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Company News

UPDATE 1-Gateway Casinos' SPAC deal to go public ends abruptly

(Adds Gateway Casinos response)

July 16 (Reuters) - Leisure Acquisition Corp said on Thursday it called off a deal to purchase Gateway Casinos & Entertainment, a move that would have helped the Canadian gaming and casino operator to go public.

Gateway said in December it had agreed for a reverse merger deal with special purpose acquisition company (SPAC) Leisure Acquisition that would have allowed the gaming operator to sidestep the initial public offering (IPO) process.

A SPAC has no business operations of its own and raises money from an IPO and uses the proceeds along with borrowed funds to buy companies that are usually privately held and are seeking an IPO.

Leisure Acquisition announced the deal termination in a regulatory filing, but did not specify a reason. The company did not respond to Reuters request for comment.

Meanwhile, Gateway, Canada’s second biggest gaming company, said the Leisure Acquisition shareholder vote in March “negatively influenced their ability to complete a transaction that was favorable to all the parties”.

Gateway has over two dozen properties in British Colombia, Ontario and Alberta. Casino operators in Canada have faced closures to limit the spread of the new coronavirus.

Gateway said it has re-opened select food and beverage outlets and have reached return-to-operations agreements with unions.

SPACs have been behind some of the most high-profile public listings of the last 12 months, with the likes of space tourism company Virgin Galactic Holdings, sports betting platform DraftKings Inc and electric truck maker Nikola Corp going public by merging with SPACs.

The SPAC deal would have helped investor Newton Glassman’s private equity firm, Catalyst Capital Group Inc, to exit its investment in Gateway. Catalyst Capital took control of Gateway in 2010.

Gateway filed for an IPO in 2018, but dropped the plan in December to pursue the SPAC deal. The company did not indicate the reason for scrapping the IPO plans. (Reporting by Bharath Manjesh and Arundhati Sarkar in Bengaluru; Editing by Shinjini Ganguly and Arun Koyyur)

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