Intertain Group Review Findings no Cause for Concern
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Intertain has issued a statement that says the committee it appointed due to the December’s stock sell-off determined that the “principal claims” by “self-described short seller”, Spruce Point Capital Management, were “false and misleading.”

Spruce Capital took issue with future earning potential and the allegedly unfunded earn-out obligations of Intertain’s UK-facing online bingo acquisitions, this included Jackpotjoy and Mandalay Media. The report showed concerns over the eagerness in which Intertain’s senior management, paid themselves handsome bonuses for their identification of future acquisition targets.

The Intertain’s committee, that consisted of non-management directors, says it had engaged Voorheis & Co LLP and as well as Stockwoods LLP to assist with the review, and Deloitte was retained as the committee advisor.

The committee said it had not found “any basis for concern” with regard to the acquisitions, the continued performances of bingo businesses, or with Vera&John online casino business, all of which “continues to meet, and/or exceed management’s expectations.

The committee also stated that there will be “no changes to Intertain’s disclosed financial statements that were previiously stated were required” to addressing certain alleged accounting shenanigans that were spelled out in the Spruce Capital’s report.

However, the committee said that it had made some recommendations for “changes and improvements” in order to to address some of the “inadequate documentation, the approvals and record keeping with regard to certain payments that were previously made by Intertain which were recorded and were also fully expensed by their transaction expenses in connection with their prior acquisitions.”

Among the complaints made by Spruce Capital was Intertain’s Management’s Incentive Plan, that allowed the CEO, John Kennedy Fitzgerald and the CFO, Keith Laslop, to be able to collect fees that are equal to 2% of the acquisition target’s purchase price. Spruce Capital has claimed that the pair of execs were each awarded C$17m in 2015 of which 2% payable in cash, before the shareholders noticed the payments in the company’s second quarter earnings report and made a fuss.

If the findings of the committee were intended to give Intertain’s shares a boost, the plan backfired abysmally. Share prices of the company fell by 9.5% on C$7.77, this is the lowest point for the 2015, and it is lower than the previous $7.98 bottom that they hit following the December plunge.

During January, the company made an attempt to change the narrative when they informed shareholders that they expected fourth quarter and FY15 revenue and profits to be above previously reported guidance. Intertain will report their official numbers on March 15.

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