Swedish operator Spiffbet is planning to pay down SEK39.6m (€3.5m) of debt as it bids to break even in 2023.
Spiffbet operates several different B2C brands including Metal Casino, Cashmio and Scandibet, as well as offering its own proprietary games on a B2B basis under the Rhino Gaming and Spiffbet Sports brands.
The company has scheduled an extraordinary general meeting of its shareholders for 19 April to vote on a set-off issue and a parallel rights issue. These are aimed at reducing its debt burden and improving capital structure.
Set-off issue background
Spiffbet has borrowed a total of SEK39.6m from its main owners, A veces AB and Johan Styren, which it now intends to offset against newly issued shares in the business.
Styren is the former CEO of LeoVegas. He is currently on the board at Spiffbet, as well as Hero Gaming and Fantasma Games.
The lenders have agreed to accept newly issued shares in lieu of repayment for the debt, in addition to waiving any interest previously accrued on the debt.
If the set-off issue is approved by shareholders, Spiffbet also intends to run a separate rights issue in parallel, allowing existing shareholders to invest further in the business at the same subscription price against which the set-off takes place.
That price will be determined by the volume-weighted average price of Spiffbet shares on the Nasdaq First North Growth Market across the 20 days prior to the 19 April meeting.
Spiffbet CEO Henrik Svensson: “I am happy about the continued great confidence that our main owners have in the company and that they are prepared to convert the receivables into equity.”
The rights issue is intended to inject more capital into the business, providing it with the resources needed to continue expanding either via further investment into its existing business units, or additional acquisitions.
The maximum combined dilution effect for shareholders not participating in the rights issue is expected to be around 83.5%.
Following the set-off issue, A veces AB will own approximately 74.4% of the shares and votes in Spiffbet.
In the event of a fully subscribed rights issue, A veces will own a maximum of around 62.2% of shares and votes in the business.
The decision to go ahead with the set-off and rights issues must be approved by at least two-thirds of Spiffbet shareholders (excluding A veces) at the EGM next month.
Management commentary
Spiffbet said that during 2022, the company worked intensively to reach break-even in terms of EBITDA.
This included cutting headcount, amid other activities aimed at increasing profitability, with further improvements to efficiency still expected to be made.
Several of Spiffbet’s previously operational brands have been discontinued, while the firm has more than halved its number of employees, it said.
The business added that it did not break even in 2022, but that results from the beginning of 2023 demonstrate that breakeven should be possible this year. This, it added, would provide a good basis for future growth and a sustainably profitable business.
CEO Henrik Svensson said: “2022 was marked by consolidation and streamlining. We have more than halved the number of employees, streamlined our processes and discontinued several brands with declining profitability.
“2022 was marked by consolidation and streamlining. We have more than halved the number of employees, streamlined our processes and discontinued several brands with declining profitability.”
“Unfortunately, we have had headwinds in the form of changed regulatory applications that have affected us and our partners, which has made parts of our business impossible.
“We have compensated for the loss by investing in other markets and implemented large savings, which we are now beginning to see the effects of.
“Furthermore, I am happy about the continued great confidence that our main owners have in the company and that they are prepared to convert the receivables into equity. The issues give us good conditions to continue sharpening the business.”
Pointing to further possible changes in the company’s structure, Svensson concluded: “We also see that acquisitions can give us a better base to stand on and a faster path to profitability. All in all, I am optimistic about 2023.”