Intertain will use an exchangeable share structure in connection with interposing a new public U.K. holding company

Intertain, which is an OBCA holding company listed on the TSX, holds most of its assets in non-resident subsidiaries and generates substantially all of its (on-line gaming) revenues in Europe through such subsidiaries. In order to effectively move its residence to the U.K., it has caused the formation of a U.K. plc (“Jackpotjoy”) which (except for those Canadian shareholders who have elected for rollover treatment) will issue its shares to the Intertain shareholders under an OBCA Plan of Arrangement in consideration for transferring all but one of their shares to a grandchild Canadian subsidiary of Jackpotjoy (“ExchangeCo”) and for transferring the remaining common share to Jackpotjoy, for contribution down the chain to ExchangeCo. Those electing for rollover treatment instead will have their Intertain shares exchanged for Class B shares of the amalgamated corporation resulting from the amalgamation of ExchangeCo and Intertain (“AmalCo”), and then exchange those Class B shares under a s. 86 reorg for exchangeable shares.

On the issuance of these exchangeable shares, Jackpotjoy will issue a corresponding number of shares to a Jersey company owned by a charitable trust, with the voting rights on those shares thereafter exercised as directed collectively by the exchangeable shareholders. When an exchangeable shareholder retracts (or AmalCo gives notice of redemption), the immediate parent of AmalCo (“CallCo”) will exercise its overriding call right, so that the exchangeable shareholder will transfer its exchangeable shares to CallCo, CallCo will issue shares to Jackpotjoy and in consideration therefor Jackpotjoy will direct the Jersey company to deliver the relevant number of Jackpotjoy Shares to the former exchangeable shareholder. The exchangeable shares are slated to mature no later than the 5th anniversary of their issuance and, in the meantime, are expected to be listed on the TSX.

All this contains some significant departures from the usual exchangeable share structure. Sirius XM also was different.

Neal Armstrong. Summary of Intertain Circular under Public Transactions – Mergers & Acquisitions – Cross-Border Acquisitions – Inbound – Exchangeable Shares.