An unaudited analysis of Amaya’s financials demonstrates a strong cash and overall fiscal position. Back in 2012, it was noted by many industry sources that when Amaya purchased Ongame (from bwin.party), that the financial outlook of Ongame’s cash position was only 31 percent of player deposit liabilities.
Now, with Amaya having successfully acquired Rational Group (which operates PokerStars and Full Tilt), the balance sheet shows a very strong cash position for the world’s most popular poker site.
Protection for Players
The financial data purportedly shows that player deposits on June 30 amount to approximately CA$646 million ($574 million USD) with cash equivalents at CA$917 ($815 million USD). The data then shows that Rational Group keeps all player funds in segregated trust accounts, away from operational funds and thus, protected.
The trust accounts for player funds is one of the reasons PokerStars is still operating and why others have gone by the wayside amid financial controversy. Since funds are in a trust, they are not available to creditors in the event of an insolvency.
When experts analyze the credit quality of the type of senior debt in the acquisition of Rational Group by Amaya, they look at the probability of default (which is very low here), the recovery rate, and the expectation of recovery time. Given the financials from this deal, both the transaction and the company appear to be highly sustainable.
Intangible Assets for Amaya
Amaya is now holding on to CA$5.2 billion ($4.6 billion USD) in acquisition-related intangible assets and goodwill. Subtract the intangible assets from the overall assets and player funds add up to about $835 million USD. Intangible assets include player lists, domain names, intellectual properties, patents, software rights, and more.
While Amaya took on a ton of debt to buy the Rational Group and took on about CA$3.4 billion ($3.02 billion USD) in long-term debt, it is also liable for about CA$425 million ($377 million USD) of deferred purchase price that has to be paid to shareholders if conditions are met.
The Big Picture: Amaya, Rational, and PokerStars
While the details surrounding Amaya’s acquisition of Rational Group are a little robust, they are in line for what some call to be a reverse takeover. The details also demonstrate that Rational Group has a very healthy business, with profits of approximately $218 million for the first half of 2014, which represents a profit margin of approximately 38 percent after taxes and operational expenses.
If that holds true, Amaya will make a profit of about $430 million just this year, which will take a huge chunk out of the $2.66 billion in debt it took on to acquire Rational Group. At that pace, it’ll only take between five to six years to wipe out the entire debt taken on from the transaction.
While that might seem positive, the news for Amaya is even better, as PokerStars will amortize $5 billion in goodwill over the next few years, meaning large corporation tax liabilities will practically evaporate in a relatively short amount of time.