Gaming Corps has today signed an agreement for the sale of 212 shares in Kung Fu Factory Ltd. to a purchase price of approximately MSEK 1,37. Gaming Corps acquired 901 shares in the American game developer during 2017 and 2018.
Following a series of negotiations in 2017 and 2018, Gaming Corps acquired 901 shares in the American development company Kung Fu Factory. The total purchase price was MUSD 1,35 to which just over MSEK 1 was added in brokerage costs. At the beginning of 2019, the then recently appointed new board decreased the valuation of the holding to zero as there was no sound data available for evaluation. When new documentation was made available, part of the total holding value was returned on two occasions in 2019 to comprise a total of MSEK 4,4. Since the beginning of 2019, the management team has been in conversations with Kung Fu Factory regarding the repurchase of the shares, something which was regulated in a repurchase program signed in 2018.
The company has today reached a new agreement with Kung Fu Factory which has resulted in the divestment of part of the holding. The new agreement includes 212 shares at a total purchase price of approximately USD 165 100, corresponding to approximately MSEK 1,37. The buyer is a third party that via this transaction becomes a shareholder in Kung Fu Factory. It is the intention of all parties that the remaining shares now belonging to Gaming Corps will also be repurchased by Kung Fu Factory and / or its new shareholders. Time and price per share in the event of further sales are the subject of ongoing discussion.
“It has long been the expressed intention of myself and this management team to sell the shares back to the founders of Kung Fu Factory, and they in turn have always been clear that they share that intention. However, it has been uncertain from the part of Kung Fu Factory when a possible transaction can take place and the Company has therefore consistently made a very restrictive assessment regarding the value of the shares for our books. While the dialogue has been ongoing, our goal has been to be a responsible shareholder and to ensure that the valuation of the holding is both restrictive and informed. We are therefore very pleased to be able to sell parts of the shares today at a fair price that exceeds the current valuation and sends a clear buy signal from Kung Fu Factory and their partners regarding the acquisition of the remaining shares in the future.” says Juha Kauppinen, CEO.
“Gaming Corps is still in an expansive phase where it is not sensible for capital to be tied up in minority holdings when it can be put to better use in the development of our own business. We are now divesting part of the holding in Kung Fu Factory and can thus increase cash for identified development initiatives. It is important to note that the deal as a whole, as it was set up in 2017 and 2018 by previous management, consists of a substantial loss for the shareholders. But that loss has long been expected and what is relevant today is what shareholders can reasonably expect based on a realistic valuation of the holding. Obtaining a well-balanced price for about 20% of the shares that exceeds the restrictive valuation in our books, as well as realistic expectations on the conditions for continued divestment, is therefore good news in my opinion.” says Bulent Balikci, Chief Financial Officer.
