ESE Entertainment Inc. (CVE:ESE) said it has entered into an agreement with Canaccord Genuity, as sole bookrunner and lead underwriter on behalf of a syndicate of underwriters, under which they will purchase on a 'bought deal' basis an aggregate of 5,360,000 units of the company at a price of $1.40 per unit for aggregate gross proceeds of $7,504,000.
The company said the net proceeds of the offering will be used for business development, general working capital, and other general corporate purposes.
Each unit in the offering will consist of one common share of the company and one common share purchase warrant. Each warrant will entitle the holder to acquire one common share at an exercise price of $1.95 per each for a period of twenty-four months from the offering closing date.
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The expiry date of the warrants may be accelerated by the company if the volume-weighted average price of ESE Entertainment's common shares on the TSX Venture Exchange is greater than $2.925 for the preceding ten consecutive trading days, at which time the company may accelerate the expiry date of the warrants to a date that is at least thirty trading days following the date of such written notice.
The company said it has granted the underwriters an over-allotment option to purchase up to an additional 804,000 units at the issue price, to cover over-allotments, if any, and for market stabilization purposes. The over-allotment option is exercisable at any time, in whole or in part, for a period of thirty days after and including the closing date, and, if exercised in full, would result in additional gross proceeds of $1,125,600.
As consideration for their services, the underwriters will receive a cash commission equal to 7.0% of the aggregate gross proceeds of the offering payable in cash or units, or any combination of cash or units at the option of the lead underwriter, and such number of broker warrants of the company as is equal to 7.0% of the aggregate number of units sold under the offering. Each underwriters' warrant will entitle the holder to acquire one unit at the issue price for a period of twenty-four months from the closing date.
Additionally, the company will pay the lead underwriter a corporate finance fee equal to that number of units which is equal to 2.5% of the aggregate number of units issued under the offering.
The units will be offered by way of a short form prospectus to be filed in all Provinces of Canada, except Quebec, pursuant to National Instrument 44-101 – Short Form Prospectus Distributions.
The offering is expected to close on or about June 15, 2021, and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and other approvals, including the approval of the TSX Venture Exchange and the applicable regulatory authorities.
ESE Entertainment is a Europe-based entertainment and technology company focused on gaming, particularly on esports. ESE consists of multiple assets and world-class operators in the gaming and esports industries.
The company's capabilities include but are not limited to: physical infrastructure, broadcasting, global distribution for gaming and esports-related content, advertising, sponsorship support, and a growing esports team franchise, K1CK Esports. ESE is focused on bridging Europe, Asia and North America.
Contact the author at jon.hopkins@proactiveinvestors.com