PERTH, AUS – VGW Holdings Limited (“VGW” or the “Company”) today announces that it has entered into a Scheme Implementation Deed (“SID”) with Ocean BidCo Limited (“BidCo”), an unlisted special purpose company established by Lance East Office (“LEO”), the family office of VGW Founder and CEO, Mr Laurence Escalante, for the acquisition by BidCo of all of the issued shares in VGW by way of a scheme of arrangement (“Scheme”).

Highlights

• VGW enters into Scheme Implementation Deed with LEO, providing a liquidity opportunity for minority shareholders^[1]
• VGW shareholders will be entitled to receive a total cash consideration of A$5.05 per VGW share less any dividends paid (“Total Transaction Value”)^[2]
• If the Scheme is implemented, VGW shareholders will have flexibility to choose to:
  • receive cash, by electing Scheme Cash Consideration; or
  • continue their investment in VGW, by electing Scheme Scrip Consideration and receiving shares in BidCo; or
  • a combination of the above
• The VGW Independent Directors recommend VGW shareholders vote in favour of the Scheme^[3]
• The Scheme is subject to certain customary conditions, including approval by VGW shareholders^[4]
• The implementation of the Scheme is proposed to occur in August 2025, subject to the satisfaction of the Scheme conditions
• In light of recent trading conditions, VGW currently expects that earnings for the second half of FY25 are likely to be 10% to 15% lower than earnings for the first half of FY25

Transaction Overview

VGW was first approached by LEO about a potential transaction in November 2024. Mr Escalante and his entities currently own approximately 70% of all VGW shares.

Following this approach, the Board put in place appropriate governance protocols and procedures to ensure that the Board acted in the best interests of VGW shareholders as a whole and independently of Mr Escalante and his related shareholding entities in respect of any formal proposal from LEO.

This included the establishment of an Independent Board Committee (“IBC”), appointment of independent financial and legal advisors, and the appointment in January 2025 of Mike Symons as an Independent Non-Executive Director of VGW.  Mr Symons is an experienced financial advisory executive and co-founder of Canterbury Partners (a specialist corporate advisory and mergers and acquisition firm). The IBC is chaired by Mr Symons and has been responsible for assessing any proposals from LEO and representing the interests of VGW shareholders independently of Mr Escalante.

In early January 2025, LEO submitted an initial non-binding indicative proposal to acquire VGW for cash consideration of between A$3.50 to A$4.00 per VGW share, subject to due diligence, which was ultimately rejected by the IBC on several grounds, including that the IBC believed it undervalued VGW.

Following this rejection, the IBC, supported by its independent financial and legal advisers, Greenstone Partners and Ashurst, negotiated with LEO over several months to obtain materially improved terms for the minority VGW shareholders. During these negotiations, LEO increased its proposed offer price several times and improved other key terms of its proposal, including the flexibility for all eligible VGW shareholders to retain an investment in the VGW business.

These negotiations ultimately resulted in the IBC reaching agreement with LEO for the proposed Scheme under which VGW shareholders will be entitled to receive a total cash consideration of A$5.05 per VGW share, less any dividends determined and paid by VGW after the date of the SID and prior to implementation of the Scheme. VGW has informed shareholders of this agreement today and further information will be provided to shareholders as required in due course.

The IBC is pleased with this outcome, providing minority shareholders with an attractive liquidity event and, in the case of eligible shareholders[5], a scrip alternative should they wish to maintain an equity interest in the business (or the option to take part cash, part scrip, should they choose to do so).

VGW Independent Directors’ Recommendation in Favour of the Scheme

The VGW Independent Directors (those directors independent of LEO, being Mr Mike Symons and Mr Mats Johnson) believe that the Scheme is in the best interests of VGW shareholders and unanimously recommend that VGW Shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of VGW shareholders (excluding Mr Escalante and his associated entities).

Each VGW Independent Director intends to vote in favour of the Scheme in respect of all VGW shares they own or control, subject to those same qualifications.
The key reasons for the VGW Independent Directors’ recommendation include:

• The Scheme provides VGW Shareholders with certainty of value, and access to full liquidity, in the context of an environment with rapidly evolving regulatory developments and increasing industry competition
• The Total Transaction Value of A$5.05 per VGW Share represents an acquisition multiple of approximately 3.0x VGW EBITDA for the 12 months ending 31 December 2024, plus net cash as at 31 December 2024, which compares favourably with listed trading multiples of casino-themed social gaming peers and precedent transactions in the social gaming sector
• A$5.05 per VGW Share represents a significant premium relative to recent historical trading prices of VGW Shares on PrimaryMarkets
• The VGW Independent Directors consider that a superior proposal is unlikely to emerge given that Mr Laurence Escalante and his affiliates hold approximately 70% of all VGW Shares
• The Scheme Scrip Consideration provides flexibility for eligible VGW Shareholders to maintain an interest in VGW with the potential benefit of CGT Rollover Relief

The VGW Independent Directors’ recommendation is based on the total cash consideration under the Scheme. The VGW Independent Directors make no recommendation in respect of the Scheme Scrip Consideration.

IBC Chairman Mike Symons said:

“The IBC is committed to acting in the best interest of all shareholders and, with this in mind, carefully considered a range of factors in arriving at its recommendation. This included a number of different valuation scenarios, the potential risks relating to VGW’s business and operating environments, and the lack of liquidity available to shareholders today.

VGW operates in an environment with rapidly evolving US regulatory developments and faces increasing industry competition. The VGW business has also experienced softer trading conditions in recent months that have impacted financial performance expectations for FY25.

The VGW Independent Directors believe the offer price recognises the value of VGW’s business, after taking into account its medium and longer-term potential and the ongoing risks relating to VGW’s business and operating environment.

The Total Transaction Value of A$5.05 per VGW share represents an acquisition multiple which compares favourably with listed trading multiples of casino-themed social gaming peers and precedent transactions in the social gaming sector.

The Scheme also provides VGW shareholders with certainty of value for their investment in VGW and an opportunity to realise value in cash in the near-term. VGW is an unlisted public company and there is currently limited opportunity to trade in VGW shares. Given that Mr Escalante and his affiliates hold approximately 70% of all VGW shares, the VGW Independent Directors consider that an alternative superior proposal is unlikely to emerge. Furthermore, as was advised to shareholders at the 2024 Annual General Meeting, there is no intention to pursue an IPO and listing of VGW on a securities exchange.

The Scheme provides a catalyst for VGW shareholders to determine how they wish to manage their investment going forward, and it was critical to the IBC that VGW shareholders would have flexibility to decide between cash and/or scrip consideration.

Accordingly, the VGW Independent Directors unanimously recommend that VGW shareholders vote in favor of the Scheme, in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of VGW shareholders (excluding Mr Laurence Escalante and his associated entities).”

VGW Founder and CEO, Laurence Escalante, said:

“VGW is a fantastic business and I thank all shareholders for their support in helping us build the company we have today. As the regulatory, competitive and economic landscape evolves, we face many new opportunities but also challenges and uncertainties.

“For some time now, many VGW shareholders have asked how and when a liquidity event may arise, and the Scheme represents an efficient opportunity to allow those shareholders looking to monetise their investment for cash to do so. For those VGW shareholders who decide to elect for cash consideration, I thank you for your support to this point.

“I also welcome any eligible shareholders who wish to continue an investment in VGW and I look forward to welcoming you as shareholders of BidCo (which would become the new holding company for VGW) if the Scheme is implemented.”

Total Transaction Value

If the Scheme is approved and implemented, VGW shareholders will be entitled to receive total cash consideration of A$5.05 per VGW share, less the amount of any dividends determined and paid to VGW Shareholders after the date of the SID and before implementation of the Scheme.

The Total Transaction Value of A$5.05 per VGW share represents an acquisition multiple of approximately 3.0x VGW EBITDA for the 12 months ending 31 December 2024, plus net cash as at 31 December 2024, which compares favourably with listed trading multiples of casino-themed social gaming peers and precedent transactions in the social gaming sector.

The Total Transaction Value of A$5.05 per VGW share values VGW’s equity at approximately A$3.2

billion, and represents a premium relative to recent trading prices of VGW on PrimaryMarkets of:

• 106%, to the last traded price on 28-May-2025, being the last traded price prior to the announcement of VGW entering into the Scheme Implementation Deed with BidCo, of A$2.45
• 115%, to the 1-month VWAP to 28-May-2025 of A$2.35
• 111%, to the 3-month VWAP to 28-May-2025 of A$2.39 

Interim Dividend and Special Dividend

The VGW Board expects to shortly determine to pay a dividend of A$0.30 per VGW share (“Interim Dividend”).

In addition, the VGW Board expects to determine and pay a special dividend of A$0.15 per VGW share on or before the implementation of the Scheme (“Special Dividend”).

This represents an early release of value to VGW shareholders, allowing VGW shareholders to receive part of the Total Transaction Value of A$5.05 per VGW share negotiated in the SID in cash ahead of the Scheme being implemented.

Scheme Cash Consideration

If the Scheme is approved and implemented and the VGW Board determines to pay the Interim Dividend and Special Dividend as outlined above, VGW Shareholders who remain shareholders at all times up to implementation of the Scheme (other than those who make an election for the Scheme Scrip Consideration described below) will receive total cash payments of A$5.05 per VGW Share comprising:

• The Interim Dividend of A$0.30 per VGW Share, which is expected to be paid shortly;
• The Special Dividend of A$0.15 per VGW Share, which is expected to be paid on or before the implementation of the Scheme; and
• The cash consideration payable by BidCo under the Scheme of A$4.60 per VGW share, payable on the implementation date of the Scheme.

Scheme Scrip Consideration

As an alternative to the Scheme Cash Consideration, eligible VGW shareholders may elect to receive one share in BidCo for each VGW Share they hold as at the Scheme Record Date. Eligible VGW shareholders may elect to receive the Scheme Scrip Consideration with respect to some or all of their VGW shares.

The Scheme Scrip Consideration provides VGW shareholders with the opportunity to maintain an interest in the VGW business if they wish to do so and still vote in favor of the Scheme.

Eligible VGW shareholders that elect to receive the Scheme Scrip Consideration will also receive the Interim Dividend and the Special Dividend in respect of any VGW shares they hold as at the respective dividend record dates for these dividends.

VGW’s Current Trading Update and Outlook

VGW operates in an environment with rapidly evolving regulatory developments. VGW promotes its casino-themed social games with sweepstakes only in those US states in which VGW believes that the sweepstakes promotions should not be regarded as contravening applicable law. VGW monitors that environment closely and responds and adapts where it believes action is appropriate. That action may include ceasing to provide casino-themed social games, or using sweepstakes promotions, in a jurisdiction, either on a temporary or permanent basis.

Since 31 December 2024 VGW has ceased providing casino-themed social games in Nevada and Delaware, which has impacted revenue. Additionally, VGW has informed players that it is phasing out sweepstakes promotions in the State of New York.

The VGW business has also experienced softer trading conditions in recent months that have impacted financial performance. This is due to a number of factors, including higher players’ prize redemption rates than in the prior period, a smaller seasonal increase in trading in February 2025 than in previous years, higher player acquisition marketing costs on a per player basis which is expected to result in lower margins, and a lower contribution from LuckyLand Slots in the second half of FY25.

Taking the above factors into account, VGW currently expects that earnings for the second half of FY25 are likely to be 10% to 15% lower than earnings for the first half of FY25. Details of VGW’s historical financial performance for the first half of FY25 will be included in the Scheme Booklet which will shortly be sent to VGW shareholders. 

Scheme Implementation Deed and Funding

The implementation of the Scheme is subject to limited conditionality[6], including the Independent Expert issuing a report which concludes that the Scheme is in the best interests of VGW shareholders and not changing or withdrawing that conclusion, the ATO’s confirmation of the availability of tax rollover relief for shareholders who elect Scheme Scrip Consideration, approval by the requisite majorities of VGW shareholders (other than Mr Laurence Escalante and his associated entities), no material adverse change in respect of VGW and Court approval.

BidCo has obtained binding debt commitment letters from external lenders for a US$310 million debt facility to fund part of the cash consideration payable by BidCo under the Scheme. VGW has also entered into a loan agreement with BidCo to loan excess cash to BidCo of up to US$586 million to fund part of the cash consideration payable to VGW shareholders under the Scheme. The provision by VGW of a loan to LEO to fund part of the cash consideration was a condition of the proposal submitted by LEO and considered by the IBC.

The IBC agreed to the proposal for the loan from VGW to BidCo on the basis that it was critical to securing the Scheme proposal that would provide minority VGW shareholders with a liquidity event. The provision by VGW of the loan to BidCo is subject to approval by VGW shareholders (other than Mr Laurence Escalante and his associated entities).

A general meeting of VGW shareholders to approve the provision of the VGW loan to BidCo and certain other matters will be held immediately prior to the separate meeting of VGW shareholders to approve the Scheme. The Scheme is conditional on VGW shareholders passing the resolutions at the general meeting.

The conditions to the Scheme must be satisfied (or waived) by 15 September 2025. There are no break fees payable under the Scheme Implementation Deed. The Scheme Implementation Deed contains customary exclusivity commitments, mutual obligations to implement the Scheme and representations and warranties.

A summary of the key terms of the Scheme Implementation Deed is set out in the annexure to this announcement.

Indicative Timetable and Next Steps

A draft Scheme Booklet containing information relating to the proposed Scheme, the reasons for the VGW Independent Directors’ recommendation, an Independent Expert’s report, and details of the shareholders meetings will shortly be provided to the Australian Securities and Investments Commission for review. Following such review and Court approval of dispatch of the Scheme Booklet, the Scheme Booklet, including the Independent Expert’s report, will be sent to VGW shareholders.

Shareholders will then have the opportunity to make their election between cash and scrip consideration and to vote on the Scheme at a shareholders meeting, expected to be in early August 2025. Subject to shareholder approval for the Scheme being obtained by the requisite majorities of VGW shareholders and the other conditions of the Scheme being satisfied, implementation of the Scheme is expected to occur in August 2025.

VGW shareholders do not need to take any action at this time. The Scheme Booklet is expected to be available to VGW shareholders by early July 2025.

The ability to trade VGW shares on PrimaryMarkets has been suspended and trading will not be reinstated if the Scheme is implemented.

Advisers

The IBC has appointed Greenstone Partners as its financial adviser and Ashurst as its legal adviser. LEO has appointed Macquarie Capital as its financial adviser and debt arranger, and King & Wood Mallesons as its legal adviser.

Shareholder Information Line
Shareholders who require further information can call VGW’s Shareholder Information Line on 1300 038 212 (within Australia) or +61 2 9066 4052 (outside Australia) at any time between 8.00 am and 4.00 pm (Perth time), excluding public holidays.

. . .

[1] Acquisition of 100% of VGW to be effected by a scheme of arrangement via a recently established BidCo.

[2] Subject to the terms of the Scheme.

[3] In the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of VGW shareholders (excluding Mr Laurence Escalante and his associated entities).

[4] Other than Mr Laurence Escalante and his associated entities.

[5] Eligible shareholders means shareholders whose address is shown in Australia, Bermuda, Canada, Colombia, Finland, Ireland, Isle of Man, Malaysia, New Zealand, Philippines, Romania, Singapore, Sweden, the United Kingdom and the United States of America and can also include a shareholder outside of those jurisdictions if Bidco determines that it is lawful and not unduly onerous or impracticable to issue the shareholder in that other jurisdiction with Bidco shares.

[6] Refer to Annexure A for a summary of the conditions precedent

. . .

Media contact:

media@vgw.co

. . .

Annexure – Key terms of the scheme implementation deed

The following is a non-exhaustive summary only of the key terms of the SID. Further details will be provided in the Scheme Booklet.

1. Offer price

Shareholders will be entitled to receive cash consideration of A$5.05 per share less any dividends determined and paid to VGW shareholders after the date of the SID and before the implementation of the Scheme.

Eligible VGW shareholders may elect to receive scrip consideration with respect to some or all of their VGW shares, providing the opportunity to maintain an interest in the VGW business.

2. Dividends

VGW may only declare dividends to the extent permitted by the SID.

VGW may, subject to compliance with applicable law:

• determine within 2 business days after the date of the SID to pay one dividend that does not exceed A$0.30 cash per VGW share (Interim Dividend) with the dividend to be paid as soon as practical after that and in any event no later than 10 business days after determination; and
• determine to pay one additional dividend that does not exceed A$0.15 cash per VGW share (Special Dividend) with the dividend to be paid on or before the earlier of 8 August 2025 and the implementation date of the Scheme.

3. Conditions precedent

Implementation of the Scheme is subject to a number of conditions which must be satisfied or waived (where capable of waiver) prior to 15 September 2025 before the Scheme can become effective. Each party is under an obligation to use reasonable endeavours to procure that the conditions for which they are responsible are satisfied as soon as practicable or not triggered.

• (ASIC) obtaining any necessary or desirable consents and approvals of ASIC;
• (shareholder approval of Scheme and other VGW resolutions) approval of the Scheme and other resolutions proposed by VGW by the requisite majorities of VGW shareholders (other than Mr Escalante and his associated shareholding entities);
• (court approval) approval of the Scheme by the court;
• (no regulatory intervention) the parties are not restrained from implementing the Scheme;
• (no Prescribed Event) there being no VGW Prescribed Event (as defined in the SID, including changes to capital structure, distributions other than the Interim Dividend and the Special Dividend, substantial changes to the business or property of VGW and insolvency);
• (no Material Adverse Effect) there being no Material Adverse Effect (as defined in the SID, being an event, occurrence or matter, which has had or is reasonably likely to have, either individually or when aggregated with other such events, the effect of diminishing forecast consolidated EBITDA of the VGW Group by at least A$150 million in any 12 month period ending on or prior to 30 June 2026);
• (Debt Facility Agreement) the LEO Debt Facility Agreement is entered into prior to the date which is 5 business days before the Scheme Meeting and it not being terminated or otherwise being or becoming unenforceable, or incapable of being drawn or utilised;
• (VGW Loan Agreement) the VGW Loan Agreement not being terminated or otherwise being or becoming unenforceable, or incapable of being drawn or utilised;
• (ATO class ruling confirmation) the ATO confirming that it is prepared to issue the class ruling sought by VGW in relation to, among other matters, scrip-for-scrip rollover relief; and
• (Independent Expert’s Report) the Independent Expert issues the Independent Expert’s Report which concludes (and continues to conclude) that the Scheme is in the best interests of VGW shareholders.

If a condition cannot be satisfied, the parties must consult in good faith to determine whether:

• the transaction may proceed by an alternative method;
• to defer the application to the court to approve the Scheme; or
• to extend the timing of satisfying that condition precedent or the end date in the SID.

4. Conduct of business

Between the date of the SID and the date the Scheme is implemented, VGW undertakes in favour of BidCo that the VGW board will not resolve to:

• make any material changes to its business;
• incur any additional financial indebtedness, other than in connection with the VGW Loan Agreement or the Debt Facility Agreement;
• enter into, vary in an adverse manner or terminate any material contract to which VGW is a party;
• amend in any material respect any arrangement with its financial advisers in respect of the transactions contemplated by the SID; or
• announce, declare or pay any dividends, other than permitted dividends (being the Interim Dividend and the Special Dividend);

unless approved by Mr Laurence Escalante (in his capacity as director of VGW) or BidCo.

VGW is also required to provide BidCo with reasonable access to information and key officers requested by BidCo for certain permitted purposes, subject to certain customary exceptions.

5. Exclusivity arrangements

VGW has granted BidCo customary exclusivity arrangements that apply from the date of the SID until the earlier of its termination and the end date under the SID (Exclusivity Period). In summary, during the Exclusivity Period, VGW must:

• no shop: not directly or indirectly solicit a competing transaction;
• no talk and no due diligence: not participate in negotiations or discussions that would be reasonably expected to lead to a competing transaction, or facilitate due diligence investigations in respect of VGW (including through the provision of non-public information) with a view to obtaining a competing transaction;
• notification obligation: notify BidCo within 2 business days of VGW (i) receiving any unsolicited approach with respect to any competing transaction (including an obligation to disclose all material details of the competing transaction including details of the proposed acquirer), (ii) receiving any request for information relating to VGW that VGW has reasonable grounds to suspect may relate to a competing transaction, and (iii) providing any information relating to VGW to any person in connection with a competing transaction.

The ‘no talk’ and ‘no due diligence’ arrangements are subject to a customary fiduciary exception, such that those restrictions do not apply where the VGW Independent Directors has determined, after consulting with its financial advisers and receiving legal advice from its legal advisers, that a competing transaction is, or could reasonably be considered to become, superior to the BidCo proposal and the VGW Independent Director’s fiduciary duties require them to act on the competing transaction.

6. Representations and warranties

VGW and BidCo have given to each other representations and warranties that are customary for a transaction of this nature.

7. Termination rights

The SID can be terminated in the following circumstances:

• by either VGW or BidCo if:
  • the Scheme has not become effective before the end date in the SID;
  • the other party commits a material breach of the SID and has not remedied the breach within 20 business days (or such shorter period ending at 8am on the second court date);
  • the Scheme is not approved by the requisite majority of VGW shareholders at the shareholder meeting;
  • a condition precedent has not been satisfied or waived by the end date in the SID and, in certain circumstances, VGW and BidCo are unable to agree on a course of action; or
  • agreed to in writing by the other party;
• by VGW if:
  • the VGW Independent Directors determine that a competing transaction is a superior proposal; or
  • the Independent Expert concludes that the Scheme is not in the best interests of VGW shareholders (excluding Mr Laurence Escalante and his associated entities), or withdraws or adversely changes its previously given opinion that the Scheme is in the best interests of VGW shareholders (excluding Mr Laurence Escalante and his associated entities); or
• by BidCo if any VGW Independent Director fails to recommend the Scheme, withdraws or adversely changes, qualifies or revises their recommendation, or make a public statement indicating that they no longer support the Scheme.