. According to Dayanim, the position of the DOJ with respect to the allocation of seized funds being used to repay players is still unsettled.1
Multiple sources close to the negotiations tell Subject: Poker that the $128 million in uncollected e-check deposits that is partially to blame for FTP’s insolvency is part of the discussion between the DOJ and GBT. It is still unclear, in light of the DOJ’s stance on the legality of online poker, the legality of gambling debts in the United States, and the legality of Full Tilt’s decision to effectively loan players money without telling them, whether any of this money could ever be collected. Even if collections did take place, it is possible that they would not be particularly successful.2
In addition, there still remains the question of whether Full Tilt itself will agree with the deal. A source close to FTP says that Full Tilt’s corporate structure requires that owners representing two thirds of the shares of Tiltware must sign off. The same source says he hopes that a vote will take place in the next few days.
Subject: Poker will continue monitoring this story as it progresses.
Correction 10/5/2011 8:07 PM EST:
We originally reported that the conversion of debt into stock for some players would require the approval of the US Securities and Exchange Commission. This should have simply read “securities regulators,” as the particular regulations that would apply to such a deal are currently unclear.
Subject: Poker apologizes for any confusion caused by our mistake.
Edited on 10/5/2011 10:02 AM EDT: Changed “Ben Dayanim” to “Behnam Dayanim.”
- The DOJ recently released a statement suggesting that it might be willing to repay players directly. However, the DOJ has not committed to anything, and it is not clear whether this statement applies to the case in which FTP is sold successfully. ↩
- This issue is separate from the collection of these debts from players who deposited in this way and still have a positive balance on Full Tilt. Full Tilt says that $9 million of the shortfall can be collected by simply deducting the appropriate amount from player balances. ↩