FRISCO, TX - GameSquare Holdings, Inc. (NASDAQ:GAME), a media and technology company focused on gaming and esports audiences, has entered into a financing agreement for a $20 million pre-paid advance (PPA) with an investment fund managed by Yorkville Advisors Global L.P.
The announcement made today comes after the company's recent sale of non-core assets, which generated over $36 million in non-dilutive capital.
The PPA arrangement allows GameSquare to repay a $5.7 million balance on its senior secured convertible note with King Street Partners LLC. According to GameSquare's CEO, Justin Kenna, this move is part of a seven-month effort to strengthen the company's balance sheet and provide support for its growth strategies in response to increasing demand trends in global markets.
Under the PPA terms, Yorkville has provided an initial advance of $6.5 million as a convertible debenture, to be purchased at 93% of its face value, bearing 0% interest. The debenture has a fixed conversion price of $1.375, with Yorkville having limited rights to convert based on trading volume and price conditions.
Further advances beyond the initial $6.5 million are subject to GameSquare's discretion, and Yorkville has agreed not to short GameSquare's stock during the term of the PPA.
The transaction was facilitated by Northland Capital Markets, which acted as the sole placement agent. The securities offering is subject to the effectiveness of the company's registration statement on Form S-1 and related prospectus, which are to be filed with the SEC.
GameSquare's mission is to connect brands with hard-to-reach audiences, leveraging its platform to deliver marketing and creative services, data and analytics solutions, and exposure through FaZe Clan, a prominent gaming organization. The company's major investors include Dallas Cowboys owner Jerry Jones and the Goff family.
The information provided is based on a press release statement from GameSquare Holdings, Inc.
In other recent news, GameSquare Holdings has been making significant strategic financial decisions that have caught the attention of analysts and investors. Roth/MKM has maintained its Buy rating on GameSquare, citing the company's financial acumen and potential for growth, particularly demonstrated in the acquisition of FaZe Clan and divestiture of Complexity.
Notably, GameSquare's acquisition of FaZe Clan and subsequent partial sale of a stake in FaZe Media to Matt Kalish, a figure well-known in the industry, has resulted in a valuation significantly higher than the initial investment in FaZe Clan.
GameSquare has also been focusing on profitability through strategic acquisitions and sales. The company reported a Q1 revenue of $23.5 million and an improved adjusted EBITDA of $6.4 million during their 2024 First Quarter Conference Call.
CEO Justin Kenna expressed optimism about the company's direction, aiming to achieve over $100 million in annual revenue and expecting profitability in the coming quarters.
These recent developments reflect GameSquare's commitment to leveraging esports and media assets for revenue growth. The company's strategic financial management and recent transactions underscore a clear focus on value generation for shareholders.
With an ambitious target to remove $18 million in cost synergies by the second and third quarters of 2024, GameSquare continues to execute its strategy to become a profitable next-generation media business.
InvestingPro Insights
In light of GameSquare Holdings, Inc.'s recent financial maneuvers, a closer look at the company's performance metrics and analyst insights from InvestingPro may offer valuable context for investors. The company's market capitalization currently stands at $37.68 million, reflecting its position in the market. Despite a substantial revenue growth of 159.12% over the last twelve months as of Q1 2024, GameSquare is grappling with significant challenges. Analysts have flagged concerns about the company's profitability, noting that GameSquare has not been profitable over the past year and do not expect it to be profitable this year either.
InvestingPro Tips reveal that while analysts anticipate sales growth in the current year, GameSquare is quickly burning through cash, which is a critical factor for investors to consider given the company's recent financing agreement. Moreover, the company's short-term obligations exceed its liquid assets, which could pose liquidity risks. On the valuation front, the price has fallen significantly over the past year, with a one-year price total return of -67.53%, indicating a period of bearish investor sentiment.
For investors seeking a deeper dive into GameSquare's financial health and future prospects, InvestingPro offers additional insights. There are currently 10 more InvestingPro Tips available, which can provide a more comprehensive understanding of the company's financial situation and market performance. Interested readers can explore these tips and more by visiting https://www.investing.com/pro/GAME and can take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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