Esports Entertainment Group shares plummet as operator announces fire sale amid CEO sacking
The share price of Esports Entertainment Group fell 12.7% yesterday after the operator took more than 48 hours to confirm the departure of CEO Grant Johnson.
On Monday 5 December, Cody Luongo’s Sharpr esports newsletter reported that Johnson had been sacked by the company’s board of directors.
That news was left to fester until Esports Entertainment Group confirmed the exit in a press release dated Wednesday 7 December, despite the fact the company is publicly traded and duty bound to inform its investors of significant developments.
Johnson also lost his position as chairman and was replaced by Jan Jones Blackhurst. The change was first enacted on Saturday 3 December.
In a short statement, Blackhurst said: “Grant recognised the value of esports and online gambling and founded EEG on that basis. On behalf of the board, we wish him well.
“The company is looking forward to bringing in new leadership to work with board to realise the full potential of our acquired esports businesses,” she added.
Esports Entertainment Group said it had already identified a preferred candidate for interim CEO and would make another formal announcement in the coming days.
Several further candidates have been identified to become the firm’s new permanent CEO, with an evaluation process still ongoing.
The beleaguered company fell into dire straits under Johnson’s leadership. In recent months, it has sold off its esports assets and closed down its esports betting platform VIE.
And now the operator has announced a further process to explore the fire sale of its remaining iGaming assets.
The sale of the operator’s Spanish-facing online casino business is expected to close on 12 December, with the proceeds used primarily to pay down the principal on the Senior Convertible Note.
Its UK-facing Argyll Entertainment business – which included the SportNation and RedZone sports betting brands – was shuttered as of 7 December due to the high cost of operating in the market, as well as an inability to generate profits.
The company said a further iGaming asset sell-off would be explored due to “increasing regulatory burdens and competition”. The new CEO will be tasked with assessing the value of its remaining iGaming assets and determining its next steps.
Earlier this week, Esports Entertainment Group discovered it would be allowed to remain on the Nasdaq Capital Market following a decision from the Nasdaq Hearings Panel.
The operator’s future as a publicly traded company is subject to its compliance with a minimum bid price requirement by February 7, 2023, as well as meeting a shareholder equity requirement of a minimum of $2.5m in stockholder’s equity by March 31, 2023.
Esports Entertainment Group said it was in discussions with its debt holder to restructure its payment obligations with regards to eliminating the derivative liability on its consolidated balance and addressing the company’s default status under the debt.
“The company is optimistic that an agreement can be reached to the benefit of both parties in the near term,” it added.
Finally, Esports Entertainment Group said it was currently considering an offer from a third-party company to purchase its assets and intellectual property via a non-binding letter of intent.
The combined company would focus on growing esports revenues, according to a statement to investors.
The share price is down 98% on a one-year basis. The operator’s market cap stands at just €7.5m, compared to €375m one year ago.