Not for distribution to United States newswire services of for dissemination in the United States.
J55 CAPITAL CORP.
Suite 830, 1100 Melville Street
Vancouver, BC V6E 4A6
VANCOUVER, British Columbia, June 20, 2019 (GLOBE NEWSWIRE) -- J55 Capital Corp. (“J55” or the “Company”) (TSX-V: FIVE.P) is pleased to announce that its qualifying transaction target, Aquilini GameCo Inc. (“GameCo”), has closed its bought deal private placement (the “Offering”) of unsecured convertible debentures (“Debentures”) in the principal amount of $10,000,000. Canaccord Genuity Corp. acted as the lead underwriter together with a syndicate of underwriters consisting of Haywood Securities Inc., Cormark Securities Inc. and PI Financial Corp. (collectively the “Underwriters”) for the Offering pursuant to an underwriting agreement dated June 19, 2019 among the Company, GameCo, and the Underwriters. The Offering was previously announced in the Company’s news release dated May 31, 2019 in connection the announcement of the Arrangement (as defined herein).
The Debentures will mature on the date (the “Maturity Date”) that is the earlier of: (i) June 30, 2020, and (ii) the closing date of the plan of arrangement among Enthusiast Gaming Holdings Inc. (“Enthusiast Gaming”), J55 and GameCo to be completed pursuant to the arrangement agreement dated May 30, 2019 pursuant to which J55 has agreed to acquire all of the outstanding common shares of Enthusiast Gaming in exchange for common shares of J55 on the basis of 4.22 J55 common shares for each one Enthusiast common share (collectively, the “Arrangement”). Prior to the completion of the RTO Transaction (as defined herein) and the Arrangement, J55 shall complete a 1.25:1 share consolidation.
Under the terms and conditions of an amalgamation agreement among J55, 11305751 Canada Inc. (“J55 Subco”), and GameCo dated May 30, 2019 as amended June 19, 2010 (collectively, the “Amalgamation Agreement”), any Debentures that remain outstanding immediately prior to the completion of the three cornered amalgamation of J55, GameCo and J55 Subco as more particularly described in the Amalgamation Agreement (the “RTO Transaction”) shall be exchanged on a 1:1 basis for convertible debentures of the Company. The resulting convertible debentures of J55 will be convertible into common shares of J55 on the same terms as the Debentures.
In the event that the Escrow Release Conditions (as defined in the subscription receipt agreement between GameCo, Computershare Trust Company of Canada, and Canaccord Genuity Corp. dated March 20, 2019, and summarized in the Company’s news release dated March 20, 2019 pursuant to which GameCo sold subscription receipts at an effective offering price of $0.30 per GameCo common share) are met prior to the Maturity Date, each Debenture will become convertible into common shares of GameCo or J55, as applicable, at a conversion price of $0.45 at the option of the holder. Any Debentures that remain outstanding immediately prior to the closing of the Arrangement will automatically convert into common shares of J55 upon closing of Arrangement. If the Debentures have not automatically converted to J55 common shares by the Maturity Date, then the principal will be repayable on the Maturity Date as well as interest on the basis of 8.0% per annum accruing from the date of issuance of the Debentures.
The net proceeds from the Offering will be used by GameCo to extend a $10,000,000 bridge loan (the “Bridge Loan”) to Enthusiast Gaming. All principal and unpaid interest under the Bridge Loan will be due and payable by Enthusiast Gaming to GameCo on the earlier of (a) June 30, 2020, and (b) the closing of a change of control transaction (which includes the closing of the Arrangement).
The completion of the RTO Transaction and Arrangement remain subject to the closing conditions set out in the Amalgamation Agreement and Arrangement Agreement, respectively, including approval of the TSXV Venture Exchange and the approval of the requisite majority of the shareholders of J55 and Enthusiast, as applicable.
ON BEHALF OF THE BOARD
“John Veltheer”
____________________________
John Veltheer
Chief Financial Officer, Secretary and
Director
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s completion of the Amalgamation, the Arrangement, and related transactions. Forward looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future, including but not limited to the conversion of the debentures and the use of the proceeds of the Offering. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of the Company. The risks include the following: conditions not being satisfied for the Arrangement or Amalgamation closing; and other risks that are customary to transactions of this nature. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them.
This press release does not constitute an offer to sell or solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to a U.S. Person unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information, please contact:
John Veltheer
Telephone: 604-562-6915
Email: john@veltheer.com