David Baazov Announces Permanent Exit from Amaya
Today, Amaya, Inc., the parent company of PokerStars, released its second quarter earnings for 2016, a report that also included the announcement that former CEO and Chairman of the Board David Baazov has permanently resigned his twin executive roles with the company.
Baazov had taken an extended leave of absence following the filing of insider-trading charges against him and several others by Quebec’s financial regulatory overseer, Autorité des marchés financiers (AMF). Baazov has continued to proclaim his innocence regarding the charges. Per an Amaya statement:
Appointment of Chief Executive Officer
Rafi Ashkenazi, who was appointed Interim Chief Executive Officer of Amaya in March 2016 and currently serves as Chief Executive Officer of Rational Group, has been appointed Chief Executive Officer of Amaya on a permanent basis. Mr. Ashkenazi’s appointment follows the resignation of David Baazov from all positions with Amaya, effective August 11, 2016. Commented Mr. Baazov, “I am proud of my contributions in building Amaya into the successful company it is today, and continue to be supportive of its strategy and management.” Amaya thanks Mr. Baazov for his contributions to Amaya since its inception and through its rapid growth, and looks forward to Mr. Ashkenazi’s continued success in leading the execution of Amaya’s strategy.
Ashkenazi had already been serving as Amaya’s interim CEO, and has long been recognized as one of Amaya’s most experienced online-gaming executives.
Later in the mid-year update, the Amaya report addressed the matching changes to the company’s board of directors in the wake of Baazov’s departure:
Director Update – Following Amaya’s 2016 Annual General Meeting of Shareholders held in June and the announcement that David Baazov and Daniel Sebag would not stand for re-election at the meeting, Alfred F. Hurley, Jr. and David Lazzarato joined Amaya’s Board of Directors as independent directors and Divyesh (Dave) Gadhia was appointed Chairman of the Board. Messrs. Lazzarato and Hurley will also serve as the chairs of the Audit Committee and Corporate Governance, Nominating and Compensation Committee, respectively. Mr. Hurley has 40 years of experience in the finance and banking sectors and currently serves on the boards of New Mountain Finance Corporation (NYSE: NMFC) and Merrill Corporation. Mr. Lazzarato, a Chartered Accountant, has 30 years of public company experience in the technology, telecommunications and media industries and currently serves on the board of Yellow Pages Limited (TSX: Y).
Sebag, Amaya’s chuef financial officer, currently remains in that role. He is a long-time part of Baazov’s inner circle but was not among those charged in the primary AMF investigation, although he was listed separately in an AMF update as being among those under investigation regarding the insider-trading allegations.
As for Dave Gadhia, the new permanent chairman of the board, he also has been affirmed in a role he had been filling on an interim basis.
Undisclosed at the present time is whether David Baazov will be retaining his personal stake in Amaya’s ownership, or whether the company will attempt a buyout package to remove him from the company’s operations. Also now consigned to the trash heap is a tentative $2 billion offer that Baazov had planned to make for all of Amaya. That offer was announced in February, but was rendered a long shot after the AMF announced its charges against Baazov just weeks later.
Overshadowed by the confirmation of Baazov’s and Sebag’s departures — though their exit from the BOD had been tentatively announced in May — are a handful of important specifics about Amaya’s ongoing operations. For instance, Amaya is doing quite well in New Jersey, where it has become one of the three largest operators.
Per the report:
New Jersey – PokerStars NJ continues to contribute to the growth of the New Jersey real-money online poker market, which according to the New Jersey Department of Gaming Enforcement, grew approximately 25% in the second quarter of 2016 year-over-year. In the second quarter of 2016, PokerStars NJ accounted for approximately 44% of the total New Jersey real-money online poker revenue.
Overall, the company’s online poker numbers were relatively stable; some indicators trended a few percentage points higher, while others showed a mild drop-off. Amaya summarized its poker fortunes as follows:
Poker Revenues – Real-money online poker revenues for the quarter were virtually flat year-over-year at $215.6 million, evidencing the initial positive impact of Amaya’s previously announced strategy of focusing on recreational players, including through changes to its online poker loyalty program and rake structure and the introduction of new poker promotions.
As for what might be coming down the road for Amaya, the company was generally circumspect. Amaya announced that it does not expect further, significant reductions in staff, despite ongoing realignment including its London, Sydney and Dublin offices. The now-left-for-dead offer floated by Baazov, along with ongoing discussions with the AMF, have been and will continue to be dealt with in semi-private negotiations. Amaya summed that up with the following:
Special Committee Update – The Special Committee of the Board continues its review of strategic alternatives with the goal of determining the best outcome for Amaya and its shareholders. As previously disclosed, Amaya entered into discussions with a number of parties, and discussions with some of these parties have progressed. While these discussions are advancing, there remains no guarantee that this process will result in a transaction of any kind. The Special Committee remains committed to diligently pursuing its review of alternatives and will provide further updates to shareholders as circumstances warrant.
The Special Committee also continues its work with respect to the investigation of allegations made by the Autorité des marchés financiers (AMF).
Amaya’s share price dipped about 8% in early-Friday trading, reflecting the apparent end of the Baazov offer for the company.