TANGELO GAMES FILES MANAGEMENT INFORMATION CIRCULAR, ISSUES LETTER TO SHAREHOLDERS REGARDING PROPOSED TRANSACTION TO BECOME A PRIVATE COMPANY

 

Toronto, Ontario – August 15, 2018 – Tangelo Games Corporation (“Tangelo”, or “the Company”) (TSX-VENTURE: GEL) today issued a letter to shareholders (the “Shareholders”) and filed its management information circular (the “Circular”) in preparation for its annual and special meeting of Shareholders (the “Meeting”) to be held on September 11, 2018.

At the Meeting, Shareholders will be asked to approve the previously announced proposed sale of the Company to GoGel Holdings Inc. (“GoGel”). Under the terms of the arrangement agreement with GoGel, GoGel will acquire all the issued and outstanding common shares of Tangelo for C$0.02565 per share in cash by way of the statutory plan of arrangement (the “Arrangement”).

The proposed sale was unanimously approved by the Company’s Board of Directors (the “Board”) after a comprehensive review of strategic alternatives for Tangelo concluded that the sale to GoGel is the only available alternative that will provide value to Shareholders.

Shareholders are encouraged to vote FOR the Arrangement well in advance of the voting deadline of 10:00 a.m. (Toronto Time) on September 7, 2018.  The Circular will be mailed to all Shareholders and is also available at the Company’s issuer profile at www.sedar.com. A copy of the letter to Shareholders is included below.

Shareholders who have questions or require assistance should contact Kingsdale Advisors, our proxy solicitation agent, by telephone at 1-866-581-1489 (toll-free in North America), or at 416-867-2272 (collect calls outside of North America) or by email at contactus@kingsdaleadvisors.com. Shareholders that have questions about depositing their shares to the Arrangement including with respect to completing the applicable letter of transmittal, please contact TSX Trust, who is acting as depositary under the Arrangement, by telephone at 1-(866)-393-4891, by facsimile at 416-361-0470 or by email at TMXEInvestorServices@tmx.com.

Letter to Shareholders

Dear Fellow Shareholder,

I, on behalf of the Board of Directors Tangelo Games Corp. (“Tangelo” or the “Company”) want to personally invite you to attend an annual and special meeting (the “Meeting”) of Shareholders to be held at the offices of Cassels Brock & Blackwell LLP, Suite 2100, Scotia Plaza, 40 King Street West, Toronto, Ontario M5H 3C2 on September 11, 2018 at 10:00 a.m. (Toronto time).

At the Meeting, you will be asked to make an important decision related to your investment in Tangelo and the future of the Company. As announced on July 11, 2018, Tangelo has entered into an arrangement agreement (the “Arrangement Agreement”) with GoGel Holdings Inc. (“GoGel”), pursuant to which GoGel will acquire all the issued and outstanding common shares of Tangelo (“Shares”) for C$0.02565 per Share. The transaction was unanimously approved by the Company’s Board of Directors (the “Board”) following a comprehensive review of strategic alternatives. We’re now asking for your support.

We believe that the choice before you is clear:

–           The GoGel proposal gives you an immediate 71% all cash premium to Tangelo’s closing Share price on July 10, 2018, the last trading day prior to the announcement of the Arrangement Agreement.

–           The only alternative is the real prospect of the Company being forced to seek creditor protection, where Shareholders would, more likely than not, receive no consideration.

 

BACKGROUND TO GOGEL PROPOSAL

Shareholders should fully understand why this Arrangement Agreement is the only available alternative that will provide value.

In 2015, Tangelo entered into two term loans totaling approximately US$68 million with a maturity date of April 2019 (amended from January 2018) (the “Amended Term Loan”). Thanks, in part, to a changing industry landscape, it became apparent that the Company could not raise the equity needed to make its principal repayments to its primary lender, Third Eye Capital Corporation (“TEC”) — an affiliate of GoGel.

So, in 2016, with the assistance of a financial advisor, we began a strategic review of our alternatives with the goal of improving Tangelo’s capital position to meet our debt obligations and increase value for all Shareholders. Through this exhaustive process, we engaged in discussions with multiple prospective strategic partners and financial investors resulting in over 30 non-disclosure agreements and eight different non-binding proposals. Other than the proposal from GoGel, however, each of the proposals required significant and unrealistic concessions from our Lenders, in respect of repayment under the Amended Term Loan, or equity raises that were unachievable due to the Company’s capital structure.

Given our debt obligations, if the Arrangement Agreement with GoGel is not passed, the Company’s only alternative may be to seek creditor protection, where Shareholders would, most likely, receive no consideration.

 

WHAT YOU NEED TO DO

We encourage you to review the attached information carefully and urge you to cast your vote FOR the Arrangement Agreement Resolution.

The Arrangement Agreement is subject to customary closing conditions for a transaction of this nature, including court approval and approval of at least 66 2/3% of the votes cast by Shareholders present in person or represented by proxy at the Meeting.

This means every vote will count no matter how many Shares you own. You must vote your proxy before 10:00 a.m. (Toronto time) on September 7, 2018 for it to count.

If the necessary approvals are obtained and the other conditions to closing are satisfied or waived, it is anticipated that the Arrangement will be completed as early as September 18, 2018 and as a Shareholder, you will receive payment for your Shares shortly after closing provided the depositary receives your duly completed letter of transmittal.

For clarity, in addition to the vote on the Arrangement Resolution, Shareholders at the Meeting will be asked to vote on a number of annual meeting matters which will have limited applicability in the event that the Arrangement is completed, including: (i) the directors of the Company; (ii) the appointment of the auditors of the Company; and (iii) the approval of the Company’s Stock Option Plan. A combined annual and special meeting ensures that Tangelo fulfils its regulatory obligations and facilitates cost efficiencies.

If you have any questions or require assistance, please contact Kingsdale Advisors, our proxy solicitation agent, by telephone at 1-866-581-1489 (toll-free in North America), or at 416-867-2272 (collect calls outside of North America) or by email at contactus@kingsdaleadvisors.com. If you have any questions about depositing your Shares to the Arrangement including with respect to completing the letter of transmittal, please contact TSX Trust Company, who is acting as depositary under the Arrangement, by telephone at 1-(866)-393-4891, by facsimile at 416-361-0470 or by email at TMXEInvestorServices@tmx.com.

On behalf of the Company, I would like to thank all of our Shareholders for their continuing support.

Yours very truly,

James Lanthier

Chief Executive Officer and Director

 

Advisors

Tangelo has retained Cassels Brock & Blackwell LLP as its legal advisors. Kingsdale Advisors is acting as its Proxy Solicitation Agent.

About Tangelo Games Corp.:

Tangelo Gaming Corp., the parent company of Tangelo Israel and Tangelo Spain, is a developer of social and mobile gaming for desktop, iOS and Android platforms. Tangelo Israel and Tangelo Spain design, develop and distribute their top ranked social casino-themed games within online social networks (such as Facebook) and mobile platforms (such as Android and iPhone). All of the Tangelo Israel and Tangelo Spain games are free to play and generate revenue primarily through the in-game sale of virtual coins.

For further information, please contact:

Spyros P. Karellas

President & CEO

Pinnacle Capital Markets LTD.

Mobile/Office: 416-433-5696

www.pinnaclecapitalmarkets.ca

spyros@pinnaclecapitalmarkets.ca

Skype: spyros.karellas

 

Cautionary Note Regarding Forward Looking Statements

 

This press release contains “forward-looking statements” and “forward-looking information” within the meaning of applicable securities laws. These statements and information include information and statements as to management’s expectations with respect to, among other things, the availability of alternatives to the Arrangement, receipt of all approvals, including from the Ontario Superior Court of Justice and the Tangelo shareholders necessary to complete the Arrangement, the timing of the Meeting and the completion of the Arrangement. Often, but not always, forward-looking statements and information can be identified by the use of words such as “may”, “will”, “should”, “plans”, “expects”, “intends”, “anticipates”, “believes”, “budget”, and “scheduled” or the negative thereof or variations thereon or similar terminology. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Readers are cautioned that any such forward-looking statements and information are not guarantees and there can be no assurance that such statements and information will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed in the Company’s continuous disclosure documents which are filed with Canadian regulators on SEDAR (www.sedar.com), including in the circular to be sent to the Tangelo shareholders in advance of the Meeting. Such factors include, amongst others, the receipt of all necessary approvals to complete the Arrangement, the timing of the Meeting, the receipt of any superior proposals, and the completion of all conditions to the Arrangement. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise, except as required by applicable law. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.