Millennial Esports Corp (TSXV: GAME) announced Tuesday after the bell that it would be changing its name and proposing a share consolidation at its annual general meeting to be held in the first half of October. The consolidation would be the firms second of the year.
The proposed name change, to that of Torque Esports Corp, would be more in line with the firms core focus – esports racing. Millennial Esports has amassed a number of racing-focused esports assets, including unique motorsport IP such as the Worlds Fastest Gamer and the recently announced acquisition of Allinsports.
However, the firm doesn’t appear to appreciate its shareholder base, who in June experienced a 1 for 15 share consolidation as the firm sought to bring down its total shares outstanding from 165.09 million to that of 11.00 million. It seems that the consolidation wasn’t enough for the satisfaction of management, who now wants to take down the current share count to roughly 2.34 million common shares by taking part in a 1 for 5 consolidation. While the management team hasn’t stated that the approval would result in an immediate consolidation, it indicates that it “could” happen if approval has been given.
Millennial Esports management team gave the standard boiler plate reasoning for the consolidation, stating, “The board of directors believes that a Consolidation may be in the best interests of the shareholders of the Company as it could lead to increased interest by a wider audience of potential investors and could better position the Company to obtain financing and pursue acquisition opportunities.”
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However, share consolidations, also known as reverse splits, rarely work in the favour of shareholders. Typically, it results in a continuously falling share price as investors seek a better return elsewhere. Many retail investors will recall the likes of Namaste Technologies or Isodiol International and their resulting share price freefall on a post-consolidation basis as an example.
Millennial Esports is currently trading $0.87 on the TSX Venture Exchange.
Information for this briefing was found via Sedar and Millennial Esports Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
