Proposed placing to raise £3.7m

RNS Number : 1346D

Gfinity PLC

04 July 2016

 

Gfinity plc

("Gfinity" or the "Company")

Proposed placing to raise £3.7m

Posting of Circular and Notice of General Meeting

Gfinity plc (AIM: GFIN), a leading eSports business, announces a conditional placing of 74,000,000 new ordinary shares ("Placing Shares") in the Company at a price of 5p per Placing share (the "Placing") to raise £3.7m (before expenses), subject to Shareholder approval, to provide general working capital and accelerate growth.

Background

Founded in London during 2012, Gfinity has quickly established itself as one of the world's leading companies in the fast-growing eSports sector.  The business enjoys strong relationships with game publishers, players and the wider eSports community and has already built a strong reputation for delivering high quality competitions, both on-line and off-line, as well as producing industry leading eSports broadcasts.

The Company focuses on four principal areas of monetisation:

·     Gfinity branded events, where the Company receives payment for the commercial rights; including sponsorship deals and advertising revenue from multi-national enterprises that wish to be affiliated with the eSports demographic

·     Third party eSports events, funded by game publishers, major brands and sponsors

·     Gfinity Arena rental income from letting the arena for product launches, content creation and other events

·     Online competition revenue from players of all levels who compete on the Gfinity platform for prizes

Transaction highlights

·     Oversubscribed Placing with new and existing Institutional and other investors of 74,000,000 New Ordinary shares at 5p per ordinary share to raise proceeds of £3.7 million before expenses:

§ Placing supported by existing shareholders: Euroblue Investments Limited (Nigel Wray), Hargreave Hale Limited and MD Barnard

§ New investors include Hong Kong based Charles Street International Holdings Ltd

·     The net proceeds of the Placing will be deployed as follows:

§ expanding sales and marketing expenditure to build on the strong reputation and suite of assets that Gfinity has created to drive revenues and registrations to Gfinity.net

§ continuing to develop the GTV media player and Gfinity's tournament builder application, including the roll out of the builder application in new geographies and onto new platforms including PC

§ further developing Gfinity's own events series, with the creation of new tournaments which directors believe can represent ongoing properties for the Company

§ general working capital

·     The Placing is conditional, inter alia, on shareholder approval

Notice of General Meeting

A General Meeting of the Company will be held at the offices of Fladgate LLP, 16 Great Queen Street, London, WC2B 5DG at 10.00am on 20 July 2016, to seek shareholder approval. The Circular and Notice of General Meeting is available on the Company website: www.gfinityplc.com and are being posted to shareholders today. 

Neville Upton, Chief Executive Officer at Gfinity Plc said: "The fundraise has been supported by existing and new investors and gives us the capital we need to commercially leverage our strong position within the eSports industry and accelerate our growth. I am delighted to have the support of Charles Street International as a new investor, who we believe will make a very positive impact on the Company's future prospects.

"Gfinity has built a unique set of assets: our events venue, our tournament system on Gfinity.net, our Tournament builder App, and the recently launched GTV media player, which sets us apart and allows us to deliver turnkey solutions to publishers and brands looking to access the eSports community. We already have a Blue Chip list of games publishers and brands that use us to stage their eSports events and over last year alone we attracted a total of 58.5m views from last year's events series and grew our registered user base to over 590,000 users. This latest development strengthens our balance sheet and provides confidence to both investors and our potential partners as we continue to grow our business."

The Market Abuse Regulation (MAR) became effective from 3 July 2016.  Market soundings, as defined in MAR, were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR.  That inside information is set out in this announcement and in the Circular and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR.  Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

Enquiries:

Gfinity plc	www.gfinityplc.com
Neville Upton, Chief Executive Officer	Via Walbrook PR
Allenby Capital Limited (NOMAD & Broker)	Tel. [phone]
Jeremy Porter / John Depasquale / James Thomas
Walbrook PR (PR advisers)	Tel: [phone] or [e-mail]
Paul McManus / Paul Cornelius / Sam Allen	Mob: [phone]

 

About eSports

eSports refers to the rapidly growing phenomenon of both playing and watching competitive video gaming.  Industry experts NewZoo estimate that the global audience for eSports already exceeds 250 million people and is growing at more than 20% p.a.  

The biggest events are already filling arenas and drawing viewership levels that exceed many traditional sports. The 2015 League of Legends Championships finals in Berlin were watched by 36 million people, with a peak concurrent viewership of 14 million viewers, while at DotA 2's flagship annual championship "The International 2015" competitors from around the world competed in Seattle for a prize pot of over $18 million.

The core demographic for these events is young males, typically 18-25, who can be hard to reach via other means making it an attractive market for sponsors, with brands such as Coca Cola, Samsung, Intel, Gillette and Red Bull all already investing in the sector.

Below are extracts from the Circular that has been sent to shareholders today and which is available on the Company's website: www.gfinityplc.com

Background to and reasons for the Placing

Calendar year 2015 overview

On 22 December 2014, Gfinity was admitted to AIM having successfully raised £3.5 million before costs and expenses via a placing of 20,588,235 Ordinary Shares at a price of 17 pence per share.  The net proceeds of this fundraising were used to pursue the expansion of the business and to support its 2015 event schedule with the aim to create the UK's premier eSports arena and strengthen the position of gfinity.net as the premium hub for eSports news, content and interaction. At the time of admission to AIM, the Company planned to establish a new eSports studio from which the Company would stage the majority of its events in 2015.  

In February 2015, the Company announced an agreement with Vue to launch the UK's first premier eSports arena at Fulham Broadway cinema in London. The agreement transformed part of the Vue Fulham Broadway multiplex into a dedicated 600-capacity eSports venue, called the Gfinity Arena. The Gfinity Arena opened in March 2015 for the start of the 2015 Gfinity Championships, which comprised 23 events that concluded in September 2015.

The Championships series saw some of the top international teams and players compete for prestige and prize money across five major eSports titles: Call of Duty: Advanced Warfare; Counter Strike: Global Offensive; Hearthstone; FIFA 15; and Starcraft 2. The Company secured 58.5 million On-line Views for these events, exceeding its target of 50 million.

During 2015, the Company also announced a major sponsorship agreement with News UK for the Sun to become Gfinity's official newspaper and on-line news partner in the UK and Ireland. This two-year commercial partnership was the first major agreement signed by Gfinity since its admission to AIM and contributed towards the Company achieving its revenue target in the year ended 30 June 2015.

Outside of the major off-line events, the Company also expanded its on-line offering, adding new game titles including Rocket League, Smite and Gears of War, growing the number of registered users to over 400,000.

On 2 November 2015, the Company announced a placing to raise a further £1m at 19p per share. This placing allowed Gfinity to progress the development of a number of new assets, to complement its service offering, including the tournament builder application for Xbox One and the GTV media player.

Calendar year 2016 overview

During the current calendar year the Company:

·     was selected by Microsoft to provide a dedicated link to Microsoft's TV platform, with equipment housed within the Gfinity Arena;

·     was appointed by Microsoft in January 2016 to host the Xbox European FIFA 16 Play Like a Legend Championship for a second successive year;

·     moved into mobile gaming in February 2016 when selected by Super Evil Megacorp to stage "The Vainglory Winter Championship" finals;

·     staged an exclusive Race Off event in conjunction with Formula E, with content shown on BT Sport that attracted strong viewership;

·     entered a partnership with leading US online tournament organiser, CEVO, to jointly stage the Gfinity CEVO Counter Strike Pro-League Series Finals at the Gfinity Arena in April and May 2016;

·     launched Gfinity TV in beta in April 2016 for the Gfinity CEVO Counter Strike event;

·     staged the launch of Battlefield 1 in April 2016 at the Gfinity Arena;

·     launched the tournament builder application for Xbox One, achieving more than 35,000 downloads in the first month after release;

·     staged the UK leg of Halo World Series:

·     signed an agreement with Gillette in June 2016 to partner in staging a football based eSport competition, "the Gillette Championship";

·     signed a partnership agreement with Futhead.com, the largest FIFA Ultimate Team community in the world, to operate a series of FIFA 16 Ultimate Team competitions; and

·     further grew its online registered user base to over 590,000.

Reasons for the Placing

Through the success of the 2015 schedule of events and the investment in a range of assets, including those referenced above together with the Gfinity arena and Gfinity.net tournament system, the Directors believe that Gfinity has created a strong position from which to grow.  They also believe, however, that to capitalise on this position additional funding is required as the Company moves into the financial year that commenced on 1 July 2016.

The Directors believe the additional funding will provide greater confidence, both among the investor community and potential partners looking to do business with the Company, as to its long term financial security. The Placing also provides Gfinity with an opportunity to involve in the business a new significant shareholder, with strong sector experience, who the Directors believe will make a positive impact on the Company's future prospects.

In their strategy for growth, the Directors intend to focus the Company on the following four principal areas:

1.    Gfinity events:

These are Gfinity branded events, to which the Company owns and exploits the commercial rights, including sponsorship and broadcast revenues, both from online streaming platforms and conventional TV broadcasters, who are now starting to demand eSports content;

2.    Third party events:

These are paid for events for game publishers or bespoke events for sponsors looking to use eSports to reach their target demographic.  Gfinity is already seen as a leading provider of such events and has staged paid for championships for titles across PC, console and mobile devices and will look to move this onto the international stage;

3.    Gfinity Arena: 

The Company will utilise its unique, broadcast and streaming capability to let its arena for content creation, events and product launches (such as that of FIFA 16 and Battlefield 1 referred to above); and

4.    Online and Applications:

The Company provides a forum for online competition for all levels of eSports enthusiast, utilising Gfinity's online platform and tournament builder app which enables users to create their own leagues, ladders and cups across any title and invite their friends to play, provided all are registered users with Gfinity.  The tournament builder app is currently exclusive to Xbox One users, but the Company plans to roll it out to other platforms.

Use of proceeds

The net proceeds of the Placing will be approximately £3.63 million and are expected to be applied as follows 

·     expanding sales and marketing expenditure to build on the strong reputation and suite of assets that Gfinity has created to drive revenues and registrations to Gfinity.net;

·     continuing to develop the GTV media player and Gfinity's tournament builder application, including the roll out of the builder application in new geographies and onto new platforms, including PC;

·     further developing Gfinity's own events series, with the creation of new tournaments which directors believe can represent ongoing properties for the Company; and 

·     general working capital.

Details of the Placing

The Company is planning to raise £3,700,000 (before expenses) for the Company by way of a conditional placing, conducted by Allenby Capital, of the Placing Shares at 5 pence per Placing Share with institutional and other investors.

The Placing is conditional, inter alia, upon:

a)    the passing of the Resolutions;

b)    the Placing Agreement (as described in more detail below) becoming unconditional in all respects and not having been terminated in accordance with its terms; and

c)    admission of the Placing Shares to trading on AIM becoming effective by not later than 8.00 a.m. on 19 July 2016 (or such later time and/or date (not being later than 29 July 2016) as Allenby Capital and the Company may agree).

Accordingly, if such conditions are not satisfied, or, if applicable, waived, the Placing will not proceed.

The Placing will result in the issue of a total of 74,000,000 Placing Shares, representing, in aggregate, approximately 47.01% of the Enlarged Share Capital. The Placing Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and therefore will rank equally for all dividends or other distributions declared, made or paid after the date of issue of the Placing Shares.

Application will be made to London Stock Exchange for the Placing Shares to be admitted to trading on AIM and such admission is expected to occur on 19 July 2016.  It is expected that CREST accounts will be credited on the day of Admission as regards the Placing Shares in uncertificated form and that certificates for Placing Shares to be issued in certificated form will be dispatched by first class post by 26 July 2016. 

Substantial Shareholders

Based upon shareholdings as at 1 July 2016 and assuming completion of the Placing, the following persons will be interested in 3% or more of the Enlarged Share Capital on Admission:

Name	Existing Ordinary Shares	Percentage of Existing Ordinary Shares	Ordinary Shares on Admission	Percentage of Enlarged Share Capital
Charles Street International Holdings Limited	Nil	Nil	47,200,000	29.98%
Euroblue Investments Limited	11,240,000	13.48%	21,140,000	13.43%
Hargreave Hale Limited	8,894,571	10.66&	15,094,571	9.59%
Neville Upton	14,710,579	17.64%	14,710,579	9.35%

Charles Street International Holdings Limited ("Charles Street") is a Hong Kong based investment company. The Charles Street group of companies was originally founded in the UK by Robert Keith and Thomas Fussell, principally to invest in technology companies, and it has built a large portfolio of investments in this sector in private and public companies. Accordingly, as well as their backgrounds and experience, the Charles Street team has significant knowledge and connections in Gfinity's business space and related areas and therefore the Directors believe their involvement in the Placing will be beneficial to the growth of the Company.  Whilst Charles Street is typically a passive investor, it is expected that it will provide strategic advice and introductions to help the Directors develop Gfinity's business.

The Company, Allenby Capital and Charles Street International Holdings Limited have entered into a relationship agreement pursuant to which Charles Street International Holdings Limited, in its capacity as a substantial shareholder, has given various undertakings to the Company and Allenby Capital regarding the relationship between Charles Street International Holdings Limited, its associates and the Company. In particular Charles Street International Holdings Limited has agreed that the business and affairs of the Company will be managed by the Board in accordance with the Company's articles of association and all applicable laws. Charles Street International Holdings Limited has also agreed to use it voting rights such that the Company is capable at all times of carrying on its business independently of the Charles Street International Holdings Limited and its associates. The agreement will terminate if Charles Street International Holdings Limited and its associates cease to be interested in more than 20% of the Company's voting share capital.

Related Party Transaction

Two existing shareholders of the Company, Euroblue Investments Limited and Hargreave Hale Limited ("Substantial Shareholders"), are subscribing for 9,900,000 and 6,200,000 Placing Shares respectively. As the Substantial Shareholders currently hold more than 10% of the Existing Ordinary Shares, the subscriptions by them of Placing Shares are deemed to be related party transactions pursuant to rule 13 of the AIM Rules. Accordingly, the Directors consider, having consulted with the Company's nominated adviser, Allenby Capital, that the terms of subscription to the Placing Shares by the Substantial Shareholders are fair and reasonable insofar as Shareholders are concerned, for the purposes of rule 13 of the AIM Rules.

General Meeting

A notice convening a General Meeting of the Company, to be held at the offices of Fladgate LLP at 16 Great Queen Street, London, WC2B 5DG at 10:00 a.m. on 20 July 2015 is set out at the end of this Circular. At the General Meeting, the following Resolutions will be proposed:

1.   an ordinary resolution to grant authority to the Directors to allot Ordinary Shares up to an aggregate nominal amount of £74,000 and limited to the allotment of the Placing Shares pursuant to the Placing; and

2.   a special resolution to dis-apply statutory pre-emption rights in respect of the allotment for cash of up to 74,000,000 Ordinary Shares with an aggregate nominal amount of up to and limited to the allotment of Placing Shares pursuant to the Placing.

Resolution 1 will be proposed as an ordinary resolution and Resolution 2 as a special resolution.

Directors' Recommendation

The Directors consider the Placing to be in the best interests of the Company and its Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings of 17,645,158 Existing Ordinary Shares, representing approximately 21.2% of the Existing Ordinary Shares.

DEFINITIONS

"Admission"	the admission to trading on AIM of the Placing Shares, which is expected to take place on 21 July 2016
"AIM Rules"	the AIM rules for Companies, as published and amended from time to time by the London Stock Exchange
"Allenby Capital"	Allenby Capital Limited
"Circular"	the Circular posted to Shareholders today
"Company" or "Gfinity"	Gfinity plc
"CREST"	the relevant system for the paperless settlement of trades and the holding of uncertificated securities operated by Euroclear UK and Ireland in accordance with the CREST Regulations
"CREST member"	a person who has been admitted by Euroclear UK and Ireland as a system-member (as defined in the CREST Regulations)
"Directors" or "Board"	the directors of the Company
"Enlarged Share Capital"	the issued ordinary share capital of the Company immediately following Admission
"Euroclear UK & Ireland"	Euroclear UK & Ireland Limited, the operator of CREST
"Existing Ordinary Shares"	the existing Ordinary Shares as at today's date
"General Meeting" or "GM"	the general meeting of Shareholders to be held at the offices of Fladgate LLP at 16 Great Queen Street, London, WC2B 5DG at 10.00 a.m. on 20 July 2016
"Issue Price"	5 pence per Placing Share
"London Stock Exchange"	London Stock Exchange plc
"News UK"	News Corp UK & Ireland Limited, a subsidiary of the global media group, News Corporation, publishers of The Sun newspaper
"Notice of General Meeting"	the notice of General Meeting set out at the end of the Circular
"On-line Views"	the number of connections to a Gladiator streamed event
"Ordinary Shares"	the ordinary shares of 0.1p each in the capital of the Company
"Placees"	the persons who have conditionally agreed to subscribe for the Placing Shares
"Placing"	the placing of the Placing Shares at the Issue Price by Allenby Capital, as described in the Circular
"Placing Agreement"	the conditional agreement dated 4 July 2016 between the Company (1) and Allenby Capital (2) relating to the Placing
"Placing Shares"	the 74,000,000 new Ordinary Shares which have been conditionally placed with institutional and other investors by Allenby Capital pursuant to the Placing
"Resolutions"	the resolutions numbered 1 and 2 to be proposed at the General Meeting
"Shareholder(s)"	holder(s) of Existing Ordinary Shares
"sterling", "pounds sterling", "£", "pence" or "p"	the lawful currency of the United Kingdom
"US$" or "US dollar"	the lawful currency of the United States of America
"Vue"	Vue Entertainment International, a worldwide operator and developer of multiplex cinemas.

ENDS

 

END

 

 

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