GameSquare Extinguishes Convertible Note and Standby Equity Purchase Agreement with Yorkville Advisors Global LP

Rhea-AI Summary

GameSquare Holdings (NASDAQ:GAME) has announced the extinguishment of its convertible note and standby equity purchase agreement with Yorkville Advisors Global LP. The company has issued a zero-coupon, 60-day promissory note to Yorkville with a $780,000 prepayment penalty, which it plans to pay using existing cash reserves.

All shares previously owned by Yorkville were acquired by outside investors through block transactions on January 21, 2025. According to CEO Justin Kenna, this strategic move improves GameSquare's capital structure and eliminates potential stock overhang. The company, backed by Dallas Cowboys owner Jerry Jones and the Goff family, focuses on connecting brands with Gen Z, Gen Alpha, and Millennial audiences through gaming and creator entertainment.

Positive

• Elimination of convertible note reduces potential share dilution
• Transfer of Yorkville's shares to supportive outside investors
• Company has sufficient cash reserves to cover the $780,000 penalty

Negative

• $780,000 prepayment penalty impacts cash position
• New 60-day promissory note creates short-term debt obligation

Insights

Financial Analyst

GameSquare's strategic financial restructuring marks a pivotal shift in its capital structure. The company is effectively trading its convertible note - which could have been converted into shares and potentially diluted existing shareholders - for a straightforward $780,000 obligation through a zero-coupon promissory note. This is akin to refinancing a complex mortgage with a simpler, short-term loan.

The elimination of the convertible note and standby equity purchase agreement is particularly significant for three reasons:

• By removing the conversion feature, GameSquare eliminates the risk of future share dilution, which typically weighs negatively on stock price
• The 60-day term of the new promissory note suggests strong confidence in the company's cash position and near-term financial outlook
• The block transactions, where outside investors purchased Yorkville's shares, indicate institutional confidence in GameSquare's valuation - large block trades often occur at a premium and require substantial due diligence

While the $780,000 prepayment penalty represents a significant cost, the benefits of simplified capital structure and removed stock overhang likely outweigh this one-time expense. For retail investors, this restructuring reduces uncertainty around potential share dilution and suggests management's confidence in the company's ability to fund operations through existing cash flow rather than relying on equity-linked instruments.

FRISCO, TX / ACCESS Newswire / January 22, 2025 / GameSquare Holdings, Inc. (NASDAQ:GAME), ("GameSquare", or the "Company"), a next generation media company with roots in gaming and creator entertainment, today announced that it has extinguished its outstanding convertible note and standby equity purchase agreement with Yorkville Advisors Global L.P. ("Yorkville"). Under the strategic transaction, GameSquare has issued a zero-coupon, 60-day promissory note to Yorkville associated with a prepayment penalty of $780,000. GameSquare intends to pay off this balance using existing cash on its balance sheet. Additionally, all shares previously owned by Yorkville, were purchased by outside investors in block transactions that occurred on January 21, 2025.

Justin Kenna, CEO of GameSquare, stated, "Today's announcement marks an important milestone for GameSquare. Extinguishing Yorkville's convertible note and proactively ending the standby equity purchase agreement significantly improves our capital structure and removes a potential overhang in our stock. The outstanding shares owned by Yorkville were purchased by supportive, outside investors, which underscores GameSquare's attractive valuation and the long-term growth opportunities we are pursuing."

About GameSquare Holdings, Inc.

GameSquare's (NASDAQ:GAME) mission is to revolutionize the way brands and game publishers connect with hard-to-reach Gen Z, Gen Alpha, and Millennial audiences. Our next generation media, entertainment, and technology capabilities drive compelling outcomes for creators and maximize our brand partners' return on investment. Through our purpose-built platform, we provide award winning marketing and creative services, offer leading data and analytics solutions, and amplify awareness through FaZe Clan, one of the most prominent and influential gaming organizations in the world. With one of the largest gaming media networks in North America, as verified by Comscore, we are reshaping the landscape of digital media and immersive entertainment. GameSquare's largest investors are Dallas Cowboys owner Jerry Jones and the Goff family.

To learn more, visit www.gamesquare.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 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 Company's and FaZe Media Inc.'s future performance, revenue, growth and profitability; and the Company's and FaZe Media's ability to execute their business plans. 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's and FaZe Media's ability to grow their business and being able to execute on their business plans, 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. 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.

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 ACCESS Newswire

FAQ

What is the impact of GameSquare (GAME) extinguishing Yorkville's convertible note?

The extinguishment improves GameSquare's capital structure and removes potential stock overhang by eliminating the convertible note and standby equity purchase agreement.

How much is GameSquare's (GAME) prepayment penalty to Yorkville in January 2025?

GameSquare issued a zero-coupon, 60-day promissory note with a prepayment penalty of $780,000.

When did outside investors purchase Yorkville's GAME shares?

Outside investors purchased Yorkville's shares in block transactions on January 21, 2025.

How will GameSquare (GAME) pay the $780,000 prepayment penalty?

GameSquare plans to pay the penalty using existing cash from its balance sheet.