Enthusiast Gaming Issues Statement Addressing Misleading, Baseless Letter from Activist Greywood Investments
May 24 2022 - 7:43PM
Enthusiast Gaming Holdings Inc. (NASDAQ:EGLX; TSX:
EGLX), (“Enthusiast Gaming” or the “Company”), an integrated gaming
entertainment company, today issued the following statement
addressing the misleading and baseless letter to the Company’s
board of directors (the
“Board”) sent by activist
investor Greywood Investments, LLC (
“Greywood”).
Enthusiast Gaming regularly engages with its
shareholders and continues to welcome constructive input focused on
enhancing value. While it is the Company’s policy not to comment on
specific interactions, we want to ensure the facts are clear
regarding our corporate strategy, leadership, and our commitment to
best-in-class governance. Most importantly, we want to set the
record straight on who Greywood is and how their unfounded
narrative seeks to serve their own interests.
“We believe the Company is well-positioned to
continue accelerating both revenue and gross profit, given the
exceptionally strong trends we continue to see in our business.
Despite the unnecessary distraction caused by Greywood, the
Company’s Board and management remain focused on executing on our
strategy,” said John Albright, lead Director of Enthusiast
Gaming. “We value the trust and confidence our
shareholders place in us every day and we plan to continue to drive
the business forward to create sustainable value over the long
term.”
Unknown Activist Fund with Suspect
Motives and a Hidden AgendaShareholders are right to
question who Greywood is and whose interests they serve. Greywood
has kept details about itself under wraps and there is no
information on who controls Greywood, their operations, or track
record. What is clear is that they have no plan for the Company
other than to take full control of the Board, for their own
undisclosed purposes, without offering shareholders a premium. This
is evidenced by Greywood’s singular focus on Enthusiast Gaming’s
CEO and a list of grievances that have nothing to do with long-term
shareholder value. A campaign based on what appears to be
misleading complaints and personal attacks will do nothing to
create long-term shareholder value and is solely designed as an
attempt to install Greywood’s handpicked director nominees.
Enthusiast Gaming is on the Right Track
to Long-Term Value CreationEnthusiast Gaming’s
exceptionally skilled Board includes seven highly qualified and
actively engaged directors, all of whom know the Company well and
are leaders in their respective fields. Under their guidance, and
the focused leadership of management, the Company is well
positioned for continued growth, as evidenced by the multiple early
successes to date this year:
- A very strong start to Q1 2022 with
revenue of $47.2 million – an increase of 57% year-over-year, well
ahead of estimates – led by accelerated growth and substantial
margin expansion. This was driven by a combination of strong web
and video views, higher direct sales, subscription growth, and
better-than-expected contributions from U.GG and Addicting
Games.
- A growing direct sales pipeline
with $5.2 million of direct sales in Q1 2022, up 136%
year-over-year, supported by renewals and expansions with existing
customers.
- A 127% increase in year-over-year
gross profit in Q1 2022, with gross profit effectively equal to Q4
2021, despite a strong seasonal difference between the two
periods.
- An 83% increase in year-over-year
recurring subscription revenue in Q1 2022, driven by a 70% increase
in paid subscribers.
- All seven equity analysts covering
the Company have a “buy” or “outperform” rating on its shares.
“Enthusiast Gaming remains committed to its
ambitious plan to accelerate growth and continue margin expansion.
Our flywheel model, centered around communities, content, creators,
and experiences, will continue to drive increasing value. Our team
is well positioned to continue delivering rapid top line growth,
while increasing gross profit at a significantly faster rate. With
so much potential right in front of us, now is not the time to risk
your investment to unproven activist nominees,” commented
Adrian Montgomery, CEO of Enthusiast Gaming.
AdvisorsKingsdale Advisors is
acting as strategic shareholder and communications advisor to the
Company. Norton Rose Fulbright Canada LLP is acting as legal
advisors to the Company.
About Enthusiast
GamingEnthusiast 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.
ContactsEnthusiast Gaming
Investor Relations:Eric Bernofsky, Chief Corporate
Officerinvestor@enthusiastgaming.com
Media Relations:Wojtek Dabrowski, Provident
Communicationswojtek@providentcomms.com647-825-5009
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