GameSquare Further Solidifies Balance Sheet Through a $10 Million Convertible Note with Gigamoon Media, LLC

Rhea-AI Summary

GameSquare Holdings (NASDAQ:GAME) has secured a $10 million convertible note from Gigamoon Media, , controlled by Matt Kalish. The note, due December 31, 2025, can be converted into either GameSquare common stock at $2.50 per share or 5.725 million shares of FaZe Media Series A-1 Preferred Stock. The proceeds will be used to repay GameSquare's existing equity line facility with Yorkville Advisors Global and for general corporate purposes. If converted to FaZe Media shares, it would value the entity at approximately $44 million, compared to GameSquare's current market cap of $32 million.

Positive

• Secured $10 million in financing through convertible note
• Conversion price of $2.50 per share represents premium to current market value
• FaZe Media valuation implied at $44 million, above GameSquare's $32 million market cap
• Strengthened balance sheet through non-dilutive capital raising

Negative

• Potential future dilution if note converts to common stock
• Possible loss of FaZe Media preferred shares if conversion option is exercised

Insights

Financial Analyst

This $10 million convertible note transaction represents a significant strategic financing move for GameSquare. The deal's structure at a $2.50 conversion price - substantially above current market levels - signals strong confidence in the company's future prospects. The repayment of the Yorkville equity line facility is particularly positive, as it eliminates a potentially dilutive financing arrangement.

The transaction effectively values FaZe Media at $44 million, compared to GameSquare's total market cap of $32 million, suggesting potential undervaluation of the combined assets. The investment by Matt Kalish, a seasoned gaming industry figure, adds credibility to the deal. The strengthened balance sheet and non-dilutive nature of the financing provide improved operational flexibility and reduced financial risk.

GameSquare intends to use a portion of the proceeds to repay the outstanding equity line facility with Yorkville

FRISCO, TX / ACCESSWIRE / November 14, 2024 / GameSquare Holdings, Inc. (NASDAQ:GAME), ("GameSquare", or the "Company"), today announced that it has entered into a $10 million convertible note transaction (the "Note") with Gigamoon Media, LLC, an investment entity controlled by Matt Kalish.

Under the terms of the transaction, the conversion date is December 31, 2025, at which time the note, at Gigamoon Media LLC's election, will convert into either shares of GameSquare's common stock at a conversion price of $2.50 per share, or 5.725 million shares of FaZe Media Series A-1 Preferred Stock beneficially held by GameSquare. GameSquare intends to use the proceeds from the convertible note to pay down GameSquare's existing equity line facility with an investment fund managed by Yorkville Advisors Global L.P ("Yorkville"), and for general corporate purposes.

Justin Kenna, CEO of GameSquare stated, "Over the past 12 months, we have successfully pursued shareholder friendly transactions that raise non-dilutive capital and today's announcement reflects a continuation on this approach. Our ability to raise $10 million of capital at a $2.50 conversion price demonstrates the meaningful opportunities strategic investors see in the platform we have created. I am also pleased to announce that we intend to repay the existing equity line facility with Yorkville. With a strengthened balance sheet and capital position, we believe we have the financial resources in place to support the growth strategies we are pursuing and to take advantage of growing demand trends currently underway across our global markets."

Matt Kalish of Gigamoon Media LLC stated, "I continue to be impressed by the execution of Justin Kenna and the team at GameSquare, and the amazing revival of the FaZe Clan brand since the return of CEO FaZe Banks and team. The combination of GameSquare's creator platforms and operational expertise, as well as the masterful work of Banks and the FaZe team have the companies extremely well positioned for the future. I look forward to continuing my support of GameSquare, FaZe Banks, and the entire FaZe Clan team as they continue in their journey to create the world's largest and most powerful creator-led internet media company."

If Kalish elects to convert the Note into the remaining shares of FaZe Media it would value the entity at approximately $44 million, compared to GameSquare's current market cap of approximately $32 million. GameSquare still owns 100% of FaZe esports.

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 use of the convertible note proceeds, 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 accesswire.com

FAQ

What is the value of GameSquare's (GAME) new convertible note with Gigamoon Media?

GameSquare (GAME) secured a $10 million convertible note from Gigamoon Media,

What is the conversion price for GameSquare's (GAME) new convertible note?

The conversion price is $2.50 per share of GameSquare (GAME) common stock.

When does GameSquare's (GAME) convertible note with Gigamoon Media mature?

The convertible note matures on December 31, 2025.

How will GameSquare (GAME) use the proceeds from the convertible note?

GameSquare will use the proceeds to repay its existing equity line facility with Yorkville Advisors Global and for general corporate purposes.