David George-Cosh

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Great Canadian Gaming Corp. is scaling back its plans to buy back $500 million of its shares later this month, citing the potential impact its business could have from the COVID-19 pandemic.

The Toronto-based gaming and entertainment company said it now plans to buy back $350 million of its shares on Mar. 25 as the rapidly spreading coronavirus whipsawed global markets over the past week. When Great Canadian Gaming first announced its share buyback program last month, it stated it could change its issuer bid if the S&P/TSX composite, Dow Jones Industrial Average or S&P 500 falls by more than 10 per cent over the past month.

“In order to provide greater financial flexibility and liquidity to respond if there is a material future downturn in customer visits, the board of directors have determined it is in the best interests of the company to amend the offer to lower the aggregate purchase amount,” Great Canadian Gaming said in a statement.

The company’s announcement pushed its shares to trade into positive territory on the Toronto Stock Exchange during Wednesday’s morning session. However, Great Canadian Gaming erased its gains shortly before 12 p.m. ET.

As a result of Great Canadian Gaming’s new plans, it has instructed its shareholders to retender their shares if they wish to accept the offer, the company said.

Canaccord Genuity analyst Derek Dlay said in a research note to clients on Wednesday that investors were concerned that Great Canadian Gaming would have to adjust the share price range of its buyback program when it was first announced last month. He said that the announcement to the size of the company’s buyback plans, rather than the share range, should “reinforce Great Canadian's confidence in its long-term earnings growth potential.”