Letter of Intent for Reverse Takeover and Agreement for $1MM VANCOUVER, BC, Feb. 18, 2022 /CNW/ - TGS Esports Inc. ("TGS" or the "Company") (TSXV: TGS) is pleased to announce that it has entered into a non-binding letter of intent dated February 16, 2022 with respect to a potential business combination (the "Transaction") with certain subsidiaries (the "Media Subsidiaries") of an arm's length entertainment, travel and media company (the "MediaCo") which would result in a reverse takeover of the Company by the shareholders of MediaCo. The final structure and terms of the Transaction have not yet been finalized, and remain subject to conditions including due diligence of the parties and receipt by the parties of tax, corporate, and securities law advice.
The issuer resulting from the Transaction is expected to remain a diversified media company with esports and gaming, travel and media divisions, and to carry on the current business of TGS and the Media Subsidiaries. MediaCo is a digital business ecosystem company that brings digital advertisers, consumers, video gamers and travelers together and provides avenues for in-game and in-video advertising and monetization. The Media Subsidiaries represent the travel division and interactive TV and media divisions of MediaCo and are expected to have synergies with the business of TGS. The Transaction with the Media Subsidiaries is intended to provide the Company with an opportunity to internalize a travel platform for its live events and have travel integration in Pepper's social gaming-platform, and to provide access to more end users for TGS' esports content, tournaments and events through an internalized media division with significant reach. Additional information regarding the business and financial condition of the Media Subsidiaries will be provided when available.
The Company also announces that two arms' length lenders have agreed to advance an aggregate of $1,000,000 to the Company as an unsecured loan (the "Loan") payable in tranches at the request of the Company. The Loan will be unsecured, will not bear interest, is not convertible and will mature on the date that is six months from the date of issuance of each tranche, as applicable. The proceeds of the Loan are expected to be used by the Company to fund its working capital commitments, including equipment purchases, salaries, and payment of outstanding obligations, and to fund the Company's expenses in connection with the evaluation and completion of the Transaction.
In connection with the Transaction, the Company seeks to complete a private placement (the "Concurrent Financing") to raise minimum gross proceeds of $3,000,000. The terms of the Concurrent Financing have not been finalized. The proceeds from the Concurrent Financing are expected to be used to fund the initial working capital requirements of the issuer resulting from the Transaction with respect to its operations and business plans, and to fund the working capital requirements for the current business of the Company and the Media Subsidiaries.
The completion of the Transaction (the "Closing") and Concurrent Financing remain subject to a number of conditions including satisfactory due diligence, the receipt of structuring advice by the parties, approval of the board of directors of each of the parties, entry into a binding agreement, approval of the TSX Venture Exchange (the "Exchange") and other conditions customary to transactions of this nature. Further updates and particulars of the Transaction will be provided upon the Company and MediaCo entering into a binding agreement for the Transaction. Trading in the Company's stock is expected to remain halted until completion of the Transaction.
On Closing, subject to Exchange acceptance and the Exchange limitations on finder's fees, the Company is expected to pay a finder's fee to two arms' length parties which fees shall be equal to 3% and 2.5%, respectively, of the purchase price paid by the Company for the Media Subsidiaries pursuant to a binding agreement in respect of the Transaction. Subject to Exchange acceptance, the finder's fees will be paid by the issuance of common shares of the Company at a deemed price per share equal to the issue price of securities issued pursuant to the Concurrent Financing, and such shares will be subject to a hold period expiring four months and one day after the date of issuance. The finders are arm's length parties with respect to the Company, MediaCo and the Media Subsidiaries.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of TGS Esports Inc. should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.
None of the securities to be issued in connection with the Transaction or the Concurrent Financing will be or have been registered under the United States Securities Act of 1933, as amended (the "1933 Act"), and none may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act. This press release is being issued pursuant to Rule 135c of the 1933 Act and shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the securities, in any state where such offer, solicitation or sale would be unlawful.