Esports Entertainment Group has faced a turbulent time in recent years, with brand closures, a debt default and large operating losses. In May, within the business’ quarterly financial report, EEG said that there had been “substantial doubt” about its ability to continue as a going concern for a least a year.
In October, the group then announced that it was effectively at the mercy of an unnamed creditor after the business defaulted on its debt.
Earlier this week, the business revealed it had escaped delisting, but must drastically increase its share price by February to remain on the Nasdaq exchange.
Given these financial woes, the igaming business will now be restructured, with the sale of its online casino business in Spain expected to close by 12 December. Proceeds from the sale will mainly be used to pay down the principal on a senior convertible note.
Meanwhile, Esports Entertainment Group closed its Argyll iGaming operations – which operates RedZone and SportNation – in the UK and Ireland with effect from yesterday (7 December) due to high operational costs and an inability to generate profit. EEG had already announced that it would be shutting its RedZone and Sport Nation brands in the UK.
Now, EEG has revealed it will will evaluate further strategic options for the igaming business, including exploring a potential sale of igaming assets due to increasing regulatory burdens and competition.
Search for a new CEO
This process will be overseen by Esports Entertainment Group’s new CEO, with the operator’s board having identified a number of candidates to replace the outgoing Johnson and an evaluation of individuals is now taking place
Earlier this week, it was reported that the EEG board had asked to Johnson to resign, with his departure having now been confirmed by the operator.
Esports Entertainment Group said its board has identified a preferred candidate to serve as acting CEO, and will make a formal announcement regarding the appointment in the coming days, pending formal approval by the Nominating and Corporate Governance Committee.
In relation to this, Esports Entertainment Group announced Jan Jones Blackhurst as the new chair of its board.
“Grant recognised the value of esports and online gambling and founded EEG on that basis,” Blackhurst said. “On behalf of the board, we wish him well.
“The company is looking forward to bringing in new leadership to work with the board to realise the full potential of our acquired esports businesses.”
This new CEO will be tasked with determining the value of the group’s igaming assets and evaluating any opportunities to sell them.
Potential Esports Entertainment Group merger
In terms of wider business operations, Esports Entertainment Group revealed it also recently received a non-binding letter of intent from a third party in relation to a potential merger. EEG did not disclose the identity of the interested party, but did state that should the deal go ahead, the combined business would focus on growing esports revenue.
EEG is currently in the process of evaluating the proposed merger.
Esports Entertainment Group also announced that it is in discussions with its debt holder to restructure payment obligations, including eliminating derivative liability on its consolidated balance and addressing its default status under the debt.
EEG said it remains optimistic an agreement can be reached to the benefit of both parties in the near term.