Cantor Entertainment Technology, Inc., changed its game plan and withdrew its initial public offering on Monday, May 25. The Las Vegas-based mobile gaming provider intends to confidentially submit a new proposal under the Jumpstart Our Business Strength (JOBS) Act. According to Renaissance Capital, Cantor Entertainment is the first company to withdraw its IPO plans because of the act and openly revealed its intention to pursue an offering as a confidential filer.
The JOBS Act, which became law in April, gives emerging-growth companies more flexibility on becoming public entities. Startups that are generating less than $1 billion in revenues would not have to worry about some regulatory strains for the first five years after they go public. Once a company goes beyond $1 billion in revenues, it would have a one-year transition, at which point it would have to comply with Securities and Exchange Commission regulations. However, if the company remains below the $1 billion threshold, it would never have to incur that cost.
Cantor Entertainment falls right in line with the characteristics of an emerging-growth company. The company reported that its net revenue for the nine months ending on September 30, 2011, generated approximately $7.7 million. It was established nearly eight years ago in 2004 and is an affiliate of the global financial services firm, Cantor Fitzgerald. The firm is listed as the sole book runner on Cantor Entertainment’s original IPO proposal, which was submitted in December.
According to its filing, Cantor Entertainment had plans to raise at least $100 million. It stated that it would have used a portion of the proceeds for acquisitions. Its last known acquisition took place in 2010, when it bought Cantor Gaming and Wagering Ltd. In 2008, it acquired the rights to games and technologies from the Las Vegas-based gaming company, Game Masters, as well as its affiliated companies, Games of Nevada and Westronics, Inc. Within the same year, it bought Las Vegas Sports Consultants (LVSC), the world’s largest odds maker company.
Hopefully, Cantor Entertainment will have more of an appetite once it goes public under the JOBS Act.
Morgan, Lewis & Bockius LLP served as Cantor Entertainment’s legal adviser with Christopher Jensen and George Yearsich as lead counsel.