Executive Commentary
"This is a pivotal moment for NorthStar, marking the largest financing in our history. This Credit Facility strengthens our balance sheet and directly supports our ability to scale operations and drive the business towards profitability with a single-minded focus," said Michael Moskowitz, Chair and CEO of NorthStar. "We are grateful to Beach Point Capital Management for their trust in our strategy and vision. We are also thankful for Playtech's steadfast partnership which was instrumental in securing this funding, reinforcing their value both strategically and as a technology provider."
"Beach Point has deep experience investing across the gaming sector and is excited to partner with NorthStar to support their strategic initiatives. The online gaming sector has been growing rapidly, and this investment reflects our confidence in the Company's leadership, market potential, and ability to deliver long-term sustainable growth. Likewise, we value the partnership with Playtech, who are contributing their leading technology, global reach, and strategic vision towards NorthStar's continued success," said Gabriel Fineberg, Managing Director at Beach Point.
Purpose of the Credit Facility
The purpose of the Credit Facility is to support NorthStar's continued growth by significantly strengthening the Company's balance sheet. The Company will use the proceeds of loans made pursuant to the Credit Facility: (i) to repay the aggregate $9.5 million CAD principal amount (plus accrued interest) loaned to the Company by Playtech pursuant to unsecured, interest-bearing promissory notes dated April 25, 2024, September 13, 2024 and December 16, 2024; (ii) to fund an interest reserve account in respect of the Credit Facility in an amount equal to $7,000,000 CAD; (iii) for working capital and general corporate purposes; and (iv) to pay transaction costs in connection with the Credit Facility.
Key Terms of the Credit Facility
- Loan Amount: $43.4 million CAD
- Interest Rate: SOFR + 9.35%, with a SOFR floor of 4.40%
- Maturity Date: January 24, 2030
- Amortization: Payment deferral for the first 30 months, followed by 2.5% per annum of the principal amount until the 42nd month ending after the closing date (paid quarterly), and, thereafter, 5% per annum until the Maturity Date (paid quarterly).
The Credit Facility is secured by a first-priority lien on substantially all of the assets of NorthStar and its wholly-owned subsidiaries (the "NorthStar Guarantors"). The NorthStar Guarantors have provided a guarantee of the obligations of the Company under the Credit Agreement and the other loan documents.
A copy of the Credit Agreement will be available on NorthStar's SEDAR+ profile at www.sedarplus.ca.
Credit Support from Playtech
In addition to the guarantee by the NorthStar Guarantors, it is also a requirement of the Credit Agreement that Playtech, together with certain of its affiliates (the "Playtech Guarantors") guarantee the obligations of the Company under the Credit Agreement and the other loan documents (the "Playtech Guarantee"). In consideration of the Playtech Guarantors providing the Playtech Guarantee, and subject to receipt of all required regulatory approvals (including final approval of the TSX Venture Exchange), NorthStar has issued to Playtech 32,735,295 common share purchase warrants ("Bonus Warrants"), exercisable at a price of $0.055 CAD per share, reflecting an approximately 8.70% premium to the five-day volume-weighted average price of the common shares of the Company on January 24, 2025. The Bonus Warrants will be subject to a trading hold period expiring four months from the date of issue under applicable securities laws. The Bonus Warrants expire on January 24, 2030 and are non-transferable. In accordance with the policies of the TSX Venture Exchange, if at any time the outstanding principal amount under the Credit Facility is reduced or repaid during the first year of the term of the Credit Facility, the expiry date in respect of a pro rata number of the total Bonus Warrants will be accelerated to the later of: (a) one year from the date of issuance of the Bonus Warrants; and (b) 30 days from such reduction or repayment of the Credit Facility.
Playtech is an insider of the Company and the issuance of the Bonus Warrants in connection with the provision of the Playtech Guarantee will be considered a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company intends to rely on the exemptions set forth in sections 5.5(b) and 5.7(a) of MI 61-101 from the valuation and minority shareholder approval requirements of MI 61-101 in respect of the issuance of the Bonus Warrants in connection with the provision of the Playtech Guarantee, as the Company is not listed on one of the specified markets in section 5.5(b) of MI 61-101 and the aggregate fair market value of the Bonus Warrants will be less than 25% of the Company's market capitalization.
A material change report in respect of, inter alia, the issuance of the Bonus Warrants to Playtech in connection with the provision of the Playtech Guarantee will be filed in accordance with MI 61-101. Such material change report was not filed at least 21 days before the issuance of the Bonus Warrants to Playtech in connection with the provision of the Playtech Guarantee as the Company wanted to close and implement these arrangements on an expedited basis for sound business reasons.
Advisors
NorthStar would like to express its gratitude to the advisory teams that facilitated this successful transaction. The Company was co-advised by XST Capital Group LLC and Roselli Advisory LLC, who provided financial advisory services to NorthStar, and Norton Rose Fulbright Canada LLP, who acted as legal counsel to NorthStar.
Kirkland & Ellis LLP and Goodmans LLP acted as legal counsels to Beach Point.
About NorthStar
NorthStar proudly owns and operates NorthStar Bets, a Canadian-born casino and sportsbook platform that delivers a premium, distinctly local gaming experience. Designed with high-stakes players in mind, NorthStar Bets Casino offers a curated selection of the most popular games, ensuring an elevated user experience. Our sportsbook stands out with its exclusive Sports Insights feature, seamlessly integrating betting guidance, stats, and scores, all tailored to meet the expectations of a premium audience.
As a Canadian company, NorthStar is uniquely positioned to cater to customers who seek a high-quality product and an exceptional level of personalized service, setting a new standard in the industry. NorthStar is committed to operating at the highest level of responsible gaming standards.
NorthStar is listed in Canada on the Toronto Stock Venture Exchange under the symbol BET and in the United States on the OTCQB under the symbol NSBBF. For more information on the company, please visit: www.northstargaming.ca
About Beach Point
Beach Point is a multi-strategy investment manager making credit, private equity, real estate and structured product investments. As of December 31, 2024, Beach Point manages approximately $19 billion in AUM on behalf of a predominantly institutional client base. Headquartered in Santa Monica, CA, Beach Point also has offices in New York, London and Dublin. For more information, visit https://beachpoint.capital.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the 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 press release.
Cautionary Note Regarding Forward-Looking Information and Statements
This communication contains "forward-looking information" within the meaning of applicable securities laws in Canada ("forward-looking statements"), including without limitation, statements with respect to the following: the expected benefits of the Credit Facility, the use of proceeds of the Credit Facility, the ability of the Company to perform its obligations under the Credit Facility, and future value to be delivered as a result of the Credit Facility and the Company's ability to continue as a going concern (whether or not the Credit Facility is available in the short- and long-term). The foregoing is provided for the purpose of presenting information about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of the Company's anticipated financial position, results of operations, and operating environment. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. This forward-looking information is based on management's opinions, estimates and assumptions that, while considered by NorthStar to be appropriate and reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by such forward- looking information. Such factors include, among others, the following: risks related to the Company's business and financial position; risks associated with general economic conditions; adverse industry risks; future legislative and regulatory developments; the ability of the Company to implement its business strategies; and those factors discussed in greater detail under the "Risk Factors" section of the Company's most recent annual information form, which is available under NorthStar's profile on SEDAR+ at www.sedarplus.com. Many of these risks are beyond the Company's control.
If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking statements. Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other risk factors not presently known to the Company or that the Company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking statements. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents NorthStar's expectations as of the date specified herein, and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements.
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