ESE Entertainment Inc announced it has closed a private placement offering of convertible note units of the company for gross proceeds of $1,575,000, via the issuance of 1,575 units at a price of $1,000 per unit.
Under the terms of the offering, each unit comprises $1,000 in principal amount of an unsecured convertible note and 250 common share purchase warrants of the company.
The notes will mature on the date that is 24 months from the date of issuance and bear interest at a rate of 10% per annum, payable quarterly on the last business day of each quarter, commencing on March 31, 2022, according to a statement.
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The entire principal amount of the notes may be converted at the election of the holder into shares of ESE at a conversion price of $1.60 per share at any time prior to the maturity date.
Accrued but unpaid interest may also be converted into common shares at a conversion price equal to the greater of either $1.60 and the market price as of the date of conversion, subject to prior approval of the TSX Venture Exchange.
Each warrant will entitle the holder to acquire one common share at a price of $1.60 per share for a period of 24 months from the closing, subject to the company's acceleration right.
ESE will have the right to accelerate the expiry date of the warrants to a date which is 30 days after the date on which a written notice is provided to the holders of warrants if the daily volume-weighted average trading price of the common shares is greater than $2.25 for any 15 consecutive trading days on the exchange, subject to receipt of any required approvals from the exchange.
ESE paid Leede Jones Gable Inc and Echelon Wealth Partners Inc cash finders fees in aggregate of $37,560 and issued a total of 23,100 finder warrants to the finders. Each finder warrant is exercisable at $1.60 for a period of 24 months from the date of issuance.
The company said it intends to use the net proceeds from the offering to finance acquisitions and business development, and for general working capital purposes.
"We are pleased to execute this strategic financing, which is anticipated to provide extra strength in the months ahead,” CEO Konrad Wasiela said in a statement.
“With the recent acquisitions completed, ESE business units are anticipating strong revenue and the ability to service debt. With shareholders in mind, we believe holding a strategic component of debt will minimize dilution and optimize our capital structure."
ESE is a Europe-based entertainment and technology company focused on gaming and e-sports.
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