- Further to the press release issued on May 31, 2019, J55 has received conditional approval from the TSX Venture Exchange for its proposed Qualifying Transaction with Aquilini GameCo Inc.
- Pursuant to which J55 has agreed to acquire all of the issued and outstanding securities of GameCo.
VANCOUVER, British Columbia, Aug. 07, 2019 — J55 Capital Corp. (“J55â€) (TSX-V: FIVE.P) and Enthusiast Gaming Holdings Inc. (“Enthusiastâ€) (TSXV: EGLX)(OTCQB: EGHIF) are pleased to announce that further to the press release issued on May 31, 2019, J55 has received conditional approval from the TSX Venture Exchange (“Exchangeâ€) for its proposed Qualifying Transaction (as defined in the policies of the Exchange) with Aquilini GameCo Inc. (“GameCoâ€) (the “Qualifying Transactionâ€), pursuant to which J55 has agreed to acquire all of the issued and outstanding securities of GameCo.
J55 and Enthusiast have also received conditional approval from the
Exchange for their proposed merger by plan of arrangement pursuant to
which J55 will acquire all outstanding common shares of Enthusiast (the “Arrangementâ€, and together with the Qualifying Transaction, the “Transactionsâ€). Further, Enthusiast has obtained an interim order from the Ontario Superior Court of Justice (Commercial List) (the “Interim Orderâ€)
in connection with the Arrangement. The Interim Order authorizes
Enthusiast to call, hold and conduct an annual and special meeting (the “Enthusiast Meetingâ€) of the holders of the common shares of Enthusiast (the “Enthusiast Shareholdersâ€),
pursuant to which the Enthusiast Shareholders will consider and, if
determined advisable, approve the Arrangement. Enthusiast Shareholders
will receive 4.22 post-First Consolidation (as defined below) common
shares of J55 (“J55 Sharesâ€) in exchange for each
Enthusiast Share pursuant to the Arrangement. Following the consummation
of the Transactions and the Second Consolidation (as defined below),
Enthusiast Shareholders will hold 0.5275 J55 Shares for each Enthusiast
common share previously held. No fractional shares will be issued
pursuant to the Second Consolidation; in such case, a downward
adjustment shall be made to the nearest whole J55 Share without
consideration in respect thereof.
J55 Annual and Special Meeting
J55 will hold an annual and special meeting (the “J55 Meetingâ€) of the holders of the J55 Shares (the “J55 Shareholdersâ€, and together with the Enthusiast Shareholders, the “Shareholdersâ€)
on August 26, 2019 at the offices of Clark Wilson LLP, Suite 900 – 855
West Georgia Street, Vancouver, British Columbia V6C 3H1 at 10:00 a.m.
(Vancouver time). The record date for determining J55 Shareholders
entitled to receive notice of and vote at the J55 Meeting was fixed as
at the close of business on July 17, 2019.
At the J55 Meeting, the J55 Shareholders will consider, and if
determined advisable, approve among other things, the Qualifying
Transaction and the Arrangement. Pursuant to Multilateral Instrument
61-101 – Protection of Minority Security Holders in Special Transactions
and Exchange Policy 5.9, because the Qualifying Transaction is a
Related Party Transaction (as defined in the policies of the Exchange),
the Qualifying Transaction must be approved by at least a majority of
all votes cast by the disinterested J55 Shareholders at the J55 Meeting.
Further, pursuant to Exchange Policy 2.4, the Qualifying Transaction
must be approved by a majority of all votes cast by J55 Shareholders
after excluding the votes of Non-Arm’s Length Parties (as defined in
Exchange Policy 2.4) to J55 or the Qualifying Transaction, and persons
acting jointly or in concert with such Non-Arm’s Length Parties. The
Arrangement must be approved by at least a majority of all votes cast by
the J55 Shareholders on the resolution in respect of the Arrangement at
the J55 Meeting.
Enthusiast Annual and Special Meeting
In accordance with the Interim Order, Enthusiast will hold an annual and special meeting of the Enthusiast Shareholders (the “Enthusiast Meetingâ€, together with the J55 Meeting, the “Meetingsâ€)
on August 26, 2019 at the offices of Stikeman Elliott LLP, 5300
Commerce Court West, 199 Bay Street, Toronto, Ontario M5L 1B9 at 10:00
a.m. (Toronto time). The record date for determining Enthusiast
Shareholders entitled to receive notice of and vote at the Enthusiast
Meeting was fixed as at the close of business on July 19, 2019. The
Arrangement must be approved by at least 66â…”% of all votes cast by the
Enthusiast Shareholders on the resolution in respect of the Arrangement
at the Enthusiast Meeting.
Information Circular and Meeting Materials
In connection with the Meetings, J55 and Enthusiast mailed a joint management information circular dated July 23, 2019 (the “Circularâ€), notices of meeting and forms of proxy and related meeting materials (collectively, the “Meeting Materialsâ€)
to their Shareholders on July 26, 2019 and August 5, 2019,
respectively. Shareholders are urged to carefully review all Meeting
Materials as they contain important information concerning the
Transactions and the rights and entitlements of the Shareholders in
relation thereto. The Meeting Materials are available on SEDAR under
J55’s and Enthusiast Gaming’s respective profiles at www.sedar.com.
The terms of each of the Transactions are summarized in the press
release issued on May 31, 2019 and the full details of each of the
Transactions are contained in the Circular. The anticipated hearing date
for the application for the final order of the court (the “Final Orderâ€)
has been scheduled to take place on August 29, 2019 at 9:30 a.m.
(Toronto time) in Toronto, Ontario. Subject to obtaining the Final
Order, the required approvals from the Shareholders at the Meetings, the
final approval from the Exchange, and satisfying the conditions to
implementing the Qualifying Transaction as set out in the amalgamation
agreement entered into between J55, a wholly-owned subsidiary of J55 and
GameCo on May 30, 2019, as amended (the “Amalgamation Agreementâ€),
and the Arrangement as set out in the arrangement agreement entered
into between J55, GameCo and Enthusiast on May 30, 2019 (the “Arrangement Agreementâ€), the Transactions are anticipated to be completed in early September 2019.
Summary Financial Information
GameCo Financial Statements
GameCo’s audited financial statements for the period from August 29,
2018 to December 31, 2018, and unaudited interim financial statements
for the three months ended March 31, 2019 (collectively, the “GameCo Financial Statementsâ€), which were prepared in accordance with IFRS, have been appended to the Circular.
A summary of financial information from the GameCo Financial
Statements, disclosed in accordance with Exchange policies, is included
in the table below:
| | As at March 31, 2019 (unaudited) | As at December 31, 2018
(audited) |
| Total Assets | $29,854,729 | $5,865,179 |
| Total Liabilities | $1,522,388 | $421,538 |
| Total Shareholder’s Equity | $28,332,341 | $5,443,641 |
| Revenue | $0 | $0 |
| Cost of Sales | N/A | N/A |
| Expenses | $371,978 | $384,105 |
| Net Income (Loss) and Comprehensive Income (Loss) for the Period | $(371,978) | $(384,105) |
| Net Income (Loss) per Share | $(0.002) | $0.00 |
Luminosity Gaming Financial Statements
As previously announced in the press release issued May 31, 2019,
immediately prior to the closing of the Qualifying Transaction, GameCo
will complete its acquisition of Luminosity Gaming Inc. (“Luminosity Canadaâ€) and Luminosity Gaming (USA), LLC (“Luminosity USAâ€, which together with Luminosity Canada is herein referred to as “Luminosity Gamingâ€).
Luminosity Gaming’s combined audited financial statements for the three
years ended December 31, 2018, 2017 and 2016, and unaudited interim
financial statements for the three months ended March 31, 2019
(collectively, the “Luminosity Financial Statementsâ€), which were prepared in accordance with IFRS, have been appended to the Circular.
A summary of financial information from the Luminosity Financial
Statements, disclosed in accordance with Exchange policies, is included
in the table below:
| | As at March 31, 2019
(unaudited) | As at December 31, 2018
(audited) | As at December 31, 2017
(audited) | As at December 31, 2016
(audited) |
| Total Assets | $420,299 | $1,044,305 | $1,179,002 | $956,714 |
| Total Liabilities | $977,959 | $962,869 | $796,740 | $370,291 |
| Total Shareholder’s Equity | $420,299 | $1,004,305 | $1,179,002 | $956,714 |
| Revenue | $426,868 | $3,847,127 | $2,647,491 | $3,336,340 |
| Cost of Sales | $759,632 | $3,081,916 | $2,247,785 | $2,039,101 |
| Expenses | $218,729 | $723,461 | $409,662 | $193,459 |
| Net Income (Loss) and Comprehensive Income (Loss) for the Period | $(440,042) | $184,188 | $(23,161) | $846,206 |
| Net Income (Loss) per Share | $(4,400) | $1,849 | $(232) | $8,462 |
(1) Calculation includes loss/gain from foreign exchange and provision for/recovery of income taxes.
Pro Forma Financial Statements of the QT Resulting Issuer and Resulting Issuer
J55 has prepared unaudited pro forma financial statements as at March 31, 2019 and for the year ended December 31, 2018 (the “Pro Forma Financial Statementsâ€)
that incorporate the completion of each of the Transactions. A summary
of the Pro Forma Financial Statements of J55 following the completion of
the Qualifying Transaction (the “QT Resulting Issuerâ€) and the completion of the Arrangement (the “Resulting Issuerâ€),
disclosed in accordance with Exchange policies, is included in the
table below, and a copy of the Prof Forma Financial Statements have been
appended to the Circular:
| For the Three Months Ended March 31, 2019 |
| | J55 | GameCo | Luminosity | QT
Pro Forma Adjustments | QT
Resulting Issuer | Enthusiast Gaming | Resulting Issuer
Pro Forma Adjustments | Resulting Issuer
Pro Forma |
| Total Assets | $1,238,585 | $29,854,729 | $420,299 | $35,634,284 | $67,147,897 | $13,976,402 | $111,334,464 | $192,458,763 |
| Total Liabilities | $81,503 | $1,522,388 | $977,959 | $10,100,000 | $12,681,850 | $10,507,172 | $(7,750,000) | $15,439,022 |
| Total Shareholder’s Equity (Deficit) | $1,157,082 | $28,332,341 | $(557,660) | $25,534,284 | $54,466,047 | $3,469,230 | $119,084,464 | $177,019,741 |
| Revenue | – | – | $426,868 | $(113,334) | $313,534 | $2,060,709 | – | $2,374,243 |
| Cost of Sales | – | – | $759,632 | – | $759,632 | $1,939,994 | – | $2,699,626 |
| Expenses | $62,202 | $371,978 | $218,729 | $113,334 | $766,243 | $2,280,564 | – | $3,046,808 |
Net Income (Loss) and Comprehensive
Income (Loss) for the Period(1) | $(62,202) | $(371,978) | $(440,042) | $(226,668) | $(1,100,890) | $(2,501,497) | – | $(3,583,674) |
(1) Calculation includes loss/gain from foreign exchange and provision for/recovery of income taxes.
| For the Year Ended December 31, 2018 |
| | J55 | GameCo | Luminosity | QT
Pro Forma Adjustments | QT
Resulting Issuer | Enthusiast Gaming | Resulting Issuer
Pro Forma Adjustments | Resulting Issuer
Pro Forma |
| Revenue | – | – | $3,847,727 | – | $3,847,127 | $10,970,855 | – | $14,817,982 |
| Cost of Sales | – | – | $3,081,916 | – | $3,081,916 | $9,428,575 | – | $12,510,491 |
| Expenses | $62,202 | $321,978 | $723,461 | $7,028,964 | $8,136,605 | $19,952,828 | 2,800,000 | $30,889,433 |
Net Income (Loss) and Comprehensive
Income (Loss) for the Period(1) | $(62,202) | $(371,978) | $184,888 | $(7,028,964) | $(7,228,256) | $(19,159,497) | $(2,800,000) | $(29,348,067) |
(1) Calculation includes loss/gain from foreign exchange and provision for/recovery of income taxes.
Consolidations and Name Change
As previously announced in the press release dated May 31, 2019, in
connection with the closing of the Qualifying Transaction, J55 intends
to consolidate (the “First Consolidationâ€) the issued
and outstanding J55 Shares on the basis of 1.25 pre-First Consolidation
J55 Shares for one post-First Consolidation J55 Share prior to the
completion of the Qualifying Transaction. The First Consolidation will
be completed using the push out method and letters of transmittal will
not be sent to J55 Shareholders.
Following, and in connection with, the closing of the Arrangement, J55 intends to complete a second consolidation (the “Second Consolidation†and together with the First Consolidation, the “Consolidationsâ€)
of the issued and outstanding J55 Shares on the basis of 8 post-First
Consolidation J55 Shares for one post-Second Consolidation J55 Share.
The purpose of the Second Consolidation is to decrease the number of
issued and outstanding J55 Shares. The J55 Shares issued in
considerations for the common shares of GameCo pursuant to the
Qualifying Transaction and the J55 Shares issued in consideration for
the Enthusiast Shares pursuant to the Arrangement will be subject to the
Second Consolidation. Immediately following the closing of the
Transactions but prior to the Second Consolidation, it is expected that
there will be 568,438,454 J55 Shares issued and outstanding. Following
the Second Consolidation, it is expected that there will be
approximately 71,054,803 J55 Shares issued and outstanding.
In connection with the Transactions, J55 also plans to change its name (the “Name Changeâ€)
from “J55 Capital Corp.†to “Enthusiast Gaming Holdings Inc.â€, and to
change its trading symbol to “EGLX†or such other symbol as approved by
the Exchange. Enthusiast will change its name to “Enthusiast Gaming
Properties Inc.†and the Enthusiast Shares will be delisted from the
TSXV and the OTCQB, and Enthusiast will apply to cease to be a reporting
issuer.
In accordance with J55’s Articles, the Consolidations and the Name
Change do not require the approval of the J55 Shareholders and may be
completed subject to board approval. The First Consolidation, Second
Consolidation, Name Change and change in trading symbol are subject to
the approval of the Exchange.
Directors and Officers
As announced in the May 31, 2019 press release, the board of
directors of the Resulting Issuer is expected to consist of seven
members, including three nominees of J55, being Francesco Aquilini,
Adrian Montgomery and Stephen Maida, and two nominees of Enthusiast,
being Menashe Kestenbaum and Alan Friedman. J55 and Enthusiast now wish
to announce the remaining nominee of Enthusiast will be Ben Colabrese,
and the independent nominee will be Michael Beckerman. Additional
information regarding all proposed directors and officers of the
Resulting Issuer is contained in the Circular.
Consulting Agreements
GameCo has entered into, and plans to enter into, certain consulting
agreements prior to the closing of the Transactions. Under these
consulting agreements, as compensation for consulting services to be
rendered, it is expected that the consultants will be issued a certain
number of J55 Shares on the Closing at a price of $0.45 per share,
subject to the approval of the Exchange and the J55 Shareholders. J55
Shares issued pursuant to such consulting agreements will be subject to
certain voluntary escrow or escrow required by the Exchange and will be
released from escrow upon certain milestones being met and services
being rendered. Further information concerning such consulting
agreements is included in the Circular.
Trading Halt
As of the date of this release, trading of the J55 Shares is halted.
J55 anticipates that trading will remain halted until all documentation
in respect of the Transactions has been received and approved, as
necessary, by the Exchange.
ON BEHALF OF THE BOARD OF J55
“John Veltheerâ€
John Veltheer
Chief Financial Officer, Secretary and
Director
ON BEHALF OF THE BOARD OF ENTHUSIAST
“Menashe Kestenbaumâ€
John Veltheer
Chief Executive Officer and Director
Completion of the Transactions is subject to a number of
conditions, including but not limited to, Exchange acceptance and if
applicable pursuant to Exchange Requirements, majority of the minority
shareholder approval. Where applicable, the Transactions cannot close
until the required shareholder approval is obtained. There can be no
assurance that the Transactions will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management
information circular or filing statement to be prepared in connection
with the Transactions, any information released or received with respect
to the Transactions may not be accurate or complete and should not be
relied upon. Trading in the securities of a capital pool company should
be considered highly speculative. The TSX Venture Exchange Inc. has in
no way passed upon the merits of the proposed transaction and has
neither approved nor disapproved the contents of this press release.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking
statements, which reflect the expectations of management regarding the
completion of the Qualifying Transaction, the Arrangement, and related
transactions. Forward looking statements consist of statements that are
not purely historical, including any statements regarding beliefs,
plans, expectations or intentions regarding the future. Such statements
are subject to risks and uncertainties that may cause actual results,
performance or developments to differ materially from those contained in
the statements, including risks related to factors beyond the control
of J55 or Enthusiast. The risks include the following: conditions not
being satisfied for the Arrangement or Qualifying Transaction closing;
and other risks that are customary to transactions of this nature. No
assurance can be given that any of the events anticipated by the
forward-looking statements will occur or, if they do occur, what
benefits J55 or Enthusiast will obtain from them.
This press release does not constitute an offer to sell or
solicitation of an offer to buy any of the securities in the United
States. The securities have not been and will not be registered under
the United States Securities Act of 1933, as amended (the “U.S.
Securities Actâ€) or any state securities laws and may not be offered or
sold within the United States or to a U.S. Person unless registered
under the U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this
release.
For further information regarding J55, please contact:
John Veltheer
Chief Financial Officer, Secretary and Director
Telephone: 604-562-6915
Email: [email protected]
For further information regarding Enthusiast, please contact:
Julia Becker
Head of Investor Relations & Marketing
Telephone: 604-785-0850
Email: [email protected]
