CD Projekt agrees to buy out from Polish tech company

by: Chuck -
In one of the more interesting deals that I've seen lately, CD Projekt (the folks behind The Witcher and GOG.com)have signed a letter of intent with Polish tech company Optimus that will allow Optimus to buy the company completely.  The stock deal will essentially serve as a mechanism for taking the company public and allow CD Projekt to raise funds for future projects (like The Witcher 2) as CD Projekt will run the final company if the deal is approved. 

I'm interested to see how the deal turns out as stock deals can sometimes go south in a hurry (personal experience) but if it means that The Witcher 2 will get fully funded and promoted than I'm all for it.
On 1 October 2009 a letter of intent was signed by Optimus S.A.; Zbigniew Jakubas and Robert Bibrowski (Optimus S.A. Shareholders); Michał Kiciński, Marcin Iwiński, Piotr Nielubowicz and Adam Kiciński (CDP Investment Stockholders); and CDP Investment.

CDP Investment Stockholders own 100% of the capital stock in the company.

CDP Investment is the owner of a group of subsidiaries (CDP Group).

The letter of intent details a planned transaction under which Optimus will acquire 100% of the stock in CDP Investment, while CDP Investment Stockholders will become shareholders in Optimus.

In acquiring 100% of the stock in CDP Investment, Optimus will become the indirect owner of the CDP Group.

Under the planned Transaction:

1. CDP Investment Stockholders will assume ownership, through a private subscription, of 35,000,000 shares of stock in Optimus at an issue price of no less than 1.40 PLN per share (Issue I Shares). Issue I Shares will be paid for with a non-cash contribution of part (i.e. approx. 78% assuming that 100% of CDP stock is valued at 63,000,000 PLN) of the stock in CDP.
2. Within 3 days of the fulfillment of precedent conditions stipulated in the Investment Contract, Optimus will, for the price of 14,000,000 PLN, purchase from CDP Stockholders all remaining stock in CDP (i.e. approx. 22% assuming that 100% of CDP stock is valued at 63,000,000 PLN) not previously transferred to Optimus as part of the non-cash contribution.
3. With the completion of the Transaction, Optimus will become the owner of 100% of the stock in CDP Investment and indirect owner of the CDP Group.
4. In light of the conditions of the planned Transaction and the necessity for Optimus to provide supplementary financing to the CDP Group in connection with the Transaction, Optimus S.A. Shareholders have agreed to provide additional funds to Optimus through a private subscription of Optimus shares (“Private Subscription”).
5. Optimus will make an effort to obtain a bank loan in the amount of 9,000,000 PLN.
6. Under the Private Subscription, Mr. Zbigniew Jakubas or an entity designated by him shall assume ownership of 5,547,676 newly issued shares at an issue price of 1 PLN (Issue II), and Mr. Robert Bibrowski shall assume ownership of 1,300,000 newly issued shares at an issue price of 1 PLN (Issue III).
7. Optimus Shareholders or entities designated by them have agreed to transfer to Optimus the amount of 3,000,000 PLN no later than on 1 October 2009, and the amount of 3,847,676 PLN no later than on 24 October 2009. Said amounts shall constitute an advance on the amounts due for shares issued under Issues II and III.
8. The Parties have agreed on principles of corporate governance in the event that the Transaction is brought to completion.
9. Provided that all requisite corporate consents are obtained, Optimus has declared its readiness to extend loans to the CDP Group totaling no more than 10,000,000 PLN. If the borrower fails to repay the stipulated loans, the resulting debt claim of Optimus shall be credited against the payment stipulated in item (ii) above for part of CDP Investment stock.



CD Projekt Investment Sp z o.o. is a holding company that owns CD Projekt Sp. z o.o. (a computer and video games distributor operating in Poland, the Czech Republic, Slovakia and Hungary), CD Projekt RED Sp. z o.o. (the creator and developer of the game titled The Witcher) and GOG.com Ltd. (a digital distributor of video games operating worldwide). CD Projekt Investment also holds stakes in Metropolis Sp z o.o., Porting House Sp. z o.o. and Gram.pl Sp. z o.o.

CD Projekt Sp. z o.o. is Central Europe’s largest publisher of video and computer games with branches in Warsaw, Prague and Budapest. Founded in 1994 the company has to date published several hundred fully localized titles for the PC. Currently CD Projekt distributes games in all price ranges (from 9.90 to 259.90 PLN) and for all platforms (PC, Xbox 360, PlayStation 3, PSP, Nintendo). In 2009 CD Projekt will become the exclusive distributor in Poland of DVD and Blue Ray movie titles published by the Walt Disney Company, including films produced by Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures and Miramax Films.

Founded in 2002, CD Projekt RED Sp. z o.o. is the creator and developer of Poland’s best-known computer game titled The Witcher. Produced and published in 2007 for a single platform (PC), The Witcher received over 100 awards and distinctions worldwide and sold more than 1.3 million copies, becoming the most distinguished and best-selling computer game in Polish history. The Witcher also made its way into the top 100 best-selling games in the history of the PC market. CD Projekt RED’s mission is to create top quality role-playing games and to build a position as one of the world’s top game producers.

GOG.com – known also as Good Old Games – is a worldwide, Internet-based platform specializing in the digital distribution of classic games for the PC. The games available at GOG.com are competitively priced (5.99 and 9.99 USD) and stripped of the DRM (Digital Rights Management) features so unpopular among consumers. GOG.com is the only service of its kind to offer its full array of titles to gamers throughout the world. Good Old Games also applies a uniform pricing policy independent of consumer location. These features distinguish GOG.com among digital games distribution platforms and have been a key factor in the company’s success. In its relatively short history, GOG.com has quickly gained popularity and is now recognized by gamers worldwide. At present GOG.com offers more than 130 titles by more than 20 publishers and developers from around the world.

OPTIMUS S.A. has been operating since December 1988. In 1994, OPTIMUS S.A. became the first company from Poland’s IT sector to be listed on the Warsaw Stock Exchange. Subsequent to an ownership change (involving the sale of shares by former owner R. Kluska), the Company became Poland’s first publicly traded corporation to complete a corporate spin-off under which Internet operations remained with Grupa Onet.pl S.A., while the entirety of the technology business was transferred to the current OPTIMUS S.A. Through the first half of 2009 OPTIMUS S.A. continued to pursue limited operations in the sale of IT equipment and the provision of warranty and post-warranty service.
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