1033-00003
· Redstone Gaming Corp · Memos & Analyses
shareholder-ownership-analysis.xlsx
DOCUMENT
M&A / Corporate
[sheet: Cover & Summary]
| Field | Value |
| Document Title | Shareholder Ownership and Voting Power Analysis |
| Company | Redstone Gaming Corp. (Nasdaq: RGC) |
| Prepared By | Marcus Leung, Associate — Calderwood & Harkness LLP |
| Reviewed By | Claire Dempsey, Lead Associate — Calderwood & Harkness LLP |
| Matter Number | 1033-00003 |
| Date Prepared | November 2022 |
| Data Source — Share Records | Continental Share Services, Inc. (Jason Velmoran, Vice President) |
| Data Source — 13D Filings | SEC EDGAR — Schedule 13D (Pinnacle Harbor Capital Partners, LP, filed Nov. 10, 2022) |
| Data Source — Market Data | Nasdaq |
| Total Shares Outstanding | 104,700,000 |
| Reference Share Price (Nov. 15, 2022) | $30.00 |
| Market Capitalization | ~$3,141,000,000 |
| Classification | Attorney-Client Privileged / Work Product |
| Calderwood & Harkness Office | 3960 Howard Hughes Parkway, Suite 1400, Las Vegas, NV 89169 |
| Client Contact | Patricia "Trish" Nakamura, General Counsel & Corporate Secretary, RGC |
[sheet: Shareholder Register — Top Hold]
| Rank | Shareholder Name | Shareholder Type | Location | Key Contact | Shares Held | Ownership % | Market Value at $30.00 | 13D/13G Filing? | Investment Strategy / Notes |
| 1 | Ridgeway Asset Management, LP | Institutional — Long-Only Value Fund | Boston, MA | Franklin Osei, Portfolio Manager | 8,585,400 | 8.2% | $257,562,000 | Schedule 13G | Long-only value orientation; largest single holder |
| 2 | Pinnacle Harbor Capital Partners, LP | Activist Hedge Fund | 590 Madison Avenue, 34th Floor, New York, NY 10022 | Viktor S. Kessler, Managing Partner & CIO; Nadia Johar, Head of Activism | 7,119,600 | 6.8% | $213,588,000 | Schedule 13D (filed Nov. 10, 2022; amended Jan. 6, 2023) | Event-driven / activist; AUM ~$4.2B; GP: Pinnacle Harbor Capital Management, LLC; WAPPS $26.42; cost basis ~$188.1M; unrealized gain ~$25.5M (13.5%); demands: 2 board seats, interactive gaming strategic review, $300M capital return |
| 3 | Stillwater Capital Advisors, LLC | Institutional — Growth-Oriented | Chicago, IL | Margaret "Meg" Liu, Head of Governance | 5,653,800 | 5.4% | $169,614,000 | Schedule 13G | Growth-oriented fund |
| 4 | Canfield Municipal Employees' Retirement System | Public Pension Fund | Canfield, OH | David Proulx, Chief Investment Officer | 2,198,700 | 2.1% | $65,961,000 | N/A — below 5% threshold | Municipal pension fund; governance-sensitive |
| Subtotal — Known Significant Holders | 23,557,500 | 22.5% | $706,725,000 | ||||||
| Insiders & Directors (estimated) | ~1,500,000 | ~1.4% | ~$45,000,000 | Forms 3/4/5 | Includes CEO Gerald R. Whitmore, CFO Raymond Choi, and independent directors | ||||
| Remaining Public Float / Retail & Other Institutional | ~79,642,500 | ~76.1% | ~$2,389,275,000 | Estimated residual | |||||
| TOTAL SHARES OUTSTANDING | 104,700,000 | 100.0% | $3,141,000,000 | Per Continental Share Services, Inc. |
[sheet: Pinnacle Harbor Position Detail]
| Metric | Value | Source / Notes |
| Full Legal Name | Pinnacle Harbor Capital Partners, LP | Delaware limited partnership |
| General Partner | Pinnacle Harbor Capital Management, LLC | Delaware LLC |
| Managing Partner & CIO | Viktor S. Kessler | |
| Head of Activism / Portfolio Manager | Nadia Johar | |
| EIN | 47-3928154 | |
| Counsel | Hargrove Sloane & Birch LLP (Jonathan "Jon" Birch III, Lead Partner; Elise Marchetti, Associate) | 1585 Broadway, 40th Floor, New York, NY 10036 |
| Proxy Solicitor | Garrison Proxy Advisors, LLC (Alicia Trent, Managing Director) | 17 Ashbury Asset Advisors, Suite 1600, New York, NY 10004 |
| AUM | ~$4,200,000,000 | Per firm profile |
| Accumulation Period | June 2022 – November 2022 | Per Schedule 13D |
| Shares Held | 7,119,600 | = 104,700,000 × 6.8% |
| Ownership Percentage | 6.8% | Per Schedule 13D |
| Weighted-Average Purchase Price Per Share (WAPPS) | $26.42 | Per 13D disclosure |
| Total Cost Basis | $188,099,832 | = 7,119,600 × $26.42 |
| Share Price — Nov. 15, 2022 (Engagement Open) | $30.00 | Nasdaq closing price |
| Mark-to-Market — Nov. 15, 2022 | $213,588,000 | = 7,119,600 × $30.00 |
| Unrealized Gain — Nov. 15, 2022 | $25,488,168 | = $213,588,000 − $188,099,832 |
| Unrealized Gain % — Nov. 15, 2022 | 13.5% | = $25,488,168 / $188,099,832 |
| Share Price — Nov. 10, 2022 (13D Filing) | $29.12 | Nasdaq closing price |
| MTM — Nov. 10, 2022 | $207,322,752 | = 7,119,600 × $29.12 |
| Share Price — Mar. 10, 2023 (Standstill Signed) | $33.25 | Nasdaq closing price |
| MTM — Mar. 10, 2023 | $236,726,700 | = 7,119,600 × $33.25 |
| Unrealized Gain — Mar. 10, 2023 | $48,626,868 | = $236,726,700 − $188,099,832 |
| Unrealized Gain % — Mar. 10, 2023 | 25.9% | = $48,626,868 / $188,099,832 |
| Demands | (1) Two board seats; (2) Strategic review of interactive gaming division; (3) $300M capital return | Per Oct. 28, 2022 private letter and Nov. 30, 2022 open letter |
Board Nominees
[sheet: RGC Stock Price History]
| Date | Event | RGC Closing Price — Nasdaq | Pinnacle Harbor MTM | Pinnacle Harbor Unrealized Gain | Pinnacle Harbor Unrealized Gain % | RGC Market Capitalization |
| 2022-06-01 | Pinnacle Harbor begins accumulating RGC shares | $24.18 | $172,131,528 | -$15,968,304 | -8.5% | $2,531,646,000 |
| 2022-09-30 | Q3 2022 close | $27.55 | $196,144,980 | $8,045,148 | 4.3% | $2,884,485,000 |
| 2022-11-10 | Pinnacle Harbor files preliminary Schedule 13D | $29.12 | $207,322,752 | $19,222,920 | 10.2% | $3,048,864,000 |
| 2022-11-15 | Calderwood & Harkness engagement opens | $30.00 | $213,588,000 | $25,488,168 | 13.5% | $3,141,000,000 |
| 2022-11-30 | Pinnacle Harbor public open letter | $31.74 | $225,955,704 | $37,855,872 | 20.1% | $3,323,178,000 |
| 2023-01-06 | Pinnacle Harbor files amended 13D | $32.90 | $234,234,840 | $46,135,008 | 24.5% | $3,444,630,000 |
| 2023-03-10 | Cooperation & Standstill Agreement executed | $33.25 | $236,726,700 | $48,626,868 | 25.9% | $3,481,275,000 |
| 2023-05-18 | RGC 2023 Annual Meeting — uncontested | $35.60 | $253,457,760 | $65,357,928 | 34.7% | $3,727,320,000 |
[sheet: RGC Company Overview]
| Item | Detail |
| Full Legal Name | Redstone Gaming Corp., a Delaware corporation |
| Ticker / Exchange | RGC / Nasdaq |
| Headquarters | 8700 Las Vegas Boulevard South, Suite 2200, Las Vegas, NV 89123 |
| Delaware Registered Office | Capitol Corporate Services, Inc., 615 S. DuPont Highway, Dover, DE 19901 |
| Nevada Registered Agent | National Registered Agents of Nevada, Inc., 311 S. Division Street, Carson City, NV 89703 |
| EIN | 82-4031976 |
| CIK (SEC) | 0001847625 |
| DE SOS File Number | 5734821 |
| Industry | Gaming — casino resort operations, interactive/online gaming, sports wagering |
| Fiscal Year End | December 31 |
| FY 2021 Revenue | $2,870,000,000 |
| FY 2022 Projected Revenue | $3,050,000,000 |
| Interactive Gaming Division Revenue (FY 2021) | $412,000,000 (14.4% of total) |
| Net Debt | $1,620,000,000 |
| Dividend Yield | 1.8% |
| Shares Outstanding | 104,700,000 |
| Market Cap (Nov. 15, 2022 at $30.00) | ~$3,141,000,000 |
| CEO | Gerald R. Whitmore, age 58 |
| Board Chair (Independent) | Diane K. Sheridan, age 64 |
| General Counsel & Corporate Secretary | Patricia "Trish" Nakamura, age 49 |
| CFO | Raymond Choi, age 52 |
| Board Size (at engagement) | 9 directors (7 independent, 2 management) |
| Bylaws Last Amended | September 12, 2021 |
| Advance-Notice Bylaw Provision | Article II, Section 2.11 |
| Transfer Agent | Continental Share Services, Inc. (Jason Velmoran, VP) |
| Independent Auditor | Kettering Marsh & Associates LLP (Robert Ogawa, Lead Audit Partner) |
| Financial Advisor | Calloway Pinnacle Trust Bank (Thomas V. Ashford, Managing Director) |
| Proxy Solicitor | Whitfield Morrow Partners, LLC (Denise Cavanaugh, SVP) |
| IR Advisor | Harlan Ridge Communications, LLC (Philip Navarette, Partner) |
| D&O Broker | Glenmore Caulfield Insurance Brokers, Inc. (Sarah Voss, SVP) |
| D&O Primary Carrier | Northbridge Indemnity Company — Policy NBI-DOP-1025-00008 — $15M limit / $500K retention |
| D&O First Excess Carrier | Creston National Insurance Co. — Policy CNI-XS-2022-31004 — $10M xs $15M |
[sheet: Board Composition]
| Seat # | Director Name | Age | Independent? | Management Role | Committee Memberships | Special Committee Member? |
| 1 | Diane K. Sheridan (Chair) | 64 | Yes | — | Governance (Chair), Compensation | No |
| 2 | Gerald R. Whitmore (CEO) | 58 | No | CEO & Director | — | No |
| 3 | Raymond Choi (CFO) | 52 | No | CFO & Director | — | No |
| 4 | Dr. Miriam Kaplan | 61 | Yes | — | Audit (Chair), Governance | No |
| 5 | Theodore "Ted" Barlowe | 57 | Yes | — | Compensation (Chair), Governance | No |
| 6 | Lorraine Fujikawa | 55 | Yes | — | Audit, Compensation | No |
| 7 | James "Jim" Delacroix | 63 | Yes | — | Audit, Special Committee (Chair) | Yes — Chair |
| 8 | Carmen Vasquez | 50 | Yes | — | Governance, Special Committee | Yes |
| 9 | Randall Morse | 59 | Yes | — | Compensation, Special Committee | Yes |