FansUnite Entertainment, which recently acquired American Affiliate, has secured a senior term loan of up to C$12.35m from Centurion Financial Trust.
The purposes of the loan are for restructuring of earn-out obligations owed to a number of individuals under the definitive agreement dated 22 November 2021. The group said it will initially draw on C$8,233,000.
FansUnite agreed a deal to pay $58.2m (£43.5m/€51.8m) to acquire the American Affiliate (AmAff) business in November 2021, which it said would help strengthen its position in the US online betting market and serve as the cornerstone of a wider US affiliate strategy.
Discussing the new loan, Scott Burton, chief executive of FansUnite, said: "With current market conditions and share price, we made it a priority to restructure the earn-out terms of the American Affiliate acquisition as it was in the best interest of all parties and our shareholders.
"We secured senior debt with a great partner to allow us to significantly reduce the contingent liability associated with the acquisition, resulting in substantially less future dilution for our shareholders."
"As part of the restructure, we will keep more cash in the company moving forward. We also maintain a strong balance sheet and will not need to raise equity capital at this time. We continue to be ahead of internal revenue projections and are excited for the NFL season and American sports to restart as these sports correlate with our largest revenue months. Further, the Company has already cut approximately C$1.5M in expenses on an annual basis as the company focuses on the cash generating assets of the business."
Pursuant to the restructuring, the payments will constitute of US$4,775,000 (C$6,303,000) upfront (cash and loan forgiveness) and US$550,000 (C$726,000) contingent on certain future events, resulting in an estimated reduction in contingent liabilities of the group of over C$43.0m.
FansUnite and AmAff have also entered into a definitive agreement that constitutes a secured non-convertible debenture with Centurion Financial Trust, as lender agent and nominee for the lenders party thereto from time to time, and Centurion Financial Trust and certain other arms' length lenders. The debenture secures the commitment of up to C$12.35m for AmAff, and is secured by certain assets of AmAff, the company and other guarantors, being certain subsidiaries of the company.