GameSquare Completes the Sale of Its Non-Core Radio Business Assets
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Insights
The sale of non-core assets by GameSquare, specifically the radio business assets to SoCast, Inc., represents a strategic move to streamline operations and improve the company's financial health. The transaction, valued at US$3.4 million, provides GameSquare with non-dilutive capital, enhancing its balance sheet without diluting current shareholders' equity. This is a positive signal to investors, as it suggests management is focused on value creation and prudent financial management.
GameSquare's decision to sell the radio assets at approximately 1.8x trailing 12-month sales indicates a strategic divestiture above the company's current market cap to sales ratio of 0.4x. This disparity suggests that GameSquare is able to realize value from non-core assets at a premium to its overall valuation, which could be interpreted as a positive reevaluation of the company's remaining assets and core business focus.
The refinancing of a US$5 million convertible debenture with a new US$5.8 million note at a 12.75% interest rate is a significant development. While this move provides immediate liquidity and working capital, the higher principal and interest rate could indicate a riskier credit profile or a strategic maneuver to provide future equity at a set price, if conversion occurs. The convertible note's terms, including the conversion price of US$5 per share, should be compared with the current and expected future stock price to assess the potential for dilution and the attractiveness of the conversion option to the note holders.
GameSquare's asset sale reflects a broader industry trend where companies are shedding non-core assets to concentrate on their primary lines of business. This is particularly relevant in the technology and media sectors, where companies often pivot to focus on high-growth areas. GameSquare's emphasis on marketing technology capabilities aligns with the increasing demand for digital marketing solutions, a sector that is experiencing rapid growth due to shifts in consumer behavior and the rise of online platforms.
The transaction also indicates GameSquare's strategic positioning within the competitive landscape. By divesting a non-core asset at a higher multiple than its current valuation, GameSquare may be signaling confidence in its core business's growth prospects and market position. This could have implications for the company's competitive strategy and investor perceptions of its future revenue and profitability trajectories.
SoCast's acquisition of the radio assets and its focus on integrating these into its digital product ecosystem for broadcast professionals is a move towards consolidation in the digital radio market. This could potentially increase competition for companies like GameSquare that are focusing on marketing technology, as SoCast strengthens its position in the industry.
The issuance of the new convertible note by GameSquare, which has been conditionally approved by the TSX Venture Exchange, is a key legal event for the company. The terms of the convertible note, including the interest rate, maturity and conversion features, must comply with exchange regulations and securities laws. The anti-dilution provisions are standard protective measures for investors, ensuring their investment is not unduly diluted by future equity issuances at a lower price.
Legal compliance with the terms of the convertible note is essential for maintaining investor confidence and avoiding regulatory issues that could negatively impact the company's reputation and stock price. Moreover, the legal structuring of such financial instruments can have significant implications for both current and future shareholders, particularly in terms of how conversion rights are exercised and the potential impact on share price and ownership structure.
Sale Adds Non-Dilutive Capital and Supports GameSquare's Focus on Marketing Technology Capabilities
GameSquare Refinances Convertible Debenture
FRISCO, TX / ACCESSWIRE / January 2, 2024 / GameSquare Holdings, Inc. ("GameSquare") (NASDAQ:GAME)(TSXV:GAME), announces that it has completed the sale of its Frankly non-core radio business assets to SoCast, Inc. ("SoCast"). As a result of the US
"After completing four acquisitions in under three years, we believe there are opportunities to streamline our operations, enhance our cost structure and add non-dilutive capital to support our business by unlocking the value of certain non-core assets such as the radio assets of Frankly," noted Justin Kenna, CEO of GameSquare. "In addition, selling just the radio assets of Frankly at approximately 1.8x trailing 12-month sales, compared to GameSquare's current market cap of approximately 0.4x trailing 12-month sales, supports our strategies to unlock and drive value for our shareholders."
Convertible Debenture Refinancing
GameSquare has retired a principal amount US
Mr. Kenna continued, "I am also pleased to announce the successful refinancing of our convertible debt. As a result of today's announcements, we have further strengthened our balance sheet and working capital position, providing us with greater flexibility to invest in our growth initiatives."
The asset acquisition adds thousands of broadcast professional users to SoCast, and oncoming clients will benefit from the ecosystem of radio specific digital products that SoCast has to offer within one dashboard. "SoCast is dedicated to helping radio broadcasters transform into digital businesses. This acquisition increases the impact of our R&D footprint in the industry and bolsters our vision to be the leader in the space," said Elliott Hurst, CEO.
About GameSquare Holdings, Inc.
GameSquare Holdings, Inc. (NASDAQ: GAME | TSXV: GAME) is a vertically integrated, digital media, entertainment and technology company that connects global brands with gaming and youth culture audiences. GameSquare's end-to-end platform includes GCN, a digital media company focused on gaming and esports audiences, Cut+Sew (Zoned), a gaming and lifestyle marketing agency, Code Red Esports Ltd., a UK based esports talent agency, Complexity Gaming, a leading esports organization, Fourth Frame Studios, a creative production studio, Mission Supply, a merchandise and consumer products business, Frankly Media, a provider of programmatic advertising and media distribution applications, Stream Hatchet, a provider of live streaming analytics services, and Sideqik a social influencer marketing platform. For more information visit www.gamesquare.com.
About SoCast, Inc.
SoCast Inc. is a Toronto-based privately owned Canadian based digital marketing and technology company that makes digital easy for broadcasters. SoCast will now power more than 2,500 radio brands across the globe with more than 250 million people visiting a SoCast website each year. Combining a digital first mentality with radio industry knowledge, SoCast Engage provides ground-breaking websites, apps, contests, and content tools and services that clients rely upon to do their daily jobs. The SoCast Reach platform integrates sales, billing and finance into one programmatic advertising dashboard that helps broadcasters transform into digital businesses. For more information visit www.socastdigital.com.
Forward-Looking Information
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian and United States securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to the closing of the proposed transaction, the Company's future performance and revenue; the Company's ability to execute its business plan; and the proposed use of net proceeds of the transaction. These forward-looking statements are provided only to provide information currently available to us and are not intended to serve as and must not be relied on by any investor as, a guarantee, assurance or definitive statement of fact or probability. Forward-looking statements are necessarily based upon a number of estimates and assumptions which include, but are not limited to: the Company being able to grow its business and being able to execute on its business plan, the Company being able to complete and successfully integrate acquisitions, the Company being able to recognize and capitalize on opportunities and the Company continuing to attract qualified personnel to supports its development requirements. These assumptions, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: the Company's ability to achieve its objectives, the Company successfully executing its growth strategy, the ability of the Company to obtain future financings or complete offerings on acceptable terms, failure to leverage the Company's portfolio across entertainment and media platforms, dependence on the Company's key personnel and general business, economic, competitive, political and social uncertainties including impact of the COVID-19 pandemic and any variants. These risk factors are not intended to represent a complete list of the factors that could affect the Company which are discussed in the Company's most recent MD&A. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. GameSquare assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Corporate Contact
Lou Schwartz, President
Phone: (216) 464-6400
Email: ir@gamesquare.com
Investor Relations
Andrew Berger
Phone: (216) 464-6400
Email: ir@gamesquare.com
Media Relations
Chelsey Northern / The Untold
Phone: (254) 855-4028
Email: pr@gamesquare.com
SOURCE: GameSquare Holdings, Inc.
View the original press release on accesswire.com
FAQ
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