FTP-TAPIE DEAL: LATE ARRIVING INVESTOR ON BOARD

By Wendeen H. Eolis

Poker Player Newspaper

March 2, 2012

This morning, Group Bernard Tapie Counsel Behn Dayanim spoke to Poker Player Newspaper, reconfirming his renewed “significant confidence in the prospects of completing the deal” for his client to acquire the Full Tilt brand. He notes, “It could occur before the end of the first quarter.” Dayanim makes clear, however, there are still a multitude of integrated issues that need to be buttoned up in the final stretch and it is more important now than ever to work through that process patiently.

Meanwhile, the sequence of recent events – since Dayanim’s disclosures last month of several players’ indebtedness to FTP and since PPN’s identification of substantial additional roadblocks to closing a deal — have been fast moving.

In my conversation this morning with Dayanim, he was mum as to any specifics of current negotiations explaining in his usual polite manner the reasonableness on my part in probing for information, and the reasonableness on his part in deflecting my invasive questions for another day.

Like an airplane delay, affected players are frustrated by the lack of updated information as to the real progress in getting them to their destination. The primary purpose of this update is to allow players a bird’s eye view of the current machinations, even if the ending is not 100% clear.

Lawyers not intimately connected to the GBT-DOJ-FTP negotiations but well informed for one reason or another (they prefer not to explain publicly), provide useful information and insights. The lawyers consulted have all proven themselves as knowledgeable resources in the past.

They generally concur in their analysis of where things stand, citing five major developments that have breathed new life into a deal that was primed to crater:

1. Necessary Investor money is now in place. Investor commitments at the time Dayanim announced the complications caused by the player debt were wobbly; Tapie was not persuaded to take the necessary risks of the deal with the broad array of uncertainties that had risen to the surface during the due diligence process. The player debt contributed to the angst but was not the most significant cause of it. The player debt was well known prior to completion of the due diligence.

2. A late arriving investor reportedly “close to Full Tilt” has stepped up to the plate since the announcement of the threatening crash of the deal in part due to the 16.5 million dollars of player debt.

3. There is a concrete understanding as to the breadth of the total liabilities it will inherit – beyond the player repayment requirements, and in a better position to work out a plan to address them. While FTP was in worse financial condition than anticipated, the breadth and depth of investor participation is expanded.

4. There is a better handle on the extent to which they will inherit troubled assets —namely player debt that will be hard if not impossible to collect. Tapie has a clearer picture as to which players will make arrangements to discharge their debt as well as those who lack the funds or the honor to do so.

Note: Given the reportedly sparse documentation for these loans, collection efforts through enforcement proceedings are now viewed as worse than unappetizing. This was probably the reasoning for the shaking of the leaves — to see if public shaming of indebted players by Dayanim last month might unearth some additional monies. The tactic was of little effect in inducing recalcitrant players to resolve their debt, but apparently it unexpectedly drew in one additional needed investor.

5. Tapie is developing a more definitive plan by which to assure proper and orderly repayment of rest of the world players. The smart money is betting if this issue is resolved, as is now anticipated, the final arrangements will fall into place.

Explaining that it is their understanding that the DOJ has discouraged discussions with media while negotiations of any kind are in progress, lawyers queried sympathize both with the Government’s concerns of disruption of progress and with players’ frustrations over being kept in the dark for so long.

Perhaps the most interesting comment was made by one highly regarded gaming law expert not in the mix of protagonists. He said, “I wouldn’t be surprised if the Government is in an end game to position itself not only as the power that has taken down illegal online poker in the US but also as the players’ hero in picking up the pieces,” in the United States and around the world. The smart money is betting that the DOJ has become more keenly interested in assuring that victims overseas will be repaid their funds and that an orderly process is in place to do so.

Extensive player skepticism in the US notwithstanding, lawyers consulted for this article, including Government affairs experts with ties to the DOJ in Washington, D.C. express increasing confidence that the Justice Department intends to use the money from the anticipated sale ($80,000,000) and more money if recovered through other efforts, for repayment to American players.

As they say, in some places — from their lips to God’s ears!