EGLX Enthusiast Gaming Holdings Inc

Enthusiast Gaming Holdings Inc. (TSX: EGLX) (“Enthusiast Gaming” or the “Company”), a leading gaming and media company, announced today that it has received a $20 million four-year non-revolving term loan (the “Term Loan”). The financing was arranged pursuant to a credit agreement (the “Credit Agreement”) with lenders (the “Lenders”) led by Beedie Investments Ltd. (“Beedie Capital”), which is also the administrative and collateral agent.

“This strategic investment significantly bolsters our financial position, providing $20 million of additional liquidity, which will enable us to accelerate our vision of uniting gaming enthusiasts globally and delivering exceptional value to our partners and communities,” said Adrian Montgomery, Interim CEO & Chairman of the board of directors (the “Board”) of Enthusiast Gaming. “We are delighted to partner with Beedie Capital, whose reputation and successful history of supporting high-growth companies is unmatched.”

“With the operations of the Company now effectively self-sustaining, we expect this extra capital to unlock significant growth opportunities. We appreciate the support of Beedie Capital and the Lenders, who share our confidence in the future of Enthusiast Gaming’s business model,” said Felicia DellaFortuna, CFO of Enthusiast Gaming.

“After a thorough evaluation of Enthusiast Gaming’s business model, market position, and growth potential, we are confident in their trajectory,” said David Bell, Managing Director, Beedie Capital. “Enthusiast Gaming has successfully built one of the largest and most engaged audiences in the gaming media sector. We are excited to support their continued expansion and innovation in this dynamic industry.”

Terms of the Term Loan and Warrant Issuance

The Term Loan bears interest at a fixed rate of 14.0% per annum calculated and payable monthly in arrears. Enthusiast Gaming will have the option until January 31, 2025 to pay the monthly interest in-kind (“PIK Interest”) by adding accrued interest for that month to the outstanding principal amount of the Term Loan, which PIK Interest will accrue interest compounded monthly and be added to the outstanding principal amount of the Term Loan. After January 31, 2025, interest must be paid in cash for the remainder of the loan’s term to maturity. In addition, each Lender shall be entitled, upon notice to the Company, but subject to obtaining, if applicable, stock exchange and/or shareholder approval, to elect to convert all or any portion of their respective pro-rata share of the PIK Interest into common shares of the Company (“Common Shares”) at a price equal to the Market Price (as defined in TSX policy) of the Common Shares immediately prior to conversion on the Toronto Stock Exchange (“TSX”). Enthusiast Gaming has paid Beedie Capital a commitment fee equal to 2.0% of the total amount of the Term Loan. Subject to the terms of the Credit Agreement, the Term Loan will have a term of four years from the date of the close of the Term Loan and may be prepaid, subject to certain conditions including the payment of applicable prepayment fees.

In connection with the Term Loan, Enthusiast Gaming has issued to the Lenders in aggregate 37,037,037 common share purchase warrants (“Warrants”), at an exercise price of $0.135, equal to a 15% premium to the five consecutive trading day volume-weighted average price of the Common Shares on July 11, 2024. The Warrants will not be listed on any exchange. Each Warrant is exercisable to purchase one Common Share and will expire on July 12, 2029.

While there is at least $2.5 million under the Term Loan outstanding to Beedie Capital or if Beedie Capital owns, directly or indirectly, 10% or more of the issued and outstanding Common Shares of Enthusiast Gaming on a partially-diluted basis, Beedie Capital will be entitled to have an observer attend each meeting of Enthusiast Gaming’s Board and those of certain subsidiaries. Should Beedie Capital own at least 10% of the issued and outstanding Common Shares, calculated on a non-diluted basis, it shall be entitled to nominate a representative to the Board for the period it continues to hold at least 10% of the Common Shares. Further, while there is at least $2.5 million under the Term Loan outstanding to Beedie Capital or for so long as Beedie Capital owns, directly or indirectly, 10% or more of the issued and outstanding Common Shares of Enthusiast Gaming on a partially-diluted basis, Beedie Capital will be entitled to a pre-emptive right in connection with certain future equity financings by the Company to allow it to maintain its pro-rata ownership level in the Company determined on a partially-diluted basis.

The Term Loan will be guaranteed by certain Canadian and U.S. subsidiaries of the Enthusiast Gaming and secured by a second ranking security interest over substantially all of the assets of Enthusiast Gaming and the guarantor subsidiaries.

Proceeds from the Term Loan will be used by Enthusiast Gaming for growth capital and working capital purposes.

The Term Loan will be subordinated to the Company’s existing non-revolving term facility and operating line with its senior lender (the “Senior Lender”) provided under an amended and restated commitment letter among the Company, as borrower, certain Canadian and U.S. subsidiaries of the Company, as guarantors, and the Senior Lender (the “Existing Senior Commitment Letter”). In connection with the Term Loan, the Company and its guarantor subsidiaries have entered into a second amendment of the Existing Senior Commitment Letter with the Senior Lender. In connection with the amendment, the Senior Lender also provided the Company with a waiver affirming the Company’s compliance with the terms of the Existing Senior Commitment Letter.

A copy of the Credit Agreement will be available under the Company's profile on SEDAR+ at www.sedarplus.ca.

Advisors

Canaccord Genuity Corp. acted as financial advisor and Norton Rose Fulbright Canada LLP acted as legal counsel to Enthusiast Gaming. Dentons Canada LLP acted as legal counsel to Beedie Capital.

About Enthusiast Gaming

Enthusiast Gaming Holdings Inc. (TSX: EGLX) is a leading gaming media and entertainment company, building the largest platform for video game enthusiasts and esports fans to connect and compete worldwide. Combining the elements of its five core pillars: creators, content, communities, games, and experiences, Enthusiast Gaming provides a unique opportunity for marketers to create integrated brand solutions to connect with coveted Gen Z and Millennial audiences. Through its proprietary mix of digital media, content and gaming assets, Enthusiast Gaming continues to grow its network of communities, reflecting the scale and diversity of gaming enthusiasts today.

About Beedie Capital

Beedie Capital is a multi-strategy direct investment platform that manages the alternative investments for Beedie, one of the largest private companies in Western Canada. It deploys capital using a flexible, evergreen mandate, and applies a highly agnostic approach to the duration, structure and size of its investments. Beedie Capital combines the strategic capabilities of an institutional investment platform with the flexibility and entrepreneurial mindset of a privately owned business.

Beedie Capital invests in any sector, with a core focus on Technology, Tech-enabled Services, and Metals and Mining, and seeks to grow its invested capital alongside the enterprise value of its investments. For further information on Beedie Capital, please visit www.beediecapital.com.

Contacts

Enthusiast Gaming: Felicia DellaFortuna, Chief Financial OfficerInvestors: investor@enthusiastgaming.com Media: press@enthusiastgaming.com

Forward Looking Statements

This news release contains certain statements that may constitute forward-looking information under applicable securities laws. All statements, other than those of historical fact, which address activities, events, outcomes, results, developments, performance or achievements that Enthusiast Gaming anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results “may”, “could”, “would”, “might” or “will” (or other variations of the forgoing) be taken, occur, be achieved, or come to pass. Forward-looking statements in this news release include, but are not limited to statements regarding the use of proceeds of the Term Loan, future Common Share issuances to satisfy amounts owed under the Term Loan, future approvals of the TSX, statements regarding Beedie Capital’s observer status and nomination rights with respect to the Board, certain commitments and statements regarding the Company’s obligations under the Credit Agreement, and the Company’s strategy and expectations relating to the financial performance and the financial results of future periods.

Forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, including, but not limited to, expectations and assumptions concerning: interest and foreign exchange rates; capital efficiencies, cost saving and synergies; growth and growth rates; the success in the esports and gaming media industry; the Company’s growth plan, and judgment applied in the application of the Company’s accounting policies and in the preparation of financial statements in accordance with applicable financial reporting standards; uncertainties and assumptions regarding future approvals of shareholders, the TSX or third parties. While Enthusiast Gaming considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; and future legislative, tax and regulatory developments. Readers are cautioned that the foregoing list is not exhaustive. For more information on the risks, uncertainties and assumptions that could cause anticipated opportunities and actual results to differ materially, please refer to those factors discussed in greater detail under the “Risk Factors” section in Enthusiast Gaming’s annual information form for the year ended December 31, 2023, which is available under our profile on SEDAR+ at www.sedarplus.ca. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. Enthusiast Gaming disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Neither the TSX nor its Regulation Services Provider (as that term is defined in policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.