Esports Entertainment Group, Inc. Announces Sale of Bethard iGaming Business
Esports Entertainment Group, Inc. has announced the sale of its Bethard iGaming business, an online casino and sportsbook operator licensed in Malta and Sweden. The sale of the Bethard business is for a total purchase consideration of approximately €9.5 million, with €1.65 million payable in cash at closing, and €6.5 million representing the Company’s release from payment of its contingent consideration liability from the Bethard acquisition. The purchaser will assume liabilities of approximately €1.2 million. The sale is expected to close during the two-week period following the signing of the Purchase Agreement, subject to customary closing conditions.
As a condition to the closing of the sale of the Bethard business, the Company has entered into an Amendment and Waiver Agreement, which requires the Company to deposit 50% of the sale proceeds in a bank account in favor of the holder of its Senior Convertible Note. The Amendment also modifies the Senior Convertible Note and provides for a voluntary reduction in the Conversion Price when the Company issues common stock in a future registered offering at a price below the Conversion Price. The Amendment further provides rights to the Debt Holder to participate in future Securities Transactions for a period of two years.
With the sale of the Bethard business and the closing of its Argyll business, the Company plans to focus on its Lucky Dino iGaming brands that operate on the Company’s proprietary Idefix platform. The Company has also announced the impairment of goodwill primarily related to its iGaming reporting unit, resulting in a material non-cash charge to the Company’s statement of operations for the fiscal quarter ended December 31, 2022.
Moreover, the Company has reduced its debt from $32.2 million at September 30, 2022, to $15.5 million at February 16, 2023, before adjusting for the effects of the Amendment. It has closed the sale of the Spanish gambling license resulting in proceeds to the Company of €2.1 million, of which 50% will be deposited in a bank account in favor of the Debt Holder. It has also terminated a lease at an idle property, eliminating remaining total lease liability over the lease term.
Alex Igelman, CEO, stated, “I am very pleased at the work that is being undertaken to reduce debt and focus on our core iGaming and esports assets. We remain committed to building a world-class esports gambling operation that is global in reach and that provides esports content and strategic services to those involved in esports gambling, as well as those seeking to enter the market. I am extremely encouraged and pleased with the speed and efficiency in which senior management effectuated these important actions.”