Esports Entertainment Group (EEG) has suspended payment of the monthly cash dividend on its outstanding 10% Series A Cumulative Redeemable Convertible Preferred Stock.
The monthly dividend was payable in December. However, EEG said its board has now confirmed this will be suspended.
The company paid the monthly dividend for November 2023 as announced last month. Consistent with the terms of the Series A Preferred Stock, unpaid dividends will continue to be accrued.
EEG CEO Alex Igelman said the suspension will free up more capital for EEG to reinvest in the company. He added that this would create greater value for shareholders in the long term.
“We are temporarily suspending the dividend on our Series A 10% cumulative redeemable convertible preferred stock because we believe we can effectively reinvest capital in the company to achieve the greatest possible return on capital for shareholders,” Igelman said.
“This is an exciting time for EEG as we execute our turnaround strategy and position the company for long-term success.
“Management and the Board will continue to monitor the company’s financial performance to determine the appropriate timing to reinstate the dividend.”
Esports Entertainment Revenue Falls 71.9% in Q1
The suspension comes against the backdrop of a difficult first quarter for EEG. Last month the company reported a 71.9% fall in revenue to $2.7m (£2.2m/€2.5m) in the first quarter after selling the Bethard business earlier this year.
The group agreed in February to sell the Bethard online casino and sports betting business for €9.5 million. The sale was completed later that month, with EEG divesting the business entirely.
EEG also noted the winding up and liquidation of Argyll companies. In December, revenue-generating operations were discontinued, which impacted the year-on-year comparison.
The sale and liquidation resulted in lower costs, but the net loss still increased from $4.2 million to $4.8 million. However, adjusted EBITDA loss improved from $1.0 million to $354,870.
CEO Igelman said he remains positive about its long-term growth plans. He pointed to the recent deal to acquire a 30% minority stake in esports content producer Drafted.gg, saying this will further support its long-term ambitions.