Rivalry has announced that it has closed an initial tranche of its non-brokered private placement.

The Canadian esports and sports betting operator issued 27,600,000 units at C$0.05 per unit, for gross proceeds of C$1,380,000 (around $1 million).

In a statement, the company said it expects to complete additional closings of up to 82,800,000. This will generate a total of C$5.52 million ($3.9 million).

It said that it will use the funds generated “for corporate development and general working capital purposes”.

Each unit consists of one subordinate voting share in the capital of the company as well as an attached warrant to buy additional shares in the next 24 months.

The attached warrant lets investors buy more shares later at C$0.10. If Rivalry’s share price rises above that, investors can exercise the warrants, giving Rivalry more capital but also diluting existing shareholders.

The company’s share price fell from C$1.76 in September 2023 and has bottomed out at just over C$0.03 since May.

Private Placement and Debt Restructuring Start Of New Era

Last month, Rivalry announced it was issuing the private placement in addition to a significant debt restructuring.

Steven Salz, Co-Founder and CEO of Rivalry, said it marks “the start of Rivalry’s next chapter”. The move came after a strategic review process that the company kicked off in April and follows a series of cost-cutting measures.

The company also made a deal with its senior lender to convert C$12.5 million ($8.98 million) of debt into 250.5 million new shares.

This is expected to be completed later this month, which can ease pressure on the company’s balance sheet.

Company Focusing On Casino To Drive Revenue

In its Q1 results, the company reported a rise in revenue, while cutting its costs by 58%. Last year, Rivalry launched Casino.exe to generate more steady revenue streams.

Upon the launch, Salz stated, “The launch of Casino.exe will allow us to further diversify our offering in a way that stays true to our brand and separates our product from others.

“As we scale thoughtfully into the casino segment, we’ll reduce the impact of seasonality in esports, increase customer value, and offer more stable margin profiles.”