Esports Entertainment Group (EEG) has entered into a securities purchase agreement with an institutional investor, aiming to secure a private placement of unsecured series D convertible preferred stock.
The strategic transaction is expected to raise $4m in net proceeds for the company after estimated offering expenses. In addition to the initial capital, the agreement provides EEG with an opportunity to secure further funding.
The institutional investor will have the option to receive a warrant to purchase shares of common stock and additional shares of series D convertible preferred stock. The deal is set to close during the first week of May, subject to closing conditions being met.
This development comes on the heels of a previous agreement in April, where EEG entered into a deal with Alto Opportunity Master Fund. This facilitated the exchange of EEG’s debt for company stock, which was completed on 28 April.
Alex Igelman, the Chief Executive of EEG, expressed his gratitude for the additional investment, stating that it not only strengthens the company’s cash position but also complements the earlier exchange of its $15m senior convertible note into unsecured, series C convertible preferred stock. As a result of these transactions, EEG expects to have significantly enhanced its balance sheet.
Igelman further added that the company is now looking to expand its presence in target markets, including esports. He highlighted that EEG has eliminated over $4m of annual operating expenses and projects a reduction of debt and other liabilities by over $42m year-to-date.
Consequently, the company is now positioning itself to execute a new, highly focused, and capital-efficient business model that targets the growing igaming, esports, and e-simulator markets.
In April, Igelman also shared EEG’s plans for divestment and expansion of its B2C offerings, emphasising the company’s commitment to growth and market presence.