Smurfit-backed gaming and gaming technology company Gan has secured a $30 million loan from a subsidiary of US-based investment manager Beach Point Capital.
The Nasdaq-listed company successfully closed the $30 million secured loan last week, according to a filing with the US Securities and Exchange Commission.
In the statement, Karen Flores, Gan’s chief financial officer, said the announcement would ensure the company has the capital available to deliver better shareholder returns going forward.
“The incremental flexibility offered by the term loan allows us to execute our balanced capital allocation plan focused on investing in our business-to-business offering, growing Coolbet and our business-to-consumer presence, and returning of capital to shareholders at a time when we believe our share price underestimates the long-term opportunities that lie ahead.
“We are simultaneously taking steps to accelerate our journey to improved Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and profitability as we intensely focus on our margin profile and efficiency measures.”
Gan said in the statement that the investments included the opportunistic execution of its $5 million share repurchase program.
Gan’s loan announcement followed the release of the delayed annual report last month. In April, the Sunday independent reported that Gan would not be able to file its annual report by the required deadline after discovering errors in its preliminary financial results.
The company added that its management had identified a “material weakness” in its internal control over financial reporting at the end of three quarters in 2021. This relates to the “completeness and accuracy of accounting” for software development costs and the timing of revenue recognition when performance obligations are ongoing, leading to misstatements.
In its annual report, Gan said it is in the process of designing and implementing measures to improve its financial reporting to address key weaknesses. However, it warned that any failure to improve measures could result in reputational damage and a fall in the market price of its shares.
In conversation with the Sunday independent Last month, Gan CEO Dermot Smurfit Jnr said Gan had moved its auditor to Grant Thornton last June, describing it as a huge improvement. Based on this, there was a review of the capitalization guidelines and important recommendations were made to change them.
Smurfit said it’s “never a happy day” for a company to update the market and say some reports have changed. However, he believed this was a net positive for Gan and how it accounts for software development and capitalization without altering cash flow.
Smurfit added that Gan has made clear statements about transitioning the business to delivering positive Ebitda, describing it as one of the most important things for investors over the coming year.
