Strategic Review

RNS Number : 6337B

Gfinity PLC

09 October 2020

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL BE MADE OR THE TERMS ON WHICH SUCH AN OFFER MIGHT BE MADE.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Gfinity plc

("Gfinity" or the "Group")

Review of Strategic Partnership Options

&

Launch of Formal Sales Process

Gfinity plc (AIM: GFIN ), a world-leading esports solutions provider, is pleased to provide an update on its progress in the year ended 30 June 2020.

The last 12 months has been one of considerable corporate and strategic development which has left the Group exceptionally well positioned as its partners and customers sought to recalibrate their offerings during the Covid-19 pandemic. The Group appointed a new senior leadership team which has sharpened the strategic focus in three areas where the Group has competitive strength and momentum: JV's and partnerships with an initial focus on virtual motorsports; expanding the Company's own community franchise; and building communities for others, utilising its proprietary tech platforms and world class production expertise. The emphasis has shifted to virtual online capabilities utilising the strength of its technology and e-sports know how rather than just the delivery of physical events. In conjunction with this, the Group has rapidly created an unrivalled esports community network.

The implementation of this strategy was aided by a successful fundraising that left the Group, together with a comprehensive cost reduction programme and a disciplined approach to investment, on a firm financial footing. The Company is targeting profitability by the end of Q1 2021 calendar year.

In that light, Gfinity believes that it is now well positioned to drive significant future revenue growth across its three core areas:

Gfinity's digital media progress

· Launched Gfinity Digital Media in July 2020 to build on the excellent growth of Gfinity's web channels and social platforms which now have more than 10 million users and generated over £130,000 of revenues in September 2020;

· New site, Stealthoptional.com focused on gamer tech added to existing sites www.Gfinityesports.com and www.realsport101.com;

· Partnered with YaLLa Esports, one of the leading MENA esports teams, to expand its RealGaming101 offering into the Middle East-North Africa (MENA) region;

· Gfinity Plus, the reward-based product announced alongside new e-commerce platform, driving increased engagement across the sites; and

· On track to deliver target revenues from digital media for this financial year of approximately £2 million.

Establishing Joint Ventures and Partnerships

· Partnered with BT Sport to deliver a series of celebrity led gaming entertainment shows.  The first show, co-produced by Gfinity and BT Sport, "The BT Sport FIFA Challenge' aired between May and June 2020;

· Partnered with ViacomCBS to deliver Street Fighter experiential event at Vidcon London 2020; and

· Entered into a five-year agreement with Abu Dhabi Motorsport Management (ADMM) to design, develop and deliver a new virtual motorsport (esports) racing championship (ERC), to be jointly owned by Gfinity and ADMM with distribution agreements signed with 3 of the world's leading broadcasters for the first championship in the series.

Working with brands to provide esports solutions - building communities for others

· Continued trusted partnerships with some of the world's most recognised brands, including: F1 Esports Series, where the Group has extended its partnership to design, develop and deliver 3 new seasons; EA Sports; ePremier League; Activision Blizzard and the Forza Racing Championship;

· Chosen to deliver the new F1 Esports Virtual Grand Prix series, in response to COVID-19 to enable fans to continue watching Formula 1 races virtually, and extended relationship with F1 to deliver the main elements of the F1 Esports Series in 2020 and 2021, and the 2022 qualifying events;

· Selected by premier cricket broadcaster Willow TV (owned by the Times Group) to design and deliver "The eCricket Challenge", in partnership with Betway;

· Appointed to operate the inaugural and follow on ePremier League ("ePL") Invitational tournaments; and

· Partnered with BT Sport to co-produce a new entertainment based competitive gaming series, "The BT Sport FIFA Challenge".

The Board of Gfinity remains highly confident in the prospects and position of the Company, especially as market dynamics are rapidly, and permanently, changing in favour of the Group's offering. As gaming has become more and more mainstream, Gfinity have increasingly noticed a number of trends: global publishers at all levels are seeking to expand the life time value of their audiences; brands are looking for new and innovative ways to expand into the space; sports rights holders are increasingly looking to connect with the younger audiences, and; broadcasters are in growing need of new competitive gaming entertainment content. The board of Gfinity, as a consequence believes that with the Group's well positioned diverse offering it now has the opportunity to significantly expand its growth projections.

Given this, while the Board believes that the Company can continue on its current pathway towards profitability it believes, at this point in time, that it is important to all its stakeholders to ensure that it has explored all strategic options to capitalise on the potential market opportunity and to deliver shareholder value, including options for making acquisitions, forming partnerships, separating the activities of the Group or a potential sale of the Company.

The Board has concluded that such a review would benefit from taking advantage of the dispensations available from certain provisions of the City Code on Takeover & Mergers ("Code") in commencing a "formal sales process" (as described in the Code) and has appointed finnCap Limited ("finnCap") as its financial adviser with regard to this process. Gfinity is not currently in discussions with, or is in receipt of an approach from, any potential offeror as at the date of this announcement. Parties with an interest in participating in the process should contact finnCap on the contact details set out below.

For further information, please contact:

Gfinity plc	www. Gfinityplc .com
John Clarke , Chief Executive Officer Gfinity investor relations	Via Teneo [e-mail]
finnCap Group - Financial Adviser Henrik Persson / Marc Milmo / Kate Bannatyne / Teddy Whiley - finnCap Corporate Finance Chris Malcolm / Steph Frayne - Cavendish Corporate Finance	Tel: [phone]
Canaccord Genuity Limited- AIM Nominated Adviser and Broker Bobbie Hilliam /Georgina McCooke	Tel: [phone]
Teneo - Media	Tel: [phone]
Camilla Cunningham	[e-mail]

Takeover Code dispensations

The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement (subject to note 3 to Rule 2.2 of the Code) and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Code, for so long as it is participating in the formal sale process. Following this announcement, the Company is now considered to be in an "offer period" as defined in the Code and, amongst other provisions, the dealing disclosure requirements set out below will apply.

Any party wishing to participate in the formal sale process will be required to enter into a non-disclosure agreement ("NDA") with the Company on terms satisfactory to the Board and to make a written submission to express the basis of their interest ("EOI") before being permitted to participate in the formal sale process. Following execution of the NDA and the receipt by the Company of the EOI, the Company intends to undertake its own procedures as to establish the credibility of such parties and their commitment to the Company's wider stakeholder group, after which the finnCap may provide interested parties with preliminary information on the Company, following which such parties may be invited to submit further proposals to the Company..

The Board reserves the right to alter any aspect of the process as outlined above or to terminate it at any time. The Board reserves the right to reject any approach or terminate discussions with any interested party or participant at any time (without liability to any person).

At this early stage, there can be no certainty that any offer will be forthcoming or the terms of any such offer.

Further announcements will be made as and when appropriate.

Rule 2.9

In accordance with Rule 2.9 of the Code, Gfinity confirms that it has in issue 763,195,860 ordinary shares of 0.1 pence each in the capital of the Company ("Ordinary Shares") and admitted to trading on the AIM Market of the London Stock Exchange. The International Securities Identification Number for Gfinity Ordinary Shares is GB00BT9QD572.

Rule 26.1

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on the investor section of the Company's website at www. Gfinityplc .com The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on [phone] if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Miscellaneous

finnCap Ltd which is regulated in the United Kingdom by The Financial Conduct Authority is acting for the Company in relation to the matters described in this announcement and is not advising any other person, and accordingly will not be responsible to anyone other than the Company for providing the protections afforded to customers of finnCap or for providing advice in relation to the matters described in this announcement.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities or the solicitation of any vote or approval in any jurisdiction. Any offer (if made) will be made solely by certain offer documentation which will contain the full terms and conditions of any offer (if made), including details of how such offer may be accepted. This announcement has been prepared in accordance with English law and the Code, and information disclosed may not be the same as that which would have been prepared in accordance with laws outside of the United Kingdom. The release, distribution or publication of this announcement in jurisdictions outside of the United Kingdom may be restricted by laws of the relevant jurisdictions, and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Nothing in this announcement is or should be relied on as a promise or representation to the future. This announcement includes certain statements, estimates and projections provided by the Company in relation to the Company's anticipated future performance. Such statements, estimates and projections are based on various assumptions made by the Company concerning anticipated results which may or may not prove to be correct. No representations or warranties are made by any person as to the accuracy of such statements, estimates or projections.

 

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