Goodbye GameHost TSX:GH and the NFI Group TSX:NFI Turnaround Continues
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NFI Group TSX:NFI Turnaround Continues
Goodbye GameHost TSX:GH - Being Acquired
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NFI Group TSX:NFI Turnaround Continues
The turnaround of our favourite bus company continues. They released their Q4 numbers and we were satisfied. Revenue increased ~22% year-over-year and importantly free cash flow has returned.
We asked in February of last year, is this our bus? It has been a great ride so far. See previous coverage here.: https://www.canadianvalueinvestors.com/t/nfi
The decline last fall primarily driven by the battery recall issue turned out to be a good buying opportunity. The Company ultimately reversed most of the charge as expected in Q4:
The Battery Settlement impacted both NFI’s income statement and its balance sheet, with NFI recording other income of $166 million representing the total settlement amount. In aggregate, NFI has recorded an approximate 72% recovery against the original $229 million liability provision recorded in the third quarter of 2025.
COVID’s long tail
While we are happy to see things appear to be improving, we want to pause an acknowledge how long the tail of COVID has been. North American and European industry-wide bus deliveries have still not returned to pre-pandemic levels and supply chains remain fragile. NFI’s North American transit bus business remains robust, with only NFI and Gillig being the two key companies left.
We remain long but cautious. Although they appear to be addressing the seat issue and battery problem, will there be another major hiccup? The biggest risk right now is that they are not able to catch up and reduce their backlog, which we view as actually too high. Orders made today by a transit authority can take two years to fill. This is an environment that encourages new competition and new approaches to tendering by transit authorities.
Management guidance seems conservative (and no surprise after how challenging things have been), and we look forward to seeing how 2026 unfolds.
Goodbye GameHost TSX:GH
Disclosure: Exiting.
Today we say goodbye to GameHost. Earlier this week they agreed to be bought out, and while it is still subject to shareholder approval, it appears like it will go through given insider support, and the buyer appears to be the kind a regulator will approve.
We first covered GameHost in January 2025 and, including dividends, it has provided us a ~25% IRR. While we view this as a success, we also just really enjoyed writing about them.
As we said back in our initial article,
What do you get when you combine a conservative management team and a few casino licenses in a growing jurisdiction that limits them? It turns out you get pretty good returns on capital and trading today for ~10x FCF. Why gamble when you can bet on the house?
It turns out you get a lot of shareholder value creation. Dividends helped, with ~$0.80/share since our initial purchase. We have included the press release as well as the fun side story of the real estate transaction the buyer is doing with VICI Properties Inc.
Interesting what you can do with under-levered real estate with stable revenue.
Overall, we view this as a good outcome for shareholders and congratulate management. Now, it is time to redeploy our capital. Perhaps we will trade in our chips for some gold…?
Gamehost Inc. and Pure Casino Entertainment LP have entered into a definitive arrangement agreement pursuant to which Pure will, indirectly through a subsidiary, acquire all of the issued and outstanding common shares of Gamehost for $13.65 in cash per share. Pure operates casinos in Alberta and is privately held by Indigenous Gaming Partners Inc. (IGP), a gaming partnership between five Nova Scotia first nations and Sonco Gaming Inc.
The cash consideration of $13.65 per Gamehost share offered to the Gamehost shareholders pursuant to the transaction represents a premium of approximately 16 per cent to Gamehost’s closing price of $11.75 per Gamehost share on the Toronto Stock Exchange on March 27, 2026, being the last trading day prior to the announcement of the transaction, and a premium of approximately 17 per cent to Gamehost’s 20-day volume weighted average price on the TSX of $11.67 per Gamehost share as of the close of markets on March 27, 2026.
The transaction is the result of extensive and thorough arm’s-length negotiations between Gamehost and Pure, and their respective advisers, and brings together two of Alberta’s leading gaming and hospitality companies.
Darcy Will, president and chief executive officer of Gamehost, commented: “For over two decades, I have had the pleasure of working with dedicated team members to create an entertainment and hospitality company that provides extraordinary experiences for our guests, employees and community. I am excited to pass on this legacy to Pure, a proven leader in the Alberta gaming industry. I am confident that they will continue to provide a high-quality guest experience and exceptional environment for our employees.”
In a separate transaction, Pure has entered into an agreement with VICI Properties Inc. for VICI to acquire at the closing of the transaction certain Gamehost real properties from Pure and amend its triple net master lease agreement with Pure to cover those properties.
Transaction details
The transaction will be implemented by way of a plan of arrangement under the Business Corporations Act (Alberta) and is expected to close in mid-2026, subject to customary closing conditions, including the receipt of required shareholder approvals, the approval of the Court of King’s Bench of Alberta, and regulatory approval under applicable gaming and competition laws. The transaction is not subject to any financing condition.
The transaction constitutes a business combination for the purposes of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, which requires, among other things, the approval of the transaction by a majority of the votes cast by Gamehost shareholders other than the Gamehost shareholders whose votes are required to be excluded for the purposes of majority of the minority approval as required under MI 61-101. As such, the required shareholder approvals for the transaction consist of: (i) at least two-thirds of the votes cast by Gamehost shareholders at a special meeting of shareholders of the corporation; and (ii) at least a majority of the votes cast after excluding the votes cast by those persons whose votes must be excluded in accordance with MI 61-101, at such meeting.
All directors and officers of Gamehost, and the largest shareholder of Gamehost, and their associates and affiliates, who collectively own approximately 41.3 per cent of the issued and outstanding Gamehost shares, have entered into voting and support agreements pursuant to which they have agreed to vote all the securities of Gamehost they own or control in favour of the transaction. To the knowledge of Gamehost and its directors and senior officers, after reasonable inquiry, for the purposes of MI 61-101, it is expected that the votes in respect of an aggregate of 2,688,820 Gamehost shares (representing approximately 13.0 per cent of the issued and outstanding Gamehost shares) beneficially owned, or over which control or direction is exercised, directly or indirectly, by certain directors and officers will be excluded in determining whether majority of the minority approval for the purposes of MI 61-101 is obtained.
The arrangement agreement contains customary non-solicitation provisions on the part of the corporation, subject to the customary fiduciary out provisions, as well as customary right to match provisions in favour of Pure. A termination fee of $12-million would be payable by the corporation to Pure in certain circumstances, including in the context of a superior proposal supported by the board of directors of Gamehost. A purchaser expense reimbursement fee of $5-million would also be payable by Gamehost to Pure in certain circumstances, including in the event that Gamehost does not receive the required shareholder approvals. The corporation would also be entitled to a reverse termination fee of $12-million if the transaction is not completed in certain circumstances.
The fun side story. Note market cap and EV of Gamehost is ~$280MM and ~$300MM. Isn’t that neat…
NEW YORK — VICI Properties Inc. (NYSE: VICI) (“VICI Properties”, “VICI” or the “Company”), an experiential real estate investment trust, today announced the CAD$200.6 million / USD$144.4 million pending acquisition (the “Real Estate Transaction”) of the real estate assets of Deerfoot Inn & Casino, Great Northern Casino and two limited-service hotels that are adjacent to the Great Northern Casino (collectively, the “Portfolio”) located in Alberta, Canada, in connection with Pure Casino Entertainment Limited Partnership’s (“PURE”) pending take-private acquisition of Gamehost Inc. (GH.TO) (“Gamehost”).
Simultaneous with the closing of the Real Estate Transaction, the Portfolio will be added to the existing triple-net master lease agreement between VICI Properties and PURE (the “PURE Master Lease”) and annual rent will increase by CAD$16.1 million (USD$11.6 million) representing an acquisition capitalization rate of 8.0%. The Portfolio rent will escalate at 1.0% on the first February 1 following a full 12 months post-closing (in line with the timing of the PURE Master Lease escalation), and escalation will conform to the PURE Master Lease thereafter at the greater of 1.5% or the change in Canadian CPI (capped at 2.5%). Additionally, the term of the PURE Master Lease will be extended such that, upon closing of the Real Estate Transaction, the PURE Master Lease will have a full 25-year initial base lease term, with four 5-year tenant renewal options. The tenants’ obligations under the PURE Master Lease will continue to be guaranteed by Indigenous Gaming Partners, Inc. (“IGP”).
John Payne, President and COO of VICI Properties, said, “We are very excited to deepen and expand our presence in the Canadian gaming market, a very steady and stable gaming jurisdiction, alongside an existing partner. Having worked alongside IGP and PURE, we have seen firsthand their ability to operate and grow a best-in-class gaming platform, and we are proud to continue supporting that growth as their real estate partner and capital provider. This is exactly the kind of transaction that reflects VICI’s value proposition, helping best-in-class operators execute on their growth strategies, and we hope to continue growing our relationship with IGP and PURE for years to come.”