The total upfront consideration, which has been paid to the sellers as of the date hereof, amounted to USD 32.5 million on a cash and debt free basis. Of the upfront consideration USD 9.75 million was paid by set-off by transfer of 981,813 newly issued shares in Stillfront through a directed share issue to the sellers of Game Labs, and the remining part of the upfront consideration was paid in cash. The consideration for the cash payment was financed by cash at hand and available credit facilities.
The new share issue was resolved on the date hereof by the board of directors of Stillfront based on the mandate granted at the extraordinary general meeting held on 17 December 2020. The reason for the deviation from the shareholders’ pre-emption right is to allow that Stillfront will be able to fulfill its commitments made in connection with the acquisition of Game Labs. The subscription price per share related to the upfront consideration amounts to SEK 83.586 (determined through negotiations between the sellers and Stillfront) and corresponds to the volume weighted average price per share in Stillfront traded on Nasdaq First North Premier Growth Market during the ten trading days up to and including 6 May 2021 converted into USD at the average exchange rate between SEK and USD of the Swedish Central Bank (Sw. Riksbanken).
Through the new share issue, Stillfronts share capital will increase by SEK 68,726.91. The issued shares shall be entitled to dividend as from the first record day for dividend after such shares have been registered with the Swedish Companies Registration Office and in the share register kept by Euroclear Sweden AB. Through the new issue of the shares in connection with the completion of the transaction, the dilution for the current shareholders in Stillfront is approx. 0.27 percent on a fully diluted basis (i.e. based on the total number of shares and votes registered in Stillfront after completion of the share issue in relation to the transaction).
In addition, the sellers may receive an earn-out payment for each of the financial years 2021, 2022 and 2023 depending on the EBIT development of Game Labs during each of those financial years, however not exceeding USD 30 million in aggregate. The earn-out consideration will be payable 70 percent in cash and 30 percent in newly issued shares in Stillfront to the sellers during the subsequent year of the respective earn-out period. The subscription price for newly issued shares related to the earn-out payments (if any) will be based upon the volume weighted average price of the shares in Stillfront traded on Nasdaq Firth North Premier Growth Market or such other market place on which Stillfront's shares are listed for a period of ten trading days prior to the date of Stillfront’s announcement of financial results for the applicable earn-out period converted into U.S. Dollars at the average exchange rate between SEK and US Dollars of the Swedish Central Bank during the ten day period set forth above.
All conditions for closing have now been fulfilled. Game Labs will be consolidated into Stillfront’s consolidated financial reporting from May 2021.
