Black Ridge (BRAC) Gets a Third $5M Backstop

As expected, Black Ridge Acquisition Corp. (BRAC), is still busy rounding up backstops ahead of the closing of their business combination with Allied Esports.  To that end, BRAC announced this morning that they have entered into a Share Purchase Agreement for another $5 million.  This is in addition to their previous $5 million backstop with Simon Equity Development and their  $5 million backstop with TV Azteca. This new Share Purchase Agreement is with Lyle Berman, who is a director of BRAC, and Morris Goldfarb, a stockholder of the sponsor founder shares, which they define as “BROG”, but not to be confused with the symbol for Twelve Seas, which is also “BROG”.

Per the agreement, Mr. Berman has agreed to purchase $3,000,000 of shares of BRAC common stock and Mr. Goldfarb with purchase $2,000,000.  These open market or privately negotiated transactions will begin two days from now (it doesn’t say “business days, so let’s assume that means Monday) and will end on the close of business on Friday, July 26, 2019.

The price at which they will purchase the shares will not be greater than $10.30, which is the the amount currently held in trust.  If Mr. Berman and Mr. Goldfarb are unable to purchase the full $5,000,000 of shares, BRAC will sell to them newly issued shares upon closing of the Business Combination at the Maximum Price equal to the difference between $5,000,000 and the dollar amount of shares purchased by them.

So what do Mr. Berman and Mr. Goldfarb get for these purchases?  Well, it’s sort of similar to the their other two backstops, but a little sweeter.  In summary:

• 1.5 additional shares of Black Ridge common stock for every ten (10) shares that are purchased, or 15% of a share.
• BROG (BRAC’s sponsor) will transfer to them an aggregate of 200,000 shares of BRAC common stock owned by BROG.

For reference, the terms of the previous two backstops were as the following:

• one additional share of Black Ridge common stock for every ten (10) shares that are purchased, or 1/10 of a share.
• one warrant to purchase one (1) share of Black Ridge common stock for every two (2) shares purchased. The terms are the same as the public warrants.

All told, Black Ridge now has $15 million in backstops, but we still don’t have a new date for the shareholder vote.  The clock runs out on August 10th, so a new date should be set any day now.

Stay tuned for any further updates.