World Poker Tour Acquisition Offer
Mandalay Media, Inc. (OTC Bulletin Board: MNDL) today announced that it has
submitted a proposal to the Board of Directors of WPT Enterprises, Inc.
(NASDAQ:WPTE) to acquire WPT for $35 million in cash and stock. Shareholders
would receive cash and stock of $1.69 per share, based on WPT`s recent
outstanding shares and disregarding options. The proposal represents a premium
of approximately 54% over the closing price of WPT`s common stock on October 26,
2009 and a premium of approximately 23% over the implied value at closing of
WPT`s pending asset sale with Peerless Media Ltd.
In a letter to WPT`s Board of Directors, Mandalay`s Co-Chairman Robert Ellin
stated that Mandalay proposal is a "Superior Proposal" as that term is defined
under the asset purchase agreement with Peerless.
Mandalay stated that the proposed asset sale with Peerless provides no payment
or distribution of any kind to WPT`s shareholders. In contrast, the Mandalay
proposal would provide significant cash and stock directly into the hands of WPT
shareholders.
In addition, Mandalay stated that in order to enable the WPT board of directors
to comply with its fiduciary duties to give serious consideration of the
Mandalay proposal, Mandalay urged the board of WPT to postpone the Special
Meeting of Shareholders currently scheduled for October 30, 2009. Mandalay has
asked to meet with the WPT board as soon as possible.
The full text of the letter, dated October 28, 2009, follows:
Mandalay Media, Inc.
2121 Avenue of the Stars, Suite 2550
Los Angeles, CA 90067
The Board of Directors
WPT Enterprises, Inc.
5700 Wilshire Blvd. Suite 350
Los Angeles, California 90036
Re: Cash and Stock Proposal at $1.69 per share
Dear Members of the Board:
Since the announcement of your proposed asset sale with Peerless Media
(Peerless), Mandalay Media, Inc. (OTC-BB: MNDL) (Mandalay) has given serious
consideration to a combination of Mandalay and WPT Enterprises, Inc. (WPTE).We
believe a strategic combination of Mandalay and WPTE would deliver significant
value to our respective shareholders, and position the combined company for
substantial future growth.
By this letter, we are proposing a transaction that provides WPTE`s shareholders
a significant premium over both WPTE`s current market price and the current
value of the Peerless transaction.There is no doubt that our offer is a
"Superior Proposal" as that term is defined under your asset purchase agreement
with Peerless.Accordingly, we would like to meet with you as soon as possible to
discuss the terms of our offer in greater detail.In addition, in order to enable
the WPTE board of directors to comply with its fiduciary duties to give serious
consideration of our proposal, we urge the board to postpone the Special Meeting
of Shareholders currently scheduled for October 30, 2009.
As you know, the proposed asset sale with Peerless provides no payment or
distribution of any kind to WPTE`s shareholders.In addition, as WPTE`s proxy
materials make clear, WPTE has no present intention or plan to conduct any stock
repurchases or otherwise distribute either the proceeds of the Peerless sale or
WPTE`s excess cash to shareholders, even though WPTE would no longer have any
material operating assets.
In contrast, our proposal would provide significant, immediate cash and stock
directly into the hands of your shareholders, and values WPTE significantly
higher.
Under our proposal, which has no financing contingency, Mandalay and WPTE would
combine and WPTE shareholders would receive, in the aggregate, approximately $35
million in stock and cash, consisting of: (i) $10 million in Mandalay common
stock, plus (ii) $25 million of cash.On a per share basis, had we closed on
October 22, 2009 (when our stock closed at $.50 per share), and using your
August 12, 2009 outstanding shares of 20,603,333, each share of common stock of
WPTE would be converted into the right to receive approximately $1.69 per share
as follows: (1) $1.21 in cash plus (2) .97 shares of Mandalay common stock,
having an implied value of $.485 per WPTE share.The actual number of shares of
Mandalay to be issued will be determined as of prior to closing, but the total
value of the stock component will be fixed at $10 million.Our proposal assumes
no material change in WPTE`s assets and liabilities.
Based on October 26, 2009 closing prices, our offer represents a 23% premium
over the value at closing of your proposed asset sale with Peerless and a 54%
premium over WPTE`s closing price.
We expended substantial effort in developing this value on the basis of
publicly-available information.Once we have the opportunity to conduct due
diligence of non-public information and to negotiate with representatives of
WPTE we can confirm the value we ascribe to WPTE. To that end, we would be
prepared to enter into an appropriate confidentiality agreement.We expect to
conclude all due diligence within 10 days after receiving a short list of
requested materials.
We believe that your shareholders would find this proposal compelling, and to
that end, though this is not a binding offer, we are prepared to move quickly
toward the negotiation and entry into a mutually acceptable transaction
agreement with you.
Mandalay Media is a global publisher and distributor of branded entertainment
for 3G mobile networks, including images, video, TV programming, and games.With
distribution in 40 countries through 120 major mobile operators, it offers over
400 branded WAP sites, chat services, and customized video clips.Additionally,
Mandalay Media distributes more than 150 mobile game titles from content
partners such as Sony, Taito, THQ, Digital Chocolate, THQ, and others.Its
patented Play For Prizes platform is available on Verizon, AT&T, Sprint, and
Virgin Mobile, and includes titles such as Wheel of Fortune, Jeopardy, Frogger,
and Jewel Quest.
We believe the strategic rationale for combining Mandalay Media and WPTE is
compelling for a number of reasons:
* Mandalay Media has the management team, seasoned veterans and strategic
relationships necessary to lead the company in its multiple service offerings
and distribution channels.
* Mandalay Media will cultivate and expand long-term global contracts for its
television content.
* Mandalay Media can leverage its mobile platform and operator relationships
throughout the world to provide a full mobile social media and sports / poker
playing experience.
* Mandalay Media will tap into Facebook and additional social media websites to
develop and publish a more compelling and branded next generation poker
experience that currently offered.
* Mandalay Media through its existing platform technologies can provide a
"connected" game experience for the internet as well as third screens (mobile
phones).Players can always be part of the WPT community wherever they are.
* Mandalay Media through its Play for Prizes platform is uniquely positioned to
deliver mobile and internet skill with prizes game play. As gambling becomes
legal, we will already be positioned to immediately offer that functionality to
the WPT community.
Although the majority of our proposal consists of cash, we wish to call your
attention to some of the reasons we believe Mandalay`s common stock is
attractive.Mandalay recognizes annualized revenue of $40 million.With the
expected synergies and cost savings from the combination of the two public
companies, we expect annual revenues and EBITDA of the combined company to
exceed $60 million and $8 million, respectively, starting from the closing.
We expect that the combined company will be listed on Nasdaq`s capital market,
with a larger market capitalization, greater following and enhanced liquidity
for shareholders.
Our interest in this transaction is a reflection of our firm belief that a
combination of our companies would be highly beneficial financially to both of
our shareholder groups and accretive to Mandalay`s earnings per share.In sum, we
believe our proposal is superior to your proposed transaction with Peerless
based on its higher current value, and the opportunity for WPTE shareholders to
share in the enhanced prospect of growth of a stronger combined franchise.
The Board of Directors of Mandalay has unanimously approved this proposal and
has authorized our management team to proceed.
We would like to meet with you before the scheduled shareholders meeting to
discuss our proposal in greater detail.In any event, whether or not a meeting
can be arranged before Friday, we urge you to postpone your shareholders meeting
to allow full and serious consideration of our proposal.Please feel free to
contact Robert Ellin at Mandalay Media, Inc. at 310 601 2500 or to have your
financial or legal advisors contact Mr. Ellin regarding the matters set forth
herein. We look forward to meeting with you soon.
Sincerely,
Mandalay Media, Inc.
By:/s/ Robert Ellin
Co-Chairman
About Mandalay Media, Inc.
Managed by leading media and technology industry executives, MNDL`s mission is
to build a unique combination of new media distribution and content companies
through acquisitions with domestic and foreign businesses with strong management
teams and historical financial performance. Through its wholly-owned subsidiary
Twistbox Entertainment, Inc. ("Twistbox"), MNDL is a leading global producer and
publisher of mobile entertainment. Twistbox has exclusive licenses with
industry-leading brands, direct distribution with more than 120 wireless
operators in over 45 countries and provides an extensive portfolio of
award-winning games, WAP sites and mobile TV channels. Its wholly-owned
subsidiary AMV Holding Limited is a European leader in direct-to-consumer mobile
Internet content and services.
