Enthusiast Gaming Holdings Inc. (NASDAQ:EGLX;
TSX:EGLX), (“Enthusiast Gaming” or the “Company”), an integrated
gaming entertainment company, is pleased to announce that on June
2, 2022, the Company settled certain deferred and earn-out payments
in connection with its acquisitions of Addicting Games, Inc.
(“
Addicting Games”), Outplayed Inc.
(“
Outplayed”), and Vedatis SAS
(“
Vedatis”), through the issuance of an aggregate
of 16,168,836 common shares at an implied weighted average value of
US$2.47 per share.
The Addicting Games deferred payments, Outplayed
deferred and earn-out payments and Vedatis deferred payment
(collectively, the “Vendor Obligations”)
represented a total liability for the Company of more than US$40
million to be paid over a period lasting until December 2023, with
the Vedatis €750,000 payment due in May 2022 and the first
Addicting Games US$7 million payment due in September 2022.
The Company had engaged in negotiations with the
vendors over recent months with respect to the payment of the
Vendor Obligations in a manner that conserves the Company’s cash
position and minimizes exposure to trading price volatility in the
Company’s common shares. The Outplayed earn-out shares specifically
formed part of the negotiations due to Outplayed’s post-closing
site traffic performance consistently meeting or exceeding the
targets for such earn-out payments. Such negotiations culminated in
the execution of amending agreements to the purchase agreements
with respect to Addicting Games and Outplayed, pursuant to which
the Vendor Obligations in respect of Addicting Games and Outplayed
were settled through the issuance of a total of approximately 4.32
million common shares to the vendors of Addicting Games at an
implied value of US$2.50 per share and the issuance of a total of
approximately 11.5 million common shares to the vendors of
Outplayed at an implied value of US$2.52 per share, in each case
representing a premium to the closing price of the common shares as
at June 1, 2022, of US$2.29 per share. The Company also settled the
Vendor Obligations in respect of Vedatis through the issuance of a
total of 348,852 common shares to the vendors of Vedatis at C$2.90
per share in accordance with the terms of the Vedatis purchase
agreement (unamended).
Other than applicable securities law resale
restrictions (including a four-month hold period), the common
shares issued to the vendors of Addicting Games in settlement of
their Vendor Obligations are not subject to any contractual lock-up
restrictions, and the common shares previously issued to such
vendors on closing of the acquisition will be released from their
contractual lock-up on the first anniversary of the closing. In
addition to applicable securities law resale restrictions
(including a four-month hold period), the common shares issued to
the founders of Outplayed in settlement of their Vendor Obligations
are subject to contractual lock-up restrictions of 50% released
after 120 days and 50% released after 240 days, while the
non-founder vendors are not subject to any contractual lock-up
restrictions. In addition, the common shares previously issued to
the non-founder vendors of Outplayed on closing of the acquisition
have been released from their contractual lock-up as part of the
amending agreement for Outplayed. In addition to applicable
securities law resale restrictions (including a four-month hold
period), the common shares issued to the vendors of Vedatis in
settlement of their Vendor Obligations are subject to contractual
lock-up restrictions of 1/3 released after each of 6 months, 12
months, and 18 months after the first anniversary of the
closing.
“We are excited that both Addicting Games and
Outplayed have decided to convert what could have been a cash
obligation into common shares of Enthusiast Gaming, which
demonstrates their confidence in the entire company’s vision and
goal of being the leading destination for gamers and esports fans,”
said John Albright, Lead Director of Enthusiast
Gaming.
Private Placement Offer to Dissident
Shareholder
To ensure that dissident shareholder Greywood
Investments, LLC does not assert that such share issuances in
settlement of the Vendor Obligations prejudices its potential proxy
contest, the Company has unconditionally offered the dissident
shareholder the option to acquire common shares of the Company in
an amount sufficient to maintain its pro rata interest after giving
effect to the announced share issuances. The Company has offered
the dissident shareholder the opportunity to acquire up to
1,663,736 common shares, on a private placement basis, at a
subscription price of C$2.91 (the equivalent of approximately
US$2.29 based on the USD/CAD exchange rate on June 1, 2022) per
share, being equal to the market price (as defined in the TSX
Company Manual) of the common shares calculated as at June 1,
2022.
Postponement of AGM
In addition, Enthusiast Gaming announces that it
has received approval from the Toronto Stock Exchange to hold its
2022 annual meeting on or before August 30, 2022, in order to allow
sufficient time for the Company to review and respond to the
dissident shareholder’s proposals and to provide proper information
to all shareholders in advance of the meeting. The board of
directors of the Company has resolved to postpone the annual
meeting of shareholders to July 19, 2022, with an updated record
date of June 10, 2022, and will file an amended notice of meeting
and record date on its SEDAR profile in due course. Shareholders
are not required to take any action at this time. Shareholders will
receive detailed information about how to vote and the matters
presented at the meeting in a management information circular to be
sent to shareholders in advance of the meeting.
About Enthusiast Gaming
Enthusiast Gaming is an integrated gaming
entertainment company, building the largest media and content
platform for video game and esports fans to connect and engage
worldwide. Combining the elements of its four core pillars:
Communities, Content, Creators, and Experiences, Enthusiast Gaming
provides a unique opportunity and integrated approach to reach and
connect with its coveted GenZ and Millennial audience. Through its
proprietary mix of digital media and entertainment assets,
Enthusiast Gaming has built a vast network of like-minded
communities to deliver the ultimate fan experience.
Contacts
Enthusiast Gaming Investor Relations:Eric
Bernofsky, Chief Corporate Officerinvestor@enthusiastgaming.com
Media Relations:Derek Holota, Provident
Communicationsderek@providentcomms.com343-422-5606
Forward Looking Information
This news release contains certain statements
that may constitute forward-looking information under applicable
securities laws. All statements, other than those of historical
fact, which address activities, events, outcomes, results,
developments, performance or achievements that Enthusiast Gaming
anticipates or expects may or will occur in the future (in whole or
in part) should be considered forward-looking information. Often,
but not always, forward-looking information can be identified by
the use of words such as "plans", "expects", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes" or variations (including negative
variations) of such words and phrases, or statements formed in the
future tense or indicating that certain actions, events or results
"may", "could", "would", "might" or "will" (or other variations of
the forgoing) be taken, occur, be achieved, or come to pass.
Forward-looking statements in this news release include, but are
not limited to, statements relating to issuance of shares on the
terms stipulated to the vendors of Addicting Games and Outplayed,
certain lock-up periods in connection with the share issuances, and
the date of the 2022 annual meeting and related record date.
Forward-looking statements are based on assumptions, including
expectations and assumptions concerning: interest and foreign
exchange rates; capital efficiencies, cost saving and synergies;
growth and growth rates; the success in the esports and media
industry; and the Company’s growth plan. While Enthusiast Gaming
considers these assumptions to be reasonable, based on information
currently available, they may prove to be incorrect. Readers are
cautioned not to place undue reliance on forward-looking
statements. In addition, forward-looking statements necessarily
involve known and unknown risks, including, without limitation,
risks related risks associated with general economic conditions;
adverse industry events; future legislative, tax and regulatory
developments. Readers are cautioned that the foregoing list is not
exhaustive and other risks set out in Enthusiast Gaming public
disclosure recorded filed under the Company’s provide on
www.sedar.com, including those contained in the prospectus. Readers
are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
For more information on the risk, uncertainties and assumptions
that could cause anticipated opportunities and actual results to
differ materially, please refer to the public filings of Enthusiast
Gaming which are available on SEDAR at www.sedar.com.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change
thereafter. Enthusiast Gaming disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
Neither the TSX Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Exchange) accepts responsibility for the adequacy or accuracy
of this release.
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