GameSquare Esports Provides Update on Proposed Acquisition of Reciprocity
Reciprocity Securityholders Approve Transaction
TORONTO, Feb. 23, 2021 (GLOBE NEWSWIRE) -- GameSquare Esports Inc. (CSE: GSQ; FRA: 29Q1) (“GameSquare”, “GameSquare Esports” or the “Company”), an
international esports company, is pleased to provide an update on its proposed acquisition of Reciprocity Corp. (“Reciprocity”), a privately held gaming and esports company (the
“Transaction”). Please see the Company’s press releases dated January 4, 2021 and January 12, 2021 for more information about the Transaction, which are available under the
Company’s profiles at www.sedar.com and www.theCSE.com.
On January 25, 2021, a special meeting of Reciprocity’s securityholders was held to consider the Transaction (the “Reciprocity Meeting”). Holders of 28,029,503 Reciprocity shares, warrants and options, representing 100% of all votes cast, and 81.9% of Reciprocity’s outstanding shares, warrants and options entitled to vote at the Reciprocity Meeting and holders of $1,533,697 principal amount of Reciprocity debentures, representing 100% of all votes cast, and 88.7% of Reciprocity’s outstanding debentures entitled to vote at the Reciprocity Meeting approved the Transaction.
Closing of the Transaction (the “Closing”) is subject to the satisfaction of several conditions precedent, including the receipt by Reciprocity of a final court order of the Ontario Superior Court of Justice (Commercial List). In accordance with the policies of the Canadian Securities Exchange (the “CSE”), the Company must also secure the written consent of a majority of the holders of GameSquare’s common shares (the “Common Shares”) to the Transaction (the “GameSquare Shareholder Consent”). GameSquare intends to reach out directly to certain of its shareholders in order to obtain the GameSquare Shareholder Consent. The Company is working diligently to complete the remaining closing conditions, which management expects will be satisfied in March 2021. On December 31, 2020, Reciprocity and GameSquare executed an arrangement agreement in respect of the Transaction (the “Arrangement Agreement”), pursuant to which the Company expects to acquire 100% of the issued and outstanding shares of Reciprocity. Under the terms of the Arrangement Agreement, GameSquare will issue 43,750,000 Common Shares at a deemed price of C$0.33 per share to certain securityholders of Reciprocity (the “Consideration Shares”). Certain Reciprocity securityholders will also be entitled to receive (i) 5.255 million Common Shares if the Reciprocity business generates a minimum of US$5 million of revenue and US$1 million of EBITDA1 within 12 months of closing of the Transaction (the “Earn-Out Payment”), and (ii) 9 million Common Shares if the Reciprocity business generates a minimum of US$7 million of revenue and US$1.4 million of EBITDA within 12 months of Closing. The Consideration Shares shall be subject to a 12-month lock-up period, a third of which will be released every four months following Closing. In addition, in connection with the Transaction, the Company has also agreed to grant or issue (i) 3 million replacement options to certain Reciprocity option holders exercisable for 24 months to acquire an equal number of Common Shares at an exercise price of C$0.40 per option, (ii) up to 6,168,000 options to certain Reciprocity securityholders exercisable for 24 months to acquire an equal number of Common Shares at an exercise price of C$1.00 per option if certain performance targets of Reciprocity are achieved 12 months and 24 months following Closing, and (iii) up to 3,725,000 Common Shares to certain Reciprocity securityholders if certain performance targets of Reciprocity are achieved 12 months and 24 months following Closing.