RE:Promotion to TSXHi AOKAY,
I did ask months ago, but as you'll read, that portion of the question was skirted.
Here is the email exchange:
On Mon, Nov 25, 2019 at 11:59 AM XXXXX@gmail.com> wrote:
I'm slightly concerned about our ability to service the debt [$3.2M/yr] in the early years of this loan? This will strain EBITDA at a minimum. Also worrisome is if Fengate opts for the conversion. What’s the net effect of this on SP and EPS with such dilution…or better stated, how bad could it be in the short term [or even for the 5yr term of the loan?].
Even though I know you may not have an answer for the question or secondly, be somewhat handcuffed to provide an answer, I thought I would ask anyway.
I'm sure John has thought about every possible angle prior to entering this necessary deal.
Thanks for your time James and have a great week sir.
Oh, while I have your ear, do you foresee us being listed on a bigger board than the current Toronto Venture in the near future?
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James Bigg <james.bigg@thescore.com>
Dec 12, 2019, 9:31 AM
Hi xxxx - thanks for your patience on this.
Firstly, you are correct that management is extremely thorough when exploring financing options of any kind. Our deal with Fengate is extremely beneficial and has been structured to provide us with considerable flexibility. It not only provides us with the capital required to launch and grow our gaming business, but also partners us with a highly-respected investor with significant experience in the gaming space who understands what we are building.
In terms of your more specific questions, there will be zero impact on EBITDA as interest accrued is not recognized under this line item. There is also no requirement for us to use cash to service this debt in the first two years. If Fengate opted to convert, there would naturally be dilution, but any such move would be anticipated to happen at a higher share price.
In conclusion, management is very satisfied with the structure of this deal, which sets us up well to execute on our vision of becoming a leader in mobile sports betting.
Hope this is helpful,
James