Blue Star Capital (LON:BLU), the investing company with a focus on esports, technology and its applications within media and gaming, has today provided an update in respect of its esports investee company, The Drops Esports Inc.
The Directors of Blue Star are pleased to learn that, on 12 January 2020, its investee company The Drops entered into a letter of intent with Fibresources Corporation (“Fibresources”), a Capital Pool Company listed on the TSX Venture Exchange, whereby Fibresources intends to acquire all of the issued and to be issued share capital of The Drops for common shares in Fibresources (“Proposed Transaction”) subject to certain conditions summarised below.
The Proposed Transaction will likely be effected by way of a share exchange agreement, pursuant to which Fibresources will acquire all of the issued and outstanding shares of The Drops (“The Drops Shares”), in exchange for post-consolidated common shares of Fibresources (each, a “Fibresources Share”) and The Drops will become a wholly owned subsidiary of Fibresources.
Pursuant to the Proposed Transaction, the shareholders of The Drops will receive one Fibresources Share for every two The Drops Shares held. There will be an estimated 89,500,000 The Drops Shares outstanding at closing, such that Fibresources will issue an estimated 44,750,000 Fibresources Shares in exchange for all of the issued Drops Shares. It is anticipated that Fibresources will have approximately 45,000,000 shares in issue prior to funds being raised and the completion of the Proposed Transaction.
The Proposed Transaction will constitute a change of business for Fibresources such that it is intended it will seek to delist from the TSX Venture Exchange and relist on the Canadian Securities Exchange. The Completion of the Proposed Transaction is subject to, among other things, approval by shareholders of Fibresources and The Drops, Fibresources having raised additional funds and concluded a share capital and debt reorganisation, receiving all necessary regulatory approvals and the Proposed Transaction having been effected prior to 31 March 2020.
Following the passing of resolutions by shareholders on 6 November 2019, Blue Star acquired an interest of 13.6 per cent. in The Drops. It is the intention of The Drops to cancel some founder shares as part of the Proposed Transaction which is likely to result in Blue Star’s holding increasing to 18.6 per cent of the issued share capital of The Drops prior to completion of the Proposed Transaction.
The Company will provide a further update to the market in due course.
Tony Fabrizi, CEO of Blue Star said: “The Drops is the first of our six early stage investments in esports to release news and we are optimistic for the value of our investment should the Proposed Transaction complete. The Proposed Transaction is a vital step in The Drops achieving its stated objective of becoming the largest esports brand in Canada on the public markets. It also represents an important confirmation of Blue Star’s esports investment thesis and we look forward to making further announcements in due course.”