Letter to Shareholders

Dear Shareholders and Optionholders:

You are invited to attend a special meeting of the holders (the “Shareholders”) of common shares (“Common Shares”) and the holders (the “Optionholders”” and together with the Shareholders, the “Securityholders”) of options to purchase Common Shares (“Options”) of Great Canadian Gaming Corporation (the “Company”) to be held online at https://web.lumiagm.com/409988200 on Wednesday, December 23, 2020, at 11:00 a.m. (Vancouver time) (the “Meeting”). As part of our corporate social responsibility and our preparedness plans in response to COVID-19, the Company believes hosting its meeting in virtual-only format is in the best interest of our Shareholders and Optionholders and it is part of our commitment to do our part to protect the health and safety of our communities, employees, Shareholders and other stakeholders.

The Arrangement

On November 10, 2020, the Company entered into an arrangement agreement (the “Arrangement Agreement”) with Raptor Acquisition Corp., a company existing under the laws of British Columbia (the “Purchaser”) and an affiliate of funds managed by affiliates of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”), pursuant to which, and subject to the terms and conditions of the Arrangement Agreement, the Purchaser agreed to acquire all of the issued and outstanding Common Shares in accordance with a plan of arrangement to be completed under the Business Corporations Act (British Columbia) (the “Arrangement”). At the Meeting, Shareholders and Optionholders will be asked to consider a special resolution to approve the Arrangement (the “Arrangement Resolution”).

Pursuant to the terms and subject to the conditions of the Arrangement Agreement, the Purchaser will acquire each outstanding Common Share in exchange for a cash payment of CDN$39.00 per share, without interest. Holders of outstanding Options (whether vested or unvested) will be entitled to receive a cash payment from the Purchaser of CDN$39.00 per Option less the applicable exercise price of such Option and applicable withholding taxes, and holders of deferred share units and restricted share units of the Company (whether vested or unvested) will be entitled to receive a cash payment from the Purchaser of CDN$39.00 per deferred share unit or restricted share unit held, less applicable withholding taxes.

In evaluating and unanimously approving the Arrangement, a committee of the independent directors of the Company (the “Special Committee”) and the board of directors of the Company (the “Board”) gave careful consideration to the current and expected future position and condition of the business of the Company, and all terms of the draft Arrangement Agreement, including the conditions precedent, representations and warranties and deal protection provisions. The Special Committee considered a number of factors including, among others, the following:

Significant Premium to Market Price. The consideration to be received by the Shareholders pursuant to the Arrangement Agreement represents a 35% premium over the closing price of the Common Shares on the TSX on November 10, 2020 and a 56% premium over the 20-day volume weighted average trading price (the “VWAP”) for the period ended on November 10, 2020.

Attractive Transaction Relative to Alternatives. The Arrangement resulted from an ongoing process by the Company of considering strategic alternatives and engaging with potential acquirors, including its formal auction process in 2018 that resulted in no offers from potential buyers and its most recent assessment of strategic alternatives (including the execution of its current business plan, a leveraged recapitalization, the monetization of its real estate assets and growth by acquisition) that commenced more than five months ago. The Arrangement is the most attractive of those alternatives.

Business and Industry Risks. The future business, operations, financial performance and condition, operating results and prospects of the Company, including the near-term expectations of the performance of the gaming industry in light of the emergence of COVID-19, is subject to significant risks and uncertainties. Additionally, the Arrangement transfers the execution risk associated with the Company’s Ontario properties from the Securityholders to the Purchaser. The Special Committee concluded that the consideration under the Arrangement is more favourable to Shareholders than continuing with the Company’s current business plan, in light of these risks and uncertainties.

Fairness Opinions. The Fairness Opinions of CIBC World Markets Inc. (who were paid a fixed fee for their opinion) and Scotia Capital Inc. opined that, as of the date of the opinions and subject to the assumptions, limitations and qualifications contained ii therein, the consideration to be received by Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to the Shareholders.

Acceptance by Director and Officers. Pursuant to the Voting Agreements entered into concurrently with the Arrangement Agreement, each of the directors and certain executive officers of the Company have agreed to vote all of their Common Shares and Options in favour of the Arrangement at the Meeting.

Form of Consideration. The form of cash consideration equal to CDN$39.00 per share payable to Shareholders provides certainty of value and immediate liquidity.

Transaction Financing. The Purchaser has secured the Equity Commitment Letter and the Debt Commitment Letter to finance the cash consideration payable to the Shareholders in respect of the Arrangement.

Negotiated Transaction. The Arrangement Agreement is the result of a robust and comprehensive arm’s length negotiation process, conducted by management under the supervision of the Special Committee, which includes terms and conditions that are reasonable in the judgment of the Special Committee and the Board.

Fairness of the Conditions. The Arrangement Agreement provides for certain conditions to complete the Arrangement, which conditions do not include a financing condition, are not unduly onerous or outside market practice and can reasonably be expected to be satisfied.

Purchaser Experience. Funds managed by affiliates of Apollo are experienced investors in the gaming industry and other regulated industries and Purchaser is well placed to successfully support the management in operating the business of the Company in a manner beneficial to the stakeholders of Company.

The Special Committee reviewed and supervised management’s negotiation of the terms of the transaction with the Purchaser. The Special Committee is composed of all of the directors of the Company except Rod N. Baker, our President and Chief Executive Officer. The Special Committee and the Board have each unanimously determined that the Arrangement is in the best interests of the Company and is fair to Shareholders and the Board unanimously recommends that Shareholders and Optionholders vote in favour of the Arrangement Resolution.

The Special Committee received a fairness opinion from CIBC World Markets Inc., financial advisor to the Special Committee, a copy of which is attached as Appendix E to the Circular (as defined below). The Board received a fairness opinion from the Company’s financial advisor, Scotia Capital Inc., a copy of which is attached as Appendix F to the Circular (as defined below). Each financial advisor determined that, as of November 10, 2020 and subject to the assumptions, limitations and qualifications set forth in their respective opinions, the consideration to be received by the Shareholders pursuant to the terms and subject to the conditions of the Arrangement Agreement is fair, from a financial point of view, to the Shareholders.

The accompanying notice of meeting (the “Notice of Meeting”) and management information circular (the “Circular”) contain a detailed description of the Arrangement and set forth the actions to be taken by you at the Meeting. You should carefully consider all of the information in the Notice of Meeting and Circular and consult your financial, legal or other professional advisors if you require assistance.

Securityholder Approval

The Arrangement Resolution must be approved at the Meeting by: (i) at least two-thirds of the votes cast by the Shareholders present in person or represented by proxy at the Meeting and entitled to vote thereat; (ii) a simple majority of the votes cast by the Shareholders present in person or represented by proxy at the Meeting and entitled to vote thereat, excluding the votes cast by such Shareholders that are required to be excluded pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions; and (iii) at least two-thirds of the votes cast by Shareholders and Optionholders present in person or represented by proxy at the Meeting and entitled to vote thereat, voting together as a single class, with each Common Share entitling the holder thereof to one vote and each Option entitling the holder thereof to one vote for each Common Share such holder is eligible to receive upon exercise of such Option (whether or not such Option is vested). To the knowledge of the Company, only the votes attached to the Common Shares owned by Rod N. Baker and Terrance Doyle, will be excluded from the “majority of the minority” vote mandated by Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

Your vote is very important regardless of the number of Common Shares or Options you own. The Arrangement cannot be completed without Securityholders approving the Arrangement Resolution at the Meeting.

If you have questions on the Arrangement or how to vote, you may contact Kingsdale Advisors, our strategic shareholder and communications advisor, and proxy solicitation agent, at 1-877-657-5856 toll free in North America, collect outside of North America at 416-867-2272 or by email at contactus@kingsdaleadvisors.com.

Yours truly,
(signed) Peter Meredith

Peter Meredith
Chairman of the Board