Enthusiast Gaming announces forebearance transaction, strategic review process

Enthusiast Gaming (EGLXF) announces a debt financing and forbearance transaction designed to support the Company’s recapitalization and long-term business objectives. Following the Company’s announcement of the strategic divestment of its direct sales business line, Enthusiast Gaming has sharpened its focus on its portfolio of high-performing digital gaming media assets that deliver stable, high-margin revenue. These assets serve as the foundation for the Company’s streamlined operating model and long-term growth potential. In light of the strength of its core portfolio, and in response to multiple unsolicited offers and expressions of interests, the Company’s board of directors as also initiated a strategic review process to explore opportunities to further strengthen its balance sheet and unlock shareholder value. In connection with the Strategic Review, which may include recapitalization and refinancing transactions designed to strengthen the Company’s balance sheet and deleverage the business, the Board has formed a Special Committee composed of John Albright, Jordan Gnat and Thomas Hearne. The Special Committee is responsible for overseeing the review process, evaluating potential alternatives, and making recommendations to the Board. The Special Committee has engaged Oakvale Capital Partners as its financial advisor in respect of the Strategic Review. Management and the Special Committee will continue to work with Oakvale over the coming months to review the various alternatives available to the Company and to respond to ongoing inbound inquiries, with the intention of entering into a definitive agreement in respect of a Strategic Transaction by the end of 2025. The process is being undertaken with the full support of the Company’s management, Board, and lenders. The Transaction will result in the provision of a non-revolving term loan to the Company in the principal amount of $2,000,000, subject to satisfaction of customary conditions precedent, pursuant to the terms of a forbearance and first supplemental credit agreement among the Company, as borrower, certain subsidiaries of the Company, as guarantors, Beedie Investments, as administrative and collateral agent and lenders led by Beedie Capital entered into on July 9, 2025. The Beedie Forbearance Agreement amends and supplements the credit agreement dated as of July 12, 2024, in respect of the Company’s non-revolving debt facility of $20,000,000 and includes a forbearance by the Agent and the Lenders whereby the Agent and the Lenders will agree to forbear from demanding and accelerating repayment of indebtedness outstanding under the Credit Agreement and to forbear from enforcing their security thereunder. Net proceeds of the Term Loan will be used for working capital purposes. Pursuant to the Transaction and as a condition to the advance of the Term Loan, the Company also announces a private placement of common share purchase warrants of the Company to the Lenders. As a condition of the Transaction, and in response to certain defaults of the Company under the Company’s amended and restated commitment letter dated as of October 6, 2023, with its senior lender, the Company, as borrower, certain subsidiaries of the Company, as guarantors, and the senior lender to the Company have also entered into a separate forbearance agreement dated July 9, 2025, whereby the Senior Lender will agree to forbear from demanding and accelerating repayment of indebtedness outstanding under the Senior Commitment Letter and to forbear from enforcing its security thereunder, as a result of defaults by the Company thereunder. The forbearance period under the Senior Commitment Letter and the Credit Agreement will be until the earliest of December 31, 2025 and March 31, 2026, the completion date of a Strategic Transaction, and the expiry or termination of the forbearance period agreed to by the Lenders or the Senior Lenders, as applicable, or any further default. Pursuant to the Forbearance Agreements, the Company has also agreed to implement, by no later than July 31, 2025, a cost-cutting plan to achieve a minimum of $3,000,000 in annualized cost savings, which is expected to be fulfilled by the Company’s previously announced divestment of its direct sales business line.