Super Group Limited (NYSE:SGHC) announced this morning that it has launched an exchange offer for all outstanding warrants (NYSE:SGHC.WS).
The company is offering warrant holders the opportunity to receive 0.25 ordinary shares in exchange for each of its outstanding public warrants until 12:01 a.m. on December 12. As of yesterday, a total of 33,499,986 warrants were outstanding, consisting of 22,499,986 public warrants and 11,000,000 private placement warrants. Super Group is offering up to an aggregate of 5,624,997 ordinary shares in exchange for the public warrants.
Concurrently with the warrant exchange, Super Group is also soliciting consents from holders of public warrants and private placement warrants to amend the warrant agreement. This amendment would allow the company to require that each outstanding public warrant upon the closing of the offer be converted into 0.225 Ordinary Shares –a 10% drop compared to the applicable exchange ratio, and would instruct the warrant agent to cancel each outstanding private placement warrant for no consideration.
Ultimately, the warrant amendment will permit Super Group to eliminate all of the warrants that remain outstanding after the offer is completed in an attempt to simplify the company’s capital structure and reduce the potential dilutive impact of the warrants. This will provide the company with more flexibility for financing its operations and growth opportunities in the future.
But, the amendment requires the vote or written consent of holders of at least 50% of the number of then outstanding public warrants and 50% of the private placement warrants.
Parties representing approximately 22.5% of the outstanding public warrants have already agreed to tender their warrants and to consent to the amendment in the consent solicitation, and approximately 59.5% of the outstanding private placement warrants have already agreed to the warrant amendment in the consent solicitation. If holders of an additional 27.5% of the outstanding public warrants tender their public warrants and consent to the amendment, then the offer will be consummated and the amendment will be adopted.
However, if the conditions are not satisfied or waived prior to the expiration date, then Super Group may withdraw the offer and solicitation.
The company’s shares opened higher about 7.5% on the announcement, currently trading at $3.71. Sports Entertainment originally announced its $4.6 billion deal with online sports betting company Super Group on April 26, 2021, and completed its combination on January 26. UK-based Super Group provides online sports betting through its Betway brand and an online casino under the Spin brand with 2.5 million monthly active customers.
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