Baazov confirms Dubai firm not part of funding for Amaya takeover

MONTREAL – Amaya founder David Baazov has confirmed that a company he said was financially backing his proposed takeover of the online gaming firm has no plans to do so.

In a statement Wednesday, Baazov said an equity commitment letter he received purporting to be from Dubai-based KBC Aldini Capital Ltd. was delivered without KBC’s knowledge or consent.

“KBC has not committed to provide financing for the proposed acquisition of Amaya,” he said.

He said he intends to secure replacement financing and sticks by his US$6.7 billion proposal to purchase Montreal-based Amaya (TSX:AYA), which would include its debt.

Baazov, who resigned as Amaya’s CEO in August, said last week that he is leading a group of investors that has offered C$24 per share for the company, valuing Amaya at about C$3.48 billion.

At the time, Baazov said he had lined up US$3.65 billion from Head & Shoulders Global Investment Fund and Goldenway Capital, both based in Hong Kong, Ferdyne Advisory, which is registered in the British Virgin Islands, and KBC Aldini Capital.

Amaya has said it is reviewing the matter, adding that it has not entered into a definitive agreement with Baazov.

Meanwhile, a Boston law firm said Wednesday it plans to file a lawsuit next week in U.S. federal court alleging that Baazov engaged in securities fraud or manipulation as a result of the proposed takeover offer.

Lawyer Joel Fleming of Block & Leviton said it is acting on behalf of an investor who bought Amaya shares after Baazov announced his takeover offer last week, but lost money when Amaya’s share price plunged on reports that surfaced Tuesday saying KBC wasn’t part of the financing.

“The allegation is that Baazov made misstatements in connection with the purchase or sale of securities — in other words, inflating the price of the Amaya stock that he owned by making what appeared to be misstatements about the strength of his bid,” Fleming said in an interview.

Even if Baazov’s original offer included statements that weren’t deliberately false, he could still be liable if they were made recklessly, Fleming added.

“Any sort of reasonable bidder for a company, any serious person, would take detailed steps to confirm their financing sources prior to making a statement,” he said.

Baazov couldn’t be reached for comment.

Baazov has been in the news this year on a separate matter. He has pleaded not guilty to five charges, including influencing or attempting to influence the market price of the securities of Amaya and communicating privileged information. His case was briefly before a Montreal court on Wednesday before it was adjourned to Dec. 13.

He was charged as part of an investigation by the Quebec securities regulator that resulted in 23 charges against three people — Baazov, Yoel Altman and Benjamin Ahdoot — and three companies: Diocles Capital Inc., Sababa Consulting Inc. and 2374879 Ontario Inc. They have all pleaded not guilty.

The charges stem from the alleged use of privileged information when trading company shares between December 2013 and the June 2014 announcement about Amaya’s US$4.9-billion deal to acquire the Oldford Group, which includes PokerStars.

Baazov owns 17.2 per cent of Amaya’s shares, making him the company’s largest shareholder.

Follow @RossMarowits on Twitter.