Bragg Gaming Closes Previously Announced Bought Deal

TORONTO, Nov. 18, 2020 /CNW/ - Bragg Gaming Group (TSXV: BRAG) (OTC: BRGGF) ("Bragg" or the "Company") is pleased to announce the Company has closed its previously announced "bought deal" short form prospectus offering of units ("Units") of the Company ("Offering") at a price of $‎0.70 ‎per Unit (the "Offering Price") for total gross proceeds of $20,700,575, which included the exercise of the over-allotment option in full. Under the Offering, 29,572,250 Units were sold by a syndicate of underwriters including, Cormark Securities Inc. and Canaccord Genuity Corp., as co-bookrunners, Haywood Securities Inc., Paradigm Capital Inc. and Eight Capital‎ (collectively, the "Underwriters").

"I'd like to thank our financial partners and investors for their support in completing this transaction," said Adam Arviv, Interim CEO of Bragg. "This deal is the next step in our continued transformation and will allow us to look ahead to future expansion and growth."

Each Unit consists of one common share in the capital of the Company (a "Common Share") and one-half of one common share purchase warrant of the Company (each whole common share purchase warrant, a "Warrant"). Each Warrant will entitle the holder to purchase one Common Share at a price of $1.00 at any time prior to 4:30 p.m. (Toronto time) on the date that is 36 months following the closing of the Offering. At the Company's option, if the Company's daily volume weighted average Common Share price is greater than $1.50 for at least ten consecutive trading days, then the Company may accelerate the exercise period of the Warrants to a period ending at least 30 days from the date notice of such acceleration is provided to the holders of Warrants. To exercise this option, the Company must provide written notice to the holders of the Warrants, supplemented by a news release that sets out the accelerated expiry date.

As consideration for their services, the Underwriters received a cash commission equal to 6.0% of the gross proceeds of the Offering. As additional consideration, the Company issued a total of 1,774,335 broker warrants to the Underwriters. Each broker warrant is exercisable into one Unit at the Offering Price for a period of 3 years from the closing of the Offering.

The Company intends to use the net proceeds of the Offering to satisfy a portion of the outstanding the first earn-out payment to K.A.V.O. Holdings Limited ("KAVO") in partial consideration for a previously completed acquisition of all of the issued and outstanding membership interests of its principal subsidiary, Oryx Gaming International LLC, a turnkey gaming solution supplier ("Oryx").

Related Party Transaction Disclosure

The Company also announces today that, further to its news releases of September 30, 2020 and November 7, 2020, the second and final earn-out payment of €22 million (approximately C$34,289,200) owing to KAVO, will be converted into Common Shares by January 31, 2021, at a deemed conversion price of $0.73, being 47,000,000 Common Shares, or otherwise paid in cash by December 1, 2021. The satisfaction of the second and final earn-out payment and KAVO's entitlement to receive up to €1,500,000 in certain accounts receivable of the Company are subject to certain conditions, including receiving disinterested shareholder approval for the creation of KAVO (and its associates and affiliates, including Matevž Mazij) as a "control person" of the Company, being a holder of greater than 20% of the voting rights of the Company's outstanding securities (the "Transaction"). The Company intends to seek disinterested shareholder approval for the creation of KAVO as a "control person" at the Company's annual and special meeting to be held on November 27, 2020 ("Meeting"). Further details with respect to the Transaction are included in the management information circular dated October 29, 2020 in connection with the Meeting. Following the completion of the Transaction, the KAVO will hold 49,000,000 Common Shares, being, as of this news release, 30.5% of the outstanding Common Shares of the Company on a non-diluted basis or 30.4% of the outstanding Common Shares of the Company on a fully-diluted basis.

Matevž Mazij is the managing director of Oryx, of which the Company is a control person, and as a result thereof, the Transaction is a "related party transaction" under the provisions of Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions ("MI 61-101") and therefore, is subject to majority of the minority shareholder approval. The disinterested shareholder approval will also constitute majority of the minority shareholder approval for purposes of MI 61-101. As the Common Shares are listed on the TSXV, the Transaction is exempt from the valuation requirement as described in section 5.5(b) of MI 61-101. There are no prior valuations in respect of the Company or the Common Shares and neither the board of directors of the Company ("Board") nor the officers of the Company are aware of the existence of any such valuation.

No special committees of the Board were established in connection with the Transaction, there were no conflicted directors, no materially contrary view or abstention was expressed or made by any director. The Board believes that the Transaction is in the best interest of the Company. The Board based its recommendation upon the totality of information presented to it and considered by it in light of its knowledge of the business, financial conditions and prospects of the Company, after having undertaken a thorough review of, and having carefully considered the terms of the Transaction.

The following summary of the information and factors considered by the Board is not intended to be exhaustive but includes a summary of the material information considered in connection with the consideration of the Transaction:

• Contingent Liabilities: The completion of the Transaction would effectively remove the vast majority of the Company's contingent liabilities from its balance sheet, which was otherwise due in cash.
• Security Discharge: As a result of the Transaction, the security against Oryx in favour of KAVO will be discharged giving the Company flexibility to pursue further financing.
• Expands Strategic Relationship with Matevž Mazij: There is positive value of having Matevž Mazij, the founder and current managing director of Oryx, aligned and invested with the success of the Company. In addition, Matevž Mazij will continue to be committed to the Company through his appointment to the Board at the Meeting.

These various considerations were carefully considered and weighed against the dilutive impact of the Transaction to the current shareholders of the Company and the effective control Matevž Mazij would have upon the completion of the Transaction.

About Bragg Gaming Group

Bragg Gaming Group Inc. is a next generation gaming group with cutting-edge technology, leading brands and world-class management expertise, developing into a global gaming force. Formed by a team of gaming industry experts, Bragg's main portfolio asset is ORYX Gaming, an innovative business-to-business gaming technology platform and casino content aggregator.

Through this brand and targeted acquisitions, Bragg is focused on becoming a leader within the evolving global gaming industry. Learn more at https://www.bragg.games.

Cautionary Statement Regarding Forward-Looking Information

This news release may contain forward-looking statements or "forward-looking information" within the meaning of applicable Canadian securities laws ("forward-looking statements"). Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

All forward-looking statements reflect the Company's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Company's forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions listed below. Although the Company believes that these assumptions are reasonable, this list is not exhaustive of factors that may affect any of the forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include the following: the impact of COVID-19 on the business of Bragg; the countercyclical growth of the business of Bragg; the regulatory regime governing the business of Bragg;  the operations of the Company; the products and services of the Company; Bragg's customers; acquisition opportunities; the growth of Bragg's business, which may not be achieved or realized within the time frames stated or at all; and the anticipated size and/or revenue associated with the gaming market globally.

Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the following: risks associated with general economic conditions; adverse industry events; future legislative and regulatory developments; the inability to access sufficient capital from internal and external sources; the inability to access sufficient capital on favorable terms; realization of growth estimates, income tax and regulatory matters; the ability of Bragg to implement its business strategies; competition; economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices; the estimated size of the gaming market globally; changes in customer demand; disruptions to our technology network including computer systems and software; natural events such as severe weather, fires, floods and earthquakes; the ability of the Company to satisfy the earn-out payments; and risks related to health pandemics and the outbreak of communicable diseases, such as the current outbreak of COVID-19.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws.

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 news release.

SOURCE Bragg Gaming Group