EEG suspends monthly dividend

Esports Entertainment Group (EEG) has officially announced the suspension of its monthly cash dividend pertaining to the outstanding 10% Series A cumulative redeemable convertible preferred stock.

Originally slated for distribution in December, the board at EEG has confirmed the decision to halt the dividend payments. This suspension comes on the heels of the company fulfilling its November obligations just last month.

In accordance with the provisions set forth in the Series A preferred stock agreement, any unpaid dividends will remain accrued until further notice. This strategy aligns with standard practices in the industry, ensuring compliance with regulatory frameworks while allowing for future financial maneuverability.

EEG’s Chief Executive Officer, Alex Igelman, stated that this decision is aimed at freeing up vital capital for reinvestment within the organization. “By temporarily suspending the dividend on our 10% Series A cumulative redeemable convertible preferred stock, we believe that reallocating this capital back into our business will generate the highest returns for our shareholders in the long run,” Igelman remarked.

“This is a pivotal moment for EEG as we actively implement our turnaround strategy and strive for long-term success. Our management team and board of directors will continually assess the company’s financial performance to determine the best time to reinstate the dividend,” he added.

Revenue Struggles: 71.9% Decline in Q1 for Esports Entertainment Group

The announcement of the dividend suspension follows a challenging first quarter for EEG. The company disclosed a staggering 71.9% decline in revenue, generating just $2.7 million (£2.2 million/€2.5 million) during Q1. This downturn can largely be attributed to the strategic decision to divest the Bethard online casino and sportsbook earlier in the year.

In February, EEG finalized the sale of its Bethard operations for €9.5 million, successfully completing the transition by the end of the month. Furthermore, it was noted that the ongoing winding down and liquidation of the Argyll entities had also ceased revenue-producing activities as of December, which significantly impacted year-on-year revenue comparisons.

While the sale of Bethard and the liquidation of Argyllentities contributed to lower costs, EEG reported an increased net loss, widening from $4.2 million to $4.8 million. On a more positive note, the company’s adjusted EBITDA loss showed improvement, decreasing from $1 million to approximately $354,870.

Despite the current challenges, CEO Igelman expressed optimism regarding the organization’s long-term growth trajectory. He highlighted a recent strategic move to acquire a 30% minority stake in esports content producer Drafted.gg, asserting that this partnership would fuel EEG’s ambitions and support future developmental objectives.