VANCOUVER, BC, June 29,
2022 /CNW/ - TGS Esports Inc. ("TGS" or
the "Company") (TSXV: TGS) is pleased to announce that,
further to its news releases dated February
18, 2022, March 16, 2022, and
April 19, 2022, the Company has
entered into a Securities Exchange Agreement dated June 28, 2022 (the "Agreement") with
NextPlay Technologies, Inc. (Nasdaq: NXTP) ("NextPlay"),
Don Monaco and William Kerby, pursuant to which the Company has
agreed to acquire a 51% interest in Reinhart Interactive TV AG
("Reinhart") (which is the 100% owner of Zappware) and
100% interest in NextTrip Group LLC ("NextTrip") from
NextPlay and Mssrs. Monaco and Kerby, and to complete certain
ancillary transactions (collectively,
the "Transaction"). Prior to closing of the
Transaction (the "Closing"), the Company intends to raise
gross proceeds of up to $2,000,000
through the private placement of common shares of the Company (the
"TGS Shares") at $0.20 per TGS
Share (the "Interim Financing").
About Reinhart
Interactive
Reinhart is a private Swiss limited liability company which
pursues a buy and build strategy in the digital TV space. Reinhart
owns 100% of Zappware BV, a 20-year-old Belgian interactive Digital
TV solutions company based in Hasselt, Belgium. Zappware offers video user interfaces
for all screen types as well as the back-office platforms to
deliver linear and on-demand video services to those screens.
Zappware designs, develops and deploys video solutions for service
providers. Zappware seeks to create the demand for video
services through its customer experience and fuel the business
intelligence to personalise the video service with relevant content
suggestions, upsell and loyalty triggers.
About NextTrip
NextTrip is a technology driven platform delivering innovative
solutions for business and leisure travel. NextTrip Business is an
all-in-one online corporate travel and expense management solution
with a large inventory of travel options and discounted rates.
NextTrip Journeys provides leisure travelers personalized vacation
experiences on land, sea and across the world. NextTrip Solutions
offers travel technologies that makes the jobs of alternative
lodging property managers, wholesalers, distributors, and other
travel industry players easier and more efficient. For more
information, visit nexttrip.com.
Summary of the
Transaction
The business combination of TGS, Reinhart (Zappware) and
NextTrip is expected to enhance the travel and gaming products
offered by NextTrip and TGS respectively, and leverage partnerships
by incorporating them into NextTrip's newly launched Travel
Magazine metaverse and through the development of a new platforms,
which will be distributed using Zappware's reach to millions of
viewers across TV, web, and mobile platforms. TGS already partners
with Fortune 500 brands, schools, and tournament organizers to
build out their esports community with online tournaments,
broadcast production and in-person events as well as working with
some of the largest brands in the world, including 7-Eleven,
Red Bull, HyperX, Pepsi, Shaw Cable,
Telcel and Ubisoft, to help them reach the premium demographic of
the 18 to 34-year-old esports audience.
TGS Esports CEO, Spiro Khouri,
commented, "I began working with Zappware last fall to
explore the integration of our esports gaming tournament feeds and
content into Zappware's digital media ecosystem, and was advised
that esports content had become increasingly high in demand by the
TV distributors and telecoms served by Zappware. Upon further
investigation, it was evident that NextTrip could bring a
travel booking solution in-house to power our in-person
tournaments, greatly enhancing our customer experience while
allowing us to capture additional revenue, as in-person event
activity continues to recover post-pandemic. Our attendance at
the Esports Travel Summit last week further confirmed the
incredible opportunity ahead in this space. This business
combination is a very exciting progression for stakeholders."
NextPlay co-CEO, Bill Kerby
stated, "People are searching and watching content more than ever,
especially their on-the-go devices, and that includes many hours of
gaming and esports content. As the relationship with TGS developed,
our team began to realize that we could create greater shareholder
value through the combination of Reinhart/Zappware, NextTrip and
TGS by taking advantage of the increasing synergies between
esports, streaming/over-the-top (OTT) services, and travel booking
solutions. We believe that the unique and proven ability of TGS to
connect fans and multinational brands through its esports platforms
makes them a perfect fit with our Zappware media and NextTrip
travel booking technologies."
The Transaction is an arm's length transaction. Closing of
the Transaction (the "Closing") is subject to a number of
conditions, including, without limitation, the required approvals
of the TSX Venture Exchange (the "TSXV") and the
shareholders of TGS. A copy of the Agreement will be filed on
SEDAR under the Company's profile. Trading in the TGS Shares
is expected to remain halted until Closing.
Terms of the Transaction
TGS has agreed to acquire a 51% interest in Reinhart (the
"Reinhart Interest") and a 100% interest in NextTrip (the
"NextTrip Interest", and together with the Reinhart Interest
the "Target Securities") for USD$15,860,000 (CAD$20,424,428.70) payable by the issuance of an
aggregate of 69,714,286 TGS Shares to Mr. Monaco and Mr. Kerby
(the "Management Shareholders") at a deemed issue price
of USD$0.0525 (CAD$0.068) per TGS Share and the issuance of
232,380,952 non-voting convertible preferred shares of TGS having
the special rights and restrictions described in the Agreement (the
"TGS Preferred Shares") to NextPlay on Closing. Of the
total consideration paid, USD$7,660,000 (CAD$9,864,509.70) is allocated to the purchase
of the NextTrip Interest and USD$8,200,000 (CAD$10,559,919.00) allocated to purchase of the
Reinhart Interest. Each TGS Preferred Share is convertible
into one TGS Share without the payment of additional consideration
upon: (i) the Company becoming listed on a U.S. senior exchange (a
"Qualified Listing"), or (ii) upon the mutual consent of TGS
and NextPlay. On conversion, subject to the terms of the TGS
Preferred Shares and a Right of First Refusal and Distribution
Agreement to be entered into between TGS and NextPlay at closing of
the Transaction, the TGS Preferred Shares will be converted to
common shares, and NextPlay will set a shareholder record date for
a special dividend to distribute all of NextPlay's TGS Shares
issued on conversion of the TGS Preferred Shares to the
shareholders of NextPlay. If the conversion does not occur
within four years of issuance of the TGS Preferred Shares, the
shares are either automatically converted to TGS Shares or
redeemable in cash for CAD$0.068 per share, at the option of the
holder. The creation and issuance of the TGS Preferred Shares
contain additional terms not described herein and is subject to
approval of the TSXV and the shareholders of TGS. The
directors, officers and certain shareholders of TGS have signed
voting support agreements representing TGS Shares in connection
with the entry into the Agreement, and intend to vote in favour of
the creation of the TGS Preferred Shares at a meeting of the
shareholders of TGS that is expected to be called for approval of
such matters (the "Meeting"). The Company intends to
prepare a management information circular in connection with the
Meeting which will be sent to shareholders and filed on SEDAR, and
will include additional information regarding the Transaction,
NextTrip, Reinhart, the proposed directors and officers of the
resulting issuer and additional information pertinent to the
matters to be voted on at the Meeting in the information
circular.
An aggregate of 11,619,048 TGS Shares (the "Escrowed
Shares") will be subject to a voluntary escrow agreement
on Closing, pursuant to which the shares will be released from
escrow over four years from the Closing upon delivery of a Trigger
Notice (as defined in the Agreement) for each of the following
events: (i) at the time of the conversion by NextPlay of the TGS
Preferred Shares, at the last traded price of TGS' Shares equal to
or greater than CAD$0.0782 per share,
which is equivalent to a 115% premium on the TGS Shares, or (ii) at
the time of a redemption or sale of TGS' Preferred Shares by
NextPlay, the TGS Preferred Shares are sold for a price of
CAD$14,030,000 or greater, which is
equivalent to a 115% premium to the value of the TGS Preferred
Shares (the "Voluntary Escrow"). In addition to the
Voluntary Escrow, the TGS Shares and TGS Preferred Shares issued in
consideration for the Target Securities may be subject to addition
restrictions under applicable TSXV policies and securities laws,
including such reasonable restrictions that may be imposed on such
new insiders of the resulting issuer.
As part of the Transaction, NextPlay has agreed to provide funds
to support the integration and initial working capital needs for
the NextTrip and Reinhart/Zappware combination with TGS.
NextPlay has already contributed USD$1.5 million to NextTrip, and has agreed to
fund an additional commitment of USD$1.5
million to be paid by NextPlay to NextTrip over a 10-month
period commencing July 1, 2022.
Pursuant to the Agreement, the Company has also agreed to
reconstitute its board of directors on Closing such that there will
be a total of 7 directors comprised of 5 nominees of Messrs. Kerby
and Monaco and 2 nominees of Mr. Khouri (the "Board
Re-Constitution"). Messrs. Kerby and Monaco, both
nominees of NextPlay, and Mr. Khouri, a nominee of TGS, are
expected to be on the board of directors of the Company following
Closing. The other nominees to the board have not been
determined at this time. Additional information regarding the
directors and officers of the resulting issuer will be disclosed
when available. Following Closing, Mr. Monaco will become
Chairman of the Company, Mr. Kerby will become Chief Executive
Officer and Mr. Khouri will become Chief Gaming Officer. The
Board Re-Constitution will be subject to TSXV approval and approval
of the TGS shareholders at the Meeting.
The Company has also agreed, pursuant to the Agreement, that
following Closing but prior to a Qualified Listing, it will
complete a consolidation of the TGS Shares on the basis of up to 40
pre-consolidation shares for 1 post-consolidation shares (the
"Consolidation"). The Consolidation will be subject to
TSXV and shareholder approval. The Company is also considering its
options for equity financing, in addition to the Interim Financing,
which would close concurrently with closing of the Transaction.
The Company intends to change its name to "TGS Inc." on Closing
and to keep the stock symbol "TGS". Following Closing, the
Company is expected to remain listed on the TSXV as a Tier 2
technology issuer.
Certain finder's fees are payable to arm's length parties in
connection with the Transaction. Pursuant to finder's fee
agreements, the Company has agreed to pay 3% of the transaction
value to Seastar Ventures Inc. by the issuance of 9,062,205 TGS
Shares and 2.5% of the transaction value to CRM Global Capital by
the issuance of 7,521,838 TGS Shares (collectively, the
"Finder's Fee Shares"). The Finder's Fee Shares will be
issued at a deemed price of CAD$0.068 per share and will be subject to a
hold period expiring four months and one day after Closing.
The issuance of the Finders Fee Shares is subject to TSXV
approval.
On Closing, the outstanding voting shares of TGS, being the TGS
Shares on an undiluted basis, are expected to be held approximately
as to 60.5% by current TGS shareholders, 30.5%% by the Management
Shareholders, 1.7% by subscribers to the Interim Financing, and
7.2% by the finders. The TGS Preferred Shares are
non-voting.
The Closing is subject to the satisfaction of various conditions
as are standard for a transaction of this nature, including but not
limited to: (i) receipt of all requisite consents, waivers and
approvals for the Transaction, including the approval of TSXV,
including, but not limited to, the listing of the TGS Shares issued
to the Management Shareholders and those TGS Shares issuable upon
the conversion of the TGS Preferred Shares; (ii) the absence of any
material adverse change in the business, affairs or operations of
TGS, Reinhart or NextTrip, as applicable; (iii) completion of the
Interim Financing; (iv) the Board Re-Constitution; (v) the delivery
of a fairness opinion to TGS, opining on the fairness of the
consideration paid for the Target Securities, as of the date of the
Agreement; (vi) the approval by the shareholders of TGS of those
rights, preferences and privileges necessary for the creation of
the Preferred Shares; and (vii) NextTrip having received a waiver
or termination, in a form acceptable to NextPlay, from the owners
of the Reinhart Interests terminating such owners' option to
require NextPlay to purchase the Reinhart Interests not owned by
its and not included in the Target Securities.
The Transaction is an arm's length transaction and expected to
constitute a reverse takeover of TGS pursuant to the policies of
the TSXV. The Transaction, certain ancillary corporate
matters discussed above and such additional matters in connection
with the Transaction as may be required by the TSXV will require
the approval of the shareholders of TGS for their respective
authorizations and implementations.
Interim Financing
The Company seeks to complete the Interim Financing by the
issuance on a private placement basis of up to 10,000,000 TGS
Shares at an issue price of CAD$0.20
per TGS Share for gross proceeds of up to CAD$2,000,000. The proceeds of the Interim
Financing are expected to be used by the Company to pay for the
costs of the Transaction, to fund the Company's business operations
and for general working capital purposes. Finder's fees and
commissions may be paid to eligible persons in connection with the
Interim Financing. The TGS Shares issued pursuant to the
Interim Financing will be subject to a hold period expiring four
months and one day after the date of issuance, and may be subject
to additional resale restrictions under applicable TSXV policies
and securities laws. The Company expects to close the Interim
Financing prior to completion of the Transaction.
Loan Arrangement
Prior to the entry into of the Agreement, further to the
Company's news releases dated February 18,
2022 and March 16, 2022, TGS
received drawdowns in the aggregate amount of CAD$1,000,000 from Don
Monaco and Bill Kerby, both
arms' length lenders to TGS who are affiliated with NextPlay and
agreed to advance funds to the Company as an unsecured loan (the
"Loan"). The Loan does not bear interest and matures
on August 24, 2022. The Company
has used the proceeds of the loan to fund business operations,
working capital requirements and costs associated with the
Transaction. Following Closing, the Loan will be considered a
related party transaction as the lenders will be directors and
officers of the Company. For more information on the Loan as
well as the intended use of proceeds therefrom, please refer to the
Company's February 18, 2022 and
March 16, 2022 news releases filed
under its profile on SEDAR.
Additional Information
All information contained in this news release with respect to
the Company and NextPlay was supplied, for inclusion herein, by
each respective party and each party and its directors and officers
have relied on the other party for any information concerning such
other party.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, TSXV acceptance and if
applicable, disinterested shareholder approval. Where applicable,
the Transaction cannot close until the required shareholder
approval is obtained. There can be no assurance that the
Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the
management information circular or filing statement to be prepared
in connection with the Transaction, any information released or
received with respect to the Transaction may not be accurate or
complete and should not be relied upon. Trading in the securities
of the Company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the
merits of the proposed Transaction and has neither approved nor
disapproved the contents of this news release.
About TGS Esports Inc.
TGS Esports builds gaming strategies for brands looking to
connect with any gaming community. This includes planning and
executing live and digital tournaments, live broadcasting,
influencer campaigns, and scholastic integration. Tournaments are
held on TGS' proprietary social gaming platform Pepper allowing
communities to interact and engage in one space. The combination of
TGS esports event expertise and next generation software creates an
unparalleled esports experience that allows brands to reach their
desired gaming demographic.
About NextPlay Technologies
Inc.
NextPlay Technologies, Inc. (Nasdaq: NXTP), a Nevada corporation, is a technology solutions
company offering games, in-game advertising, crypto-banking,
connected TV and travel booking services to consumers and
corporations within a growing worldwide digital ecosystem.
NextPlay's engaging products and services utilize innovative
AdTech, Artificial Intelligence and Fintech solutions to leverage
the strengths and channels of its existing and acquired
technologies. For more information about NextPlay Technologies,
visit www.nextplaytechnologies.com and follow us
on Twitter @NextPlayTech and LinkedIn.
On behalf of the Board of Directors
Spiro Khouri, CEO
TGS Esports Inc.
Disclaimer for Forward-Looking
Information
Certain statements in this news release are forward-looking
statements, which reflect the expectations of management regarding
the Company's completion of the Transaction 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 Company completing the
Transaction, the completion of the Interim Financing, the
anticipated use of proceeds of the Interim Financing, the
conditions to be satisfied for completion of the Transaction, the
approval by the shareholders of the Company for the adoption of the
rights, preferences and privileges of the Preferred Shares, the
name and business carried on by the Resulting Issuer, the Board
Re-Constitution, the reliance on a prospectus exemption for the
issuance of the Shares and the Preferred Shares, and obtaining a
waiver from the TSXV sponsorship requirements. Such statements are
subject to assumptions, 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: the requisite corporate and shareholders approvals of
the directors and shareholders of the Company or NextPlay, as
applicable, may not be obtained; the Company may be unable to close
the Interim Financing in full or in part; the TSXV may not approve
the Transaction; that the parties may be unable to satisfy the
closing conditions in accordance with the terms and conditions of
the Agreement; and other risks that are customary to transactions
of this nature. The novel strain of coronavirus, COVID-19, and
ongoing dispute between the sovereign state of Ukraine and Russia also pose risks that are currently
indescribable and immeasurable. 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. The reader is cautioned not to place undue reliance of
any forward-looking statements. 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.
The forward-looking statements contained in this news release are
made as of the date of this news release. The Company 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 law.
This news release does not constitute an offer to sell, or
solicitation of an offer to buy, nor will there be any sale of any
of the securities offered in any jurisdiction where such offer,
solicitation or sale would be unlawful, including the United States of America. The securities
being offered as part of the Interim Financing 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 accordingly may not be offered or sold in
the United States except in
compliance with the registration requirements of the U.S.
Securities Act and any applicable state securities laws, or
pursuant to available exemptions therefrom.
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.
SOURCE TGS Esports Inc