Toronto-based esports and sports betting operator Rivalry has announced a major financial reset to conclude its strategic review.

The company announced a C$5.52 million ($3.9 million) private placement alongside a significant debt restructuring. The move concludes the strategic review process that the company kicked off in April and follows a series of cost-cutting measures.

In a press release, Steven Salz, Co-Founder and CEO of Rivalry, said it marks “the start of Rivalry’s next chapter”.

Stronger and Better Capitalized, Says CEO

Rivalry will sell up to 110.4 million units at C$0.05 each to raise C$5.52 million. The company noted that a strategic family office has already committed C$4.1 million, securing much of the funding.

In addition, Rivalry reached a deal with its senior lender to convert C$12.5 million ($8.98 million) of debt into 250.5 million new shares. While this wipes out most of its short-term obligations, it gives the lender greater control over the company.

This restructuring makes the lender a “control person” under securities law, giving it major influence over Rivalry’s future direction. Shareholders approved this via written consent.

Salz said, “Rivalry emerges stronger and better capitalized, having eliminated significant debt” and “secured funding for near-term priorities”. He added that it positions “the Company to focus on growth and sustained value creation”.

Both the placement and restructuring are expected to close around October 8, subject to regulatory approval.

Drastic Action Needed As Debts Mount

While the company has shown improvement this year, it had to take drastic action as debt mounted. The company initiated the strategic review in April as debts were set to reach C$17 million ($12.2 million).

The restructuring of the debt will give the company some breathing room. Whether the short-term gain will convert to long-term benefit remains to be seen.

In its Q1 results, the company showed it has been able to significantly reduce expenses. A 58% reduction in operating costs led to an increase of $1.3 million in net revenue.

Founded in 2017, Rivalry was one of the first regulated sportsbooks to focus heavily on esports, offering odds on League of Legends, Counter–Strike, Dota 2, VALORANT, and more.

To increase its profitability, the company has expanded into iGaming. Alberta, following Ontario in opening the gaming market to private operators, could boost future revenue. The province is expected to launch new betting and gaming regulations later this year or early 2026.

In addition to Alberta, the company said it “is currently in the process of obtaining additional country licenses”.

In response to the announcement, the company’s stock price fell from C$0.05 to C$0.035. This is rock-bottom for the company and an 89% drop from this time last year.