Update: Black Ridge Acquisition Corp. (BRAC) Announces Combination


Update: Black Ridge Acquisition Corp. (BRAC) Announces Combination

Dec 20, 2018 INTEL by Kristi Marvin

UPDATE:  Additional information on the Black Ridge transaction with Ourgame International Holdings was released this morning and the following is a summary of selected details found in the filings:

  • The transaction is expected to close in the first quarter of 2019
  • Earn-out:  the former owners of Allied Esports and WPT will be entitled to receive their pro rata portion of an aggregate of an additional 3,846,153 shares of Black Ridge Common Stock if the last sales price of the Black Ridge Common Stock equals or exceeds $13.00 per share for thirty (30) consecutive days at any time during the five (5) year period commencing on the date of the Closing.
  • Termination:  The transaction can be terminated if Black Ridge has less than $80,000,000 in cash available post-conversion of BRAC shares for the pro rata portion of the trust (BRAC is estimating $142.2 million will be held in trust at the time of the vote).
  • Lock-up:  one year from the Closing Date.

Curiously, there were no comparable companies provided in the presentation so it’s difficult to assess where Ourgame stacks up.  However, the multiples provided are 9.3x 2020 Estimated EBITDA and 3.2x 2021 Estimated EBITDA, but without a comparable peer group (or a better understanding of this sector) it’s hard to say whether this transaction is being done at a decent purchase price or not.

black ridge transaction overview


[From Yesterday]

Black Ridge Acquisition Corp. (BRAC) announced tonight they have signed a definitive agreement with Ourgame International Holdings Ltd. (“Ourgame”) to acquire two of Ourgame’s global esports and entertainment assets, Allied Esports International, Inc. (“Allied Esports”) and WPT Enterprises, Inc. (“WPT”). At close, the combined company will be renamed Allied Esports Entertainment, Inc. (“AESE”) and is expected to trade on the NASDAQ Capital Market under the ticker symbol “AESE.”

Upon completion of the transaction, AESE will be an esports entertainment company dedicated to providing in-person experiences, multiplatform content and interactive services to the global video gaming community through a fusion of Allied Esports™ and WPT®.

AESE is expected to be led by:

  • Lyle Berman, Chairman
  • Eric Yang, Vice Chairman
  • Frank Ng, Chief Executive Officer
  • Ken DeCubellis, Chief Financial Officer
  • David Moon, Chief Operating Officer
  • Adam Pliska, President

Jud Hannigan will continue his role as CEO of Allied Esports and Adam Pliska will continue to serve as president and CEO of WPT.

Audio Webcast Information

Management will post an audio webcast with presentation slides at 6 a.m. PT (9 a.m. ET) on December 20, 2018 to discuss the transaction.

To access the webcast online, visit the Investor Relations section of Black Ridge’s website at ir.blackridgeacq.com. The webcast will be available through February 1, 2019.

Transaction Details

At closing, in exchange for 100% of the equity in the entities comprising the Allied Esports business and WPT business, Black Ridge will issue approximately 11.6 million shares, with a value of $118 million, to Ourgame, as well as some of the management team members of Allied Esports and additional Ourgame-related investors.

Black Ridge will also issue the Ourgame investor group warrants to purchase a total of 3.8 million shares of Black Ridge common stock at a price per share of $11.50.

An additional $50 million of contingent stock consideration is available to Ourgame subject to certain milestones as set forth in the transaction documents.

  • The transaction reflects an anticipated initial enterprise value of approximately $213.8 million.
  • Assuming no shareholder redemptions, the company will have $98.7 million in cash on the balance sheet after transaction costs and payment of $35 million for debt owed to Ourgame.
  • The company will have zero debt at closing.
Quick Takes:

This press release was filed without a typical accompanying 8-k and investor presentation, so the information here is light on details.  However, the documents should get filed in the morning and post the webcast we should have more information to work with.  We’ll update accordingly.