EGLX Enthusiast Gaming Holdings Inc

Enthusiast Gaming Holdings Inc. (TSXV: EGLX)(OTCQB: EGHIF), (“Enthusiast” or the “Company”), one of the largest vertically integrated video gaming media companies in North America, is pleased to announce that Aquilini GameCo Inc. (“GameCo”) has executed a secured senior loan agreement with an arm’s length third party (“Lender”) pursuant to which the Lender has agreed to loan up to C$20 million to GameCo.

“The additional $20 million loan to GameCo further validates the confidence in our ability to execute on our accretive growth strategy. The funds will allow the merged company to continue adding valuable assets to our combined portfolio of 85+ gaming websites, 900 YouTube Channels, 8 professional esports teams and 50+ professional esports influencers, said Menashe Kestenbaum, Chief Executive Officer of Enthusiast. “We have built a strong foundation that has positioned us as leaders in the industry, and together, we will continue building the largest, vertically integrated gaming media and esports company in the world.”  C$20 Million Secured Loan

Under the terms of the facility letter dated as of August 2, 2019, the Lender has agreed to provide GameCo with a loan of up to $20 million (the “Facility”) comprising two advances: (i) an initial advance in an amount of up to C$3 million (the “Initial Advance”) at the request of GameCo following satisfaction or waiver by the Lender of certain conditions precedent and (ii) a further advance in an amount equal to the  remaining difference between C$20 million and the amount of the Initial Advance (the “Further Advance”) at the request of GameCo following satisfaction or waiver by the Lender of certain additional conditions precedent, including the completion of the Transactions (as defined below).

The loan has a term (the “Term”) which expires on the date that is 24 months from the date which the Transactions (as defined below) are completed (the “Maturity Date”). Interest (or standby fees at an equivalent rate in lieu thereof) shall accrue at a rate per annum that is equal to the prime rate plus 5.05% calculated on the aggregate amount of the Facility, compounded monthly, whether or not the conditions precedent are satisfied or the Facility is advanced.

Interest (and any such equivalent amount by way of standby fee) will be capitalized during the first 12 months of the Term and, commencing in August 2020, interest shall be payable in cash on the last business day of each and every month until the Maturity Date.

The Facility will be used for purposes of (i) working capital and (ii) to finance future acquisitions.

GameCo will be entitled to prepay all or a part of the Facility at any time, from time to time, without bonus or penalty after the date that is twelve (12) months following the date of completion of the Transactions. GameCo has paid the Lender a $400,000 (plus applicable HST) administrative fee and has further agreed to pay the Lender a success fee in an amount that is equal to 4.1% per annum, payable monthly, calculated on the full amount of the Facility from the date of the Initial Advance.

“Including this Facility, our organization has completed C$55 million of cash financings in a few short months, making us one of the largest funded gaming and esports organizations globally. We are continuing to execute on our acquisition strategy on an accretive basis, and recognize the confidence the Lender has placed in our business model,” said Alex Macdonald, Chief Financial Officer of GameCo and incoming Chief Financial Officer of Enthusiast.

Canaccord Genuity Corp. acted as special advisor to GameCo in connection with the Facility in consideration of a cash fee equal to 2.0% on the gross proceeds raised from the Facility (totalling $400,000), payable on a pro rata basis on the date of the Initial Advance and the date of the Further Advance based on the amounts advanced to GameCo on each date.

The Sims Resource Deferred Payment

Enthusiast is also pleased to announce that it has made arrangements to exercise its early pay down option in relation to The Sims Resource (“TSR”) acquisition (see press release dated January 7, 2019). Enthusiast now expects to pay the remaining portion of the purchase price in tranches with the deferred payment fully satisfied by end of September 2019, subject to the completion of the Arrangement (as defined below). This will allow Enthusiast to realize a higher profit margin due to a decrease in capital costs associated with the acquisition.

The Transactions

On May 31, 2019, J55 announced that it had entered into (i) an amalgamation agreement (the “Amalgamation”) with GameCo and a wholly owned subsidiary of J55, pursuant to which J55 has agreed to acquire all of the outstanding common shares of GameCo and (ii) an arrangement agreement (the “Arrangement”) with Enthusiast and GameCo, pursuant to which, after completion of the Amalgamation, J55 has agreed to acquire all of the outstanding common shares of Enthusiast. Immediately prior to closing of the Amalgamation, GameCo will complete its acquisition (the “Luminosity Acquisition”, and together with the Amalgamation and Arrangement, the “Transactions”) of Luminosity Gaming Inc. and Luminosity Gaming (USA), LLC.

The completion of the Amalgamation and Arrangement remain subject to the closing conditions set out in the Amalgamation Agreement and Arrangement Agreement, respectively, including approval of the TSX Venture Exchange and the approval of the requisite majority of the shareholders of J55 and Enthusiast Gaming, as applicable.

CONTACT INFORMATION

Investor Relations:

Julie BeckerHead of Investor Relations & Marketingjbecker@enthusiastgaming.com(604) 785.0850

Forward Looking Statements

Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding GameCo’s use and repayment of the Facility and the Company’s exercise of its early pay down option in relation to TSR acquisition.  Forward looking statements consist of statements that are not purely historical, including any statements regarding the use of the proceeds of the Facility and the Company’s exercise of its early pay down option in relation to TSR acquisition as well as the terms and completion of Amalgamation, the Arrangement and the Luminosity Acquisition.  Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of the Company. The risks include the following: the ability of the Company to repay the Facility; the ability of the Company to exercise its early pay down option in relation to TSR acquisition; conditions not being satisfied for the Arrangement or Amalgamation closing; and other risks that are customary to transactions of this nature. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them.

This press release does not constitute an offer to sell or solicitation of an offer to buy any of the securities in the United States.  The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to a U.S. Person unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.