Ontario-based online sports betting and iGaming operator NorthStar Gaming has secured an investment of C$12.25m from industry giant Playtech.
Purpose of the investment
The funding concludes NorthStar’s concurrent fundraising efforts relating to a reverse takeover of a wholly-owned subsidiary of publicly listed mineral exploration company Baden Resources.
NorthStar intends to secure a public listing on the TSX Ventures Exchange by way of the reverse takeover.
Including Playtech’s investment, the company’s total fundraising related to the takeover has now reached C$22.3m, including a further C$10m investment from news and media-focused holding company Torstar Corporation.
Last week (8 February), Baden announced that the terms of the acquisition had been amended to extend the outside date for completing the transaction to 28 February this year.
The companies continue to work towards satisfying all required conditions of the acquisition.
Terms of the investment
Playtech’s investment will take place through a debenture, a type of bond or other debt instrument that is unsecured by collateral.
On completion of the reverse takeover, the debenture will convert into units of NorthStar consisting of one common share, one half warrant with an exercise price of C$0.85 and one half warrant with an exercise price of C$0.90.
The NorthStar warrants will have a term of five years from the date of the conversion of the debenture, and the NorthStar common shares received by Playtech on conversion will be exchanged for Baden common shares following the closure of the takeover.
In connection with the deal, NorthStar has entered into an amended software and services agreement with Playtech.
The amendment significantly expands an existing partnership between the two companies, and includes a 10-year extension, the right to expand the agreement across the entire Canadian marketplace, and changes to certain commercial terms.
Playtech will also provide further strategic advice to NorthStar, notably in the areas of online operations, managed services and market expansion.
Playtech currently provides NorthStar with its IMS player management platform and its online casino and live casino software.
A further element of the agreement will see Playtech CFO Chris McGinnis join NorthStar’s board as a non-executive director, acting as Playtech’s representative.
Management commentary
NorthStar said the capital raised from Playtech will support the growth of the brand’s footprint across Ontario and future Canadian markets.
It will also allow NorthStar to invest in new technological innovations for its online platform, and expand its reach to new audiences through marketing campaigns.
“Playtech’s unparalleled expertise in the gaming industry will help NorthStar accelerate our growth and rapidly expand our user base,” said Michael Moskowitz, CEO and founding partner of NorthStar Gaming.
“With the additional investment, we look forward to expanding our market share across Ontario and further enhancing our premium, content-driven experience for consumers.”
Playtech CEO Mor Weizer added: “We are excited to deepen our partnership with NorthStar and become the market-leading online gaming platform in Canada.
“As a key partner of NorthStar in their early stages, we understand and were impressed by NorthStar’s unique business model and product offering and are excited to further expand our partnership.”