Esports Entertainment creditor still to decide after default 

The operator of Bethard defaulted on some convertible notes in May.

Malta.- Esports Entertainment Group has revealed that a major noteholder has yet to choose to pursue redemption in cash of notes that the group defaulted on earlier this year. A move by the noteholder could decide the future of the company, which bought Bethard last year and Argyll Entertainment in 2020.

Esports Entertainment struggled last year, and it announced in May that it may not be able to remain in business. It defaulted on convertible notes with a principal value of $35m issued last year and currently has just $2.6m in cash.

EEG’s agreement with the noteholder is that in the event of default, EEG could be obliged to redeem the full value of the notes in cash or shares at market value. But the noteholder may not hold more than 4.99 per cent of EEG.

The floor price set in the default is $2.18, meaning that if EEG’s share price falls below that, it must issue a make-whole payment in cash. Shares are now at $0.12, and EEG has calculated that the make-whole provision would be worth $9.4m but that a strict application of the calculation formula could lead to it paying $180m.

It said: “If the holder required us to redeem in cash any or all of the new notes, it would have a material adverse effect on our business and financial condition.”

EEG reported revenue of $58.4m for the year ending June 30, $53.1m of that from betting brands and $5.2m from esports events and arenas. However, it reported an operating loss of $89.4m and a net loss totalling $102.3m.