On March 13, Tiidal Gaming Group Corp., a Toronto-based esports and gaming platform company, reported that it and its entirely-owned affiliate, Tiidal Gaming Holdings Inc., have signed a stock sale and purchase deal with Entain Holdings (UK) Limited, a prominent British land-based iGaming and sportsbook operator.
Under the terms of the purchase agreement, Tiidal Holdings will officially sell the total number of shares of its operating affiliate, Tiidal Gaming NZ Limited, commonly known as Sportsflare, a flagship manufacturer of wager types for the esports wagering market based in Wellington, New Zealand, to Entain.
Total price agreement:
The parties have agreed that the total purchase consideration in the purchase agreement is $13.250.000 in cash, subject to standard transaction adaptations.
However, Tiidal will hold the purchase price in an escrow account for 180 days after closing, throughout which time Tiidal can access funds to settle any working capital adaptations or claims made by Entain and can access up to 20% of the funds to pay reasonable expanses related to the Transaction.
Terms of Transaction:
The Transaction has been agreed without any parties being overly involved with each other and is liable to many conditions usual for a transaction of this nature, involving the validation of Tiidal’s shareholders and the receipt of all necessary consents.
Furthermore, the purchase agreement involves the payment of a $500,000 termination fee to be paid by Tiidal Holdings to Entain upon certain terminations.
In this regard, Thomas Hearne, Chief Executive Officer of Tiidal, said: “I am incredibly proud of what the Sportsflare team has done over the last year. Given the capital markets environment, we believed it was best to find a great home for Sportflare in order to maximize value for Tiidal shareholders.
“Sportsflare will be a great fit with Entain’s strong presence in the industry and our board of directors is confident that Sportsflare joining Entain is the best long-term solution for its employees and partners.”
Shareholder validation requested:
At the meeting scheduled for April 26, 2023, Tiidal Holdings will request shareholder validation of the Transaction. However, certain officers, directors and stockholders owning 31.024.382 shares of common stock, aka 37.29% of the company’s issued and outstanding shares, have already executed customary voting support agreements to back up and vote for the Transaction at the upcoming meeting.
Furthermore, Tiidal’s board of directors has validated the purchase deal and the Transaction and unanimously advise that stockholders vote in support of the Transaction at the meeting.
In this regard, BDO Canada LLP has offered a fair opinion to the company’s board of directors, which is: “To the effect that, subject to the assumptions, limitations and qualifications set out in such opinion, the consideration to be received pursuant to the Transaction is fair, from a financial point of view, to the shareholders of the Company.”
In connection with the Transaction, Tiidal Gaming Group Corp., as guarantor, Tiidal Holdings, as guarantor, and Sportsflare, as borrower, inked a definitive loan deal with Ladbrokes Group Finance plc, a subsidiary of Entain in connection with a secured credit facility in the aggregate principal sum of up to NZD$1,658,470.
According to the terms of the loan agreement, an advance payment of NZD$1,158,470,was made on February 2, 2023.
However, if the purchase agreement is not terminated and the Transaction is not finalized, additional advances of NZD$250,000 will be made in March 2023 and NZD$250,000 in April 2023.
Funds transferred under the Facility will be used to finance the ongoing working capital of Sportsflare, the Tiidal Gaming Group Inc. and Tiidal until the finalization of the Transaction.
In connection with the Facility and according to the terms of the loan agreement, Tiidal executed a separate security deed for benefit of the Lender in connection with the pledge of all outstanding shares of Sportsflare as security for the Facility.