TGS Esports Signs Non-Binding Letter of Intent for Reverse Takeover and Agreement for $1,000,000 Loan

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VANCOUVER, BC, Feb. 18, 2022 /CNW/ - TGS Esports Inc. ("TGS" or the "Company") (TSXV: TGS) is pleased to announce that it has entered into a non-binding letter of intent dated February 16, 2022 with respect to a potential business combination (the "Transaction") with certain subsidiaries (the "Media Subsidiaries") of an arm's length entertainment, travel and media company (the "MediaCo") which would result in a reverse takeover of the Company by the shareholders of MediaCo. The final structure and terms of the Transaction have not yet been finalized, and remain subject to conditions including due diligence of the parties and receipt by the parties of tax, corporate, and securities law advice.  

The issuer resulting from the Transaction is expected to remain a diversified media company with esports and gaming, travel and media divisions, and to carry on the current business of TGS and the Media Subsidiaries. MediaCo is a digital business ecosystem company that brings digital advertisers, consumers, video gamers and travelers together and provides avenues for in-game and in-video advertising and monetization. The Media Subsidiaries represent the travel division and interactive TV and media divisions of MediaCo and are expected to have synergies with the business of TGS. The Transaction with the Media Subsidiaries is intended to provide the Company with an opportunity to internalize a travel platform for its live events and have travel integration in Pepper's social gaming-platform, and to provide access to more end users for TGS' esports content, tournaments and events through an internalized media division with significant reach. Additional information regarding the business and financial condition of the Media Subsidiaries will be provided when available.

The Company also announces that two arms' length lenders have agreed to advance an aggregate of $1,000,000 to the Company as an unsecured loan (the "Loan") payable in tranches at the request of the Company. The Loan will be unsecured, will not bear interest, is not convertible and will mature on the date that is six months from the date of issuance of each tranche, as applicable. The proceeds of the Loan are expected to be used by the Company to fund its working capital commitments, including equipment purchases, salaries, and payment of outstanding obligations, and to fund the Company's expenses in connection with the evaluation and completion of the Transaction.

In connection with the Transaction, the Company seeks to complete a private placement (the "Concurrent Financing") to raise minimum gross proceeds of $3,000,000. The terms of the Concurrent Financing have not been finalized. The proceeds from the Concurrent Financing are expected to be used to fund the initial working capital requirements of the issuer resulting from the Transaction with respect to its operations and business plans, and to fund the working capital requirements for the current business of the Company and the Media Subsidiaries.

The completion of the Transaction (the "Closing") and Concurrent Financing remain subject to a number of conditions including satisfactory due diligence, the receipt of structuring advice by the parties, approval of the board of directors of each of the parties, entry into a binding agreement, approval of the TSX Venture Exchange (the "Exchange") and other conditions customary to transactions of this nature. Further updates and particulars of the Transaction will be provided upon the Company and MediaCo entering into a binding agreement for the Transaction. Trading in the Company's stock is expected to remain halted until completion of the Transaction.

On Closing, subject to Exchange acceptance and the Exchange limitations on finder's fees, the Company is expected to pay a finder's fee to two arms' length parties which fees shall be equal to 3% and 2.5%, respectively, of the purchase price paid by the Company for the Media Subsidiaries pursuant to a binding agreement in respect of the Transaction. Subject to Exchange acceptance, the finder's fees will be paid by the issuance of common shares of the Company at a deemed price per share equal to the issue price of securities issued pursuant to the Concurrent Financing, and such shares will be subject to a hold period expiring four months and one day after the date of issuance. The finders are arm's length parties with respect to the Company, MediaCo and the Media Subsidiaries.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction 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 transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of TGS Esports Inc. 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 news release.

None of the securities to be issued in connection with the Transaction or the Concurrent Financing will be or have been registered under the United States Securities Act of 1933, as amended (the "1933 Act"), and none may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act. This press release is being issued pursuant to Rule 135c of the 1933 Act and shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the securities, in any state where such offer, solicitation or sale would be unlawful.

About TGS Esports Inc.

TGS Esports builds gaming strategies for brands looking to connect with any gaming community. This includes planning and executing live and digital tournaments, live broadcasting, influencer campaigns, and scholastic integration. Tournaments are held on TGS' proprietary social gaming platform Pepper allowing communities to interact and engage in one space. The combination of TGS esports event expertise and next generation software creates an unparalleled esports experience that allows brands to reach their desired gaming demographic.

On behalf of the Board of Directors
Spiro Khouri, CEO
TGS Esports Inc.

Disclaimer for Forward-Looking Information

This news release contains "forward-looking statements." Statements in this news release that are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things statements regarding the Transaction, Loan and Concurrent Financing and business of the issuer resulting from the Transaction. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned that assumptions used in the preparation of any forward-looking statements may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including that the Loan may not be advanced by the lenders on the terms agreed upon or at all, that a binding agreement may not be entered into with respect to the Transaction, that even if a binding agreement is entered into that the Transaction may not be completed, that the Concurrent Financing may not be completed at all or on terms favorable to the Company, and that the Company may need to spend the funds advanced pursuant to the Loan and/or Concurrent Financing on items not disclosed herein for sound business reasons, and that the Company may not identify or complete on any strategic transactions, or that if they do complete such transactions that those transactions will be beneficial for the business of the Company. The reader is cautioned not to place undue reliance on any forward-looking statement. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Risks and uncertainties about the Company's business are more fully discussed in the Company's disclosure materials which can be obtained from www.sedar.com. The forward-looking statements contained in this news release are made as of the date of this news release and the Company assumes no obligation to update any forward-looking statement or to update the reasons why actual results could differ from such statements except to the extent required by law.

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.

SOURCE TGS Esports Inc

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