Digital Praise Enters Into Agreement to "Reverse Acquire" Left Behind Games

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The two biggest U.S. Christian video game companies, Left Behind Games and Digital Praise, announced that they have entered into a merger agreement. In part, the timing of the announcement is designed to distract investors from the poor financial results that Left Behind Games announced, and is a "reverse triangular merger agreement." Ultimately, Digital Praise shareholders will end up in control of the company that will trade under Left Behind Games' ticker (until the ticker symbol is changed). More terms of the transaction follow:
Left Behind Games (LFBG) will create a wholly-owned subsidiary that will merge with Digital Praise, making Digital Praise a wholly-owned subsidiary of Left Behind Games. Digital Praise shareholders will receive a total of $210,000 divided among shareholders along with an amount of stock equal to $2.25 million divided by the average closing price of LFBG shares plus an additional 80 million shares


Thomas Bean, William Bean and Peter Fokos of Digital Praise will each receive options to purchase 30 million shares of LFBG, a signing bonus of $30,000, a performance bonus and a base salary of $125,000.

Troy Lyndon will receive a salary of $200,000 per year and bonus of up to $225,000 once he deems that collecting his salary will not adversely affect the company.

Furthermore, Lennox Hill Partners will be issued stock to ensure that they own 4.99% of the company. The company also hopes to use LFBG stock to erase some of the company's debt.

As you can see, the transaction will see controlling amounts of the combined company's stock issued to Digital Praise's stakeholders and executives, putting Digital Praise in charge of the publicly traded entity. Reverse acquisitions are common transactions by which a privately-held company acts as if it is acquired by a publicly traded company, while maintaining control, so as to go public without the nuisance of going through the public offering process itself.

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This page contains a single entry by Editor published on February 24, 2010 4:24 AM.

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