TIDMGFIN
RNS Number : 6404R
Gfinity PLC
25 September 2017
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ("MAR"). With the publication of this announcement,
this information is now considered to be in the public domain.
25 September 2017
Gfinity plc
("Gfinity" or the "Company")
Proposed placing to raise GBP7.0m
Posting of Circular and Notice of General Meeting
Gfinity plc (AIM: GFIN), a leading esports business, announces a
conditional placing and subscription of 25,925,926 new ordinary
shares in the Company ("Placing Shares") at a price of 27p per
Placing Share (the "Placing") to raise GBP7.0m (before expenses),
subject to shareholder approval at a general meeting.
The Placing is being undertaken to support the next phase of
development of Gfinity's pioneering Elite Series competition, to
accelerate international expansion and to further invest in the
Company's leading esports technology platform.
Further information on the Company, current trading and its
strategy is set out further below in the extracts from the
shareholder Circular.
Placing Highlights:
-- Oversubscribed placing to raise GBP7 million before expenses.
-- Placing to take place at price of 27p per share, representing
a discount of only 2.2% to the closing mid-market share price on 22
September 2017 of 27.62p.
-- Placing subject to Shareholder approval at a General Meeting
of the Company on 11(th) October 2017. If approved, the Placing
Shares will be admitted to AIM on 12 October 2017.
-- Placing Shares will represent 11.9% of a total enlarged share
capital following completion of 218,203,545 ordinary shares.
-- Placing supported by existing major shareholders including
Charles Street International Holdings Ltd, Nigel Wray.
Neville Upton, Chief Executive Officer at Gfinity Plc said:
"Gfinity has made significant progress in the last 6 months,
with highlights including: the successful launch of Elite Series in
UK, announcement of a partnership with HT&E Ltd to launch
Gfinity Esports Australia, our acquisition of CEVO, Inc in United
States and a number of events delivered all round the globe for
several prestigious clients including major game publishers and
Formula One. Following on from these achievements, I am delighted
to be able to announce this conditional placing, the funding from
which will enable us to sustain our momentum to becoming a global
leader in esports."
Notice of General Meeting and Shareholder Circular
The Placing is conditional, inter alia, on the approval of
shareholders of resolutions to be proposed at a general meeting of
the Company to provide authority to the Directors to allot further
new ordinary shares otherwise than on a non-pre-emptive basis.
A General Meeting of the Company will be held at the offices of
Fladgate LLP, 16 Great Queen Street, London, WC2B 5DG at 10.00am on
11 October 2017, to seek shareholder approval. A Circular
containing Notice of General Meeting is being posted to
shareholders today and will be available on the Company's website:
www.gfinityplc.com.
Further information
The above summary should be read in conjunction with the full
text of this announcement and the Circular, extracts from which are
set out below.
Defined terms used in this announcement have the meaning as set
out at the end of this announcement and as in the circular.
Enquiries:
Gfinity plc www.gfinityplc.com
Neville Upton, Chief Executive Via Walbrook PR
Officer
Allenby Capital Limited Tel. +44 (0)20 3328 5656
(Nominated Adviser & Broker)
Jeremy Porter / John Depasquale
/ James Thomas
Walbrook PR (PR advisers) Tel: +44 (0)20 7933 8780
or gfinity@walbrookpr.com
Paul McManus / Paul Cornelius Mob: 07980 541 893 / 07866
/ Sam Allen 384 707 / 07884 664 686
Extracts from the Circular
(References to pages or paragraphs below refer to the relevant
pages or paragraphs of the circular. References to 'this document'
refer to the circular)
Proposed Placing and Notice of General Meeting
1. Introduction
The Company announced today that it proposes to raise
approximately GBP7 million (before expenses) by way of a placing
and Subscription of 25,925,926 Placing Shares at 27 pence per
Placing Share with existing and new investors. The purpose of this
letter is to explain to Shareholders the background to and reasons
for the Placing and, as the allotment and issue of the Placing
Shares will exceed the existing authorities which the Directors
have to allot new Ordinary Shares for cash on a non-pre-emptive
basis, to seek Shareholders' approval to grant new authorities to
enable the Directors to complete the Placing.
Accordingly, the Company is seeking the approval of Shareholders
to the Resolutions which are to be put to the General Meeting of
the Company to be held at the offices of Fladgate LLP at 16 Great
Queen Street, London, WC2B 5DG at 10.00 a.m. on 11 October 2017. If
Shareholder approval of these resolutions is not given at the
General Meeting, the Placing as currently envisaged will not
proceed. The Notice of General Meeting is set out at the end of
this Circular and a Form of Proxy is also enclosed for you to
complete. This letter includes an explanation of the
Resolutions.
The Placing Shares to be issued pursuant to the Placing are to
be admitted to trading on AIM, which is expected to take place at
8.00 a.m. on 12 October 2017, should the Resolutions be passed at
the General Meeting.
2. Background to and reasons for the Placing
Esports Market
The esports market has continued to develop rapidly over the
past year, with the total worldwide audience for esports content
expected to reach 385 million people during 2017, representing
growth of 20% year on year. This growth is driven by a seminal
shift in the way in which younger people socialise and directly
engage in entertainment media, with video games now central to many
aspects of their lives.
Commercial activity within the sector has also accelerated in
2017, with significant transactions becoming more commonplace,
including sponsorship deals from major global brands, broadcast
rights fees and investment into leading teams. This has led to
revenue growth for the esports sector of 41% year on year and it is
now estimated that the sector market will reach revenues of $1.5bn
by 2020.
For many the principal attraction of the sector is the access to
a prized demographic of engaged and affluent male millennials, who
are not engaging with television or traditional sports in the same
way as previous generations. For sponsors and broadcasters looking
to engage with this group, esports is increasingly seen as the
optimum route.
About Gfinity
Gfinity is one of the world's leading esports companies and the
only listed company among the established global esports providers.
The Company has a strong reputation in the market, built on the
experience and expertise of its staff and the quality of its
underlying technology.
The business operates out of Fulham, West London, the home to
the Gfinity Esports Arena, the first venue of its type in
Europe.
The Company has two principal parts to its business:
-- Owned content: Gfinity owned and branded events, including
the recently launched Elite Series, creating large volumes of high
quality Gfinity owned content, which the Company is able to
monetise through broadcast distribution, sponsorship, franchising
and a number of ancillary revenue streams
-- Partner events: Events delivered for third parties,
leveraging Gfinity's expertise, technology and broadcast capability
to create esports competitions and content for organisations
including games publishers and major sports brands, wishing to
access the prized millennial audience that engage with esports.
These events drive direct revenues through delivery fees, but also
build the profile, reach and database of the Company, while
simultaneously building strategic relationships within the
sector.
For its financial year ended 30 June 2017, the Company currently
expects to announce revenue of approximately GBP2.3 million, with
cash at bank as at 30 June 2017 of GBP4.5 million.
Gfinity Owned Content
In July 2017, Gfinity launched the first professional season of
the Gfinity Elite Series. The series represents a pioneering new
structure for esports in the UK, providing a pathway for aspiring
amateur gamers from the online Challenger Series to one of 8
professional franchises by way of the Elite Draft process. At the
professional end of the pyramid, these franchises compete on a week
in week out basis as part of a professional league, meaning for the
first time, esports fans in the UK will have a regular esports
programme, featuring the same teams and players playing at the same
time each week, building stories and providing a vehicle for
sustained engagement for sponsors and broadcasters.
During the first nine-week season of the Elite Series, Gfinity
has already succeeded in:
-- Signing agreements with four major broadcasters: BBC, BT
Sport, Eleven Sport and Twitch.tv, to showcase the content,
reaching cumulative viewership over the nine-week season in excess
of three million.
-- Drafting 48 previously amateur gamers into the professional
teams via the unique Elite Draft process
-- Signing the first league sponsorship deal with HP Omen
-- Creating 186 hours of high quality live broadcast content
-- Delivering over 200 million social media impressions
-- Signing its first deal to license the format and technology
overseas, with HT&E Ltd in Australia
The unique structure of this series gives Gfinity a commercial
interest at each stage of the value chain:
-- Teams: Creating a platform for teams to grow, driving revenue
via franchise fees and retaining an economic interest in the value
of some of the leading teams
-- Players: Creating a pathway to professional ranks for
aspiring pros, retaining a commercial interest in players
success
-- Broadcast: High volume of quality content distributed via a
network of TV and streaming partners
-- Sponsorship: High viewership from an attractive demographic,
allowing sponsor revenues from event partners and in-stream
advertising
-- Advertising: Ability to insert adverts into live streams and
highlights clips, sold directly or via broadcast partners
-- Data: Ownership of in game data, creating opportunities within betting and fantasy markets
Through the successful launch of the Elite Series in the UK,
Gfinity has established a format, brand and underlying technology
that can be licensed to countries around the world.
Partner Events
Over the course of 2017, Gfinity has continued to build on its
position of being a leading provider of esports services to major
games publishers delivering events at locations across the globe
including London, New York, Mexico City, Paris, China and the Le
Mans 24-hour race for publishers including Microsoft Xbox and
Activision.
In August 2017, Gfinity was appointed as the global esports
partner to Formula 1 for the creation of their inaugural esports
programme. The Directors believe that the same desire that Formula
1 has to engage with this young male audience is also shared by a
number of other major sports rights holders around the world. The
Directors therefore expect other major sports organisations to look
to establish similar programmes over the next 12 months, creating a
significant opportunity for Gfinity.
Acquisition of CEVO
In July 2017, the Company announced the acquisition of the
entire issued share capital of CEVO, Inc, an American based,
industry renowned, global provider of technology and services to
the esports market.
In acquiring CEVO, Gfinity will be supplementing its existing
technology and management team with some of the most experienced
operators in the esports industry, leaving the Company well
positioned to take advantage of the growing number and scale of
esports opportunities. The Directors of Gfinity believe they will
be able to build out and enhance the Company's core products
through the integration of CEVO's key technology. The Directors
believe that Gfinity's core product suite, now combined with CEVO's
technology, represents one of the market leading suites of esports
technology.
Recruitment of Executive Team
In line with its growth strategy, the Company has recruited
several highly experienced personnel including:
-- Mark Brittain (Chief Commerical Officer). Mark joined from
SYCO Entertainment where he was Global Head of Commercial
overseeing all commercial and revenue generating activity for its
core brands, formats and represented talent.
-- Bryan Healy (Chief Strategy Officer). Previously Head of
Commerce and Strategic Partnerships at UFC
-- Amanda Lawson (Global Head of Production). Previously
Executive Producer at UFC and prior to that Head of Production
Operations at BBC Sport.
-- Taz Rose (Chief Operating Officer). Formerly Operations Director at Brandpath
These appointments have helped to cement Gfinity's position as a
leader in esports tournament design and production, while leaving
the company well positioned to be able to commercialise the
opportunity that provides.
Reasons for the Placing:
Given the success of the Gfinity Elite Series Season 1, the
Company intends to repeat the Elite Series format with another two
series and extend the Elite Series brand to multiple overseas
territories. In each new territory, the Company intends to invest
in building a large audience and a network of commercial and
broadcast rights, together with a network of interests in the
commercial rights of teams and players and an audience engaging
regularly with Gfinity content. The purpose of the Placing is to
fund this development.
3. Use of Placing proceeds
The net proceeds of the Placing will be approximately GBP6.8
million and are expected to be applied as follows:
l GBP2.1 million - delivering the next two seasons of Elite
Series UK, seeking to further establish it as a leading competition
in UK esports and develop it to a point where substantial revenues
may be generated from a combination of sponsorship, broadcast
rights and franchise fees;
l GBP0.9 million - establishment of the Elite Series in
Australia and roll out into one further country to prove the
international franchise / licence model
l GBP0.5 million - merging the technology platforms of Gfinity
and CEVO to create a market leading tournament engine for esports;
and
l GBP3.3 million - supporting working capital requirements of
the business for the next 12 months.
4. Details of the Placing and Admission
The Company is planning to raise GBP7 million (before expenses)
by way of the Subscription and a conditional placing, conducted by
Allenby Capital, of the Placing Shares at 27 pence per Placing
Share with institutional and other investors.
The Placing is conditional, inter alia, upon:
a) the passing of the Resolutions;
b) the Placing Agreement (as described in more detail below)
becoming unconditional in all respects and not having been
terminated in accordance with its terms; and
c) admission of the Placing Shares to trading on AIM becoming
effective by not later than 8.00 a.m. on 12 October 2017 (or such
later time and/or date (not being later than 31 October 2017) as
Allenby Capital and the Company may agree).
Accordingly, if such conditions are not satisfied, or, if
applicable, waived, the Placing will not proceed.
The Placing will result in the issue of a total of 25,925,926
Placing Shares, representing, in aggregate, approximately 11.9 per
cent. of the Enlarged Share Capital. The Placing Shares, when
issued and fully paid, will rank pari passu in all respects with
the Existing Ordinary Shares and therefore will rank equally for
all dividends or other distributions declared, made or paid after
the date of issue of the Placing Shares.
Application will be made to London Stock Exchange for the
Placing Shares to be admitted to trading on AIM and such admission
is expected to occur on 12 October 2017. It is expected that CREST
accounts will be credited on the day of Admission as regards the
Placing Shares in uncertificated form and that certificates for
Placing Shares to be issued in certificated form will be dispatched
by first class post by 15 October 2017.
5. The Placing Agreement
Pursuant to the terms of the Placing Agreement, Allenby Capital,
as agent for the Company, has agreed conditionally to use its
reasonable endeavours to procure placees for Placing Shares (other
than Placing Shares issued pursuant to the Subscription) at the
Issue Price. The Placing is not underwritten.
The obligations of Allenby Capital under the Placing Agreement
are conditional, among other things, upon: (i) the passing of
Resolutions; and (ii) Admission becoming effective by not later
than 8.00 a.m. on 12 October 2017 (or such later time and/or date
as Allenby Capital and the Company may agree, not being later than
31 October 2017).
The Placing Agreement contains certain warranties and
indemnities given by the Company in favour of Allenby Capital as to
certain matters relating to the Company and its business. The
obligations of Allenby Capital under the Placing Agreement may be
terminated in certain circumstances if there occurs either a
material breach of any of the warranties or if a materially adverse
event occurs at any time prior to Admission. Such rights exist in
the event that such circumstances arise prior to Admission. If the
conditions in the Placing Agreement are not fulfilled on or before
the relevant date in the Placing Agreement then the subscription
monies will be returned to Placees without interest.
The Placing Agreement also provides for the Company to pay
Allenby Capital commissions and certain other costs and expenses
incidental to the Placing and Admission.
6. Substantial Shareholders
Based upon shareholdings as at 22 September 2017 and assuming
completion of the Placing, the following persons will be interested
in 3 per cent. or more of the Enlarged Share Capital on
Admission:
Name Existing Percentage Ordinary Percentage
Ordinary of Existing Shares of Enlarged
Shares Ordinary on Share
currently Shares Admission Capital
held
Charles Street International
Holdings Limited 56,575,000 29.42% 63,186,111 28.96%
Nigel Wray 26,278,749 13.67% 29,291,211 13.42%
Neville Upton 14,710,579 7.65% 14,710,579 6.74%
Mike McTighe 6,006,250 3.11% 6,694,634 3.07%
Alden AS 5,000,000 2.60% 8,148,148 3.73%
7. Related Party Transactions
Two existing shareholders of the Company, Charles Street
International Holdings Limited and Euroblue Investments Limited
("Substantial Shareholders"), are subscribing for 6,611,111 and
3,012,462 Placing Shares respectively. As the Substantial
Shareholders currently hold more than 10 per cent. of the Existing
Ordinary Shares, the subscriptions by them of Placing Shares are
deemed to be related party transactions pursuant to rule 13 of the
AIM Rules. Accordingly, the Directors consider, having consulted
with the Company's nominated adviser, Allenby Capital, that the
terms of subscription to Placing Shares by the Substantial
Shareholders are fair and reasonable insofar as Shareholders are
concerned.
8. General Meeting
A notice convening a General Meeting of the Company, to be held
at the offices of Fladgate LLP at 16 Great Queen Street, London,
WC2B 5DG at 10.00 a.m. on 11 October 2017 is set out at the end of
this Circular. At the General Meeting, the following Resolutions
will be proposed:
1. an ordinary resolution to grant authority to the Directors to
allot Ordinary Shares up to an aggregate nominal amount of
GBP72,007.17 to permit the allotment of the Placing Shares pursuant
to the Placing plus a further number of Ordinary Shares equivalent
to approximately one third of the Enlarged Share Capital (there
being no current intention to use this additional authority);
and
2. a special resolution to dis-apply statutory pre-emption
rights in respect of the allotment for cash of up to 47,745,000
Ordinary Shares comprising the Placing Shares and up to a further
21,819,074 Ordinary Shares equivalent to approximately 10 per cent
of the Enlarged Share Capital (there being no current intention to
use this additional authority).
Resolution 1 will be proposed as an ordinary resolution and
Resolution 2 as a special resolution.
DEFINITIONS
"Admission" the admission to trading on AIM of the Placing
Shares, which is
expected to take place on 12 October 2017
"AIM Rules" the AIM rules for Companies, as published and
amended from
time to time by the London Stock Exchange
"Allenby Capital" Allenby Capital Limited, the Company's
nominated adviser and
broker pursuant to the AIM Rules
"Articles" the existing articles of association of the Company
as at the
date of this Circular
"Business Day" any day (other than a Saturday or Sunday) upon
which
commercial banks are open for business in London, UK
"Capita" or "Capita Asset Services" a trading name of Capita Registrars Limited
"Circular" this document
"Company" or "Gfinity" Gfinity Plc
"CREST" the relevant system for the paperless settlement of
trades and the holding of uncertificated securities operated by
Euroclear UK and Ireland in accordance with the CREST
Regulations
"CREST member" a person who has been admitted by Euroclear UK
and Ireland as a system-member (as defined in the CREST
Regulations)
"Directors" or "Board" the directors of the Company
"Enlarged Share Capital" the issued ordinary share capital of
the Company
immediately following Admission
"Euroclear UK & Ireland" Euroclear UK & Ireland Limited,
the operator of CREST
"Existing Ordinary Shares" the existing Ordinary Shares as at
the date of this Circular
"Form of Proxy" the form of proxy accompanying this Circular
"FCA" the Financial Conduct Authority of the United Kingdom
"FSMA" the Financial Services and Markets Act 2000 (as
amended)
"General Meeting" or "GM" the general meeting of Shareholders to
be held at the offices of Fladgate LLP at 16 Great Queen Street,
London, WC2B 5DG at 10.00 a.m. on 11 October 2017
"ISIN" International Securities Identification Number
"Issue Price" 27 pence per Placing Share
"London Stock Exchange" London Stock Exchange plc
"Member Account ID" the identification code or number attached
to any member
account in CREST
"Notice of General Meeting" the notice of General Meeting set
out at the end of this Circular
"On-line Views" the number of connections to a Gfinity streamed
event
"Ordinary Shares" the ordinary shares of 0.1p each in the
capital of the Company
"Overseas Shareholder" a Shareholder who is resident in, or who
is a citizen of, or who has a registered address in a jurisdiction
outside the United Kingdom
"Placees" the persons who have conditionally agreed
to subscribe for the Placing Shares
"Placing" the Subscription and placing of the Placing Shares at
the Issue Price as described in this Circular
"Placing Agreement" the conditional agreement dated 22 September
2017 between the Company (1) and Allenby Capital (2) relating to
the Placing but excluding the Subscription
"Placing Shares" the 25,925,926 new Ordinary Shares which have
been conditionally placed with institutional and other investors
pursuant to the Placing and Subscription
"Registrars" Capita Asset Services
"Resolutions" the resolutions numbered 1 and 2 to be
proposed at the General Meeting
"Restricted Jurisdiction" each and any of the United States of
America, Australia, Canada, Japan, New Zealand, Russia, and the
Republic of South Africa and any other jurisdiction where extension
or availability of the Placing would breach any applicable law or
regulations
"Shareholder(s)" holder(s) of Existing Ordinary Shares
"sterling", "pounds sterling", the lawful currency of the United
Kingdom "GBP", "pence" or "p"
"Subscription" the direct subscription by certain Shareholders
with the Company for certain of the Placing Shares
"US$" or "US dollar" the lawful currency of the United States of
America
"US Person" a US person as defined in Regulation S
promulgated under the US Securities Act
"US Securities Act" the United States Securities Act of 1933 (as
amended)
Market Abuse Regulation
The Market Abuse Regulation (MAR) became effective from 3 July
2016. Market soundings, as defined in MAR, were taken in respect of
the Placing with the result that certain persons became aware of
inside information, as permitted by MAR. That inside information is
set out in this announcement and in the Circular and has been
disclosed as soon as possible in accordance with paragraph 7 of
article 17 of MAR. Therefore, those persons that received inside
information in a market sounding are no longer in possession of
inside information relating to the Company and its securities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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