The share issue would dilute existing holdings in Scout Gaming Group by 90 per cent.
Norway.- Shareholders in the fantasy gaming provider Scout Gaming Group are to vote on a new share issue that would dilute existing holdings in the group by 90 per cent. The vote will be held on September 1 as the company seeks to stay afloat after finding a SEK17m (€1.6m) hole in its finances.
The firm has already announced 68 layoffs as a result of the financial problems, with jobs going both at its head office in Bergen, Norway, and Lviv in Ukraine. It now plans to issue 202.7 million new shares – a move that requires shareholder approval.
Shareholders will be offered the chance to purchase nine more shares at SEK0.50 per share. They will not be able to sell the newly issued shares for nine months without Scout Gaming Group’s permission.
Scout said existing shareholders Topline Capital Partners, Scobie Ward, Novobis, Knutsson Holdings and Erlinghundra have pledged to subscribe to the issue for a combined SEK46m of shares and to underwrite an additional SEK55m of shares if other shareholders don’t buy, thereby guaranteeing the share issue.
If that happened, Topline Capital Partners’ commitments to underwrite the issue could increase its stake in the business beyond the 30 per cent threshold that would normally result in a mandatory offer to acquire a majority stake. It has agreed to divest enough shares to avoid this if needed.
Scout said the previously undiscovered hole in its finances would impact cash flow for the third quarter and would have a negative effect on profit and loss of close to SEK5.5m.
In June, Andreas Ternström stepped down as CEO and president of Scout Gaming Group after six years in the role. Chief financial officer Niklas Jönsson has stepped in as acting CEO until a permanent replacement is found. In March, Ternström announced a cost review due to slow growth and increased expenses.