UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14A

Information Required in Proxy Statement

Schedule 14A Information

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to §240.14a-12

SPORTS ENTERTAINMENT ACQUISITION CORP.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

☒		No fee required.
☐		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
		(1)		Title of each class of securities to which transaction applies:
		(2)		Aggregate number of securities to which transaction applies:
		(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
		(4)		Proposed maximum aggregate value of transaction:
		(5)		Total fee paid:
☐		Fee paid previously with preliminary materials.
☒		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
		(1)		Amount Previously Paid:   $615,051.25
		(2)		Form, Schedule or Registration Statement No.:   Form F-4 Reg. No.: 333-259395
		(3)		Filing Party:   Super Group (SGHC) Limited
		(4)		Date Filed:   September 9, 2021

SPORTS ENTERTAINMENT ACQUISITION CORP.

Golden Bear Plaza 11760 US Highway 1, Suite W506

North Palm Beach, Florida 33408

NOTICE OF SPECIAL MEETING

OF STOCKHOLDERS OF

SPORTS ENTERTAINMENT ACQUISITION CORP.

To Be Held On January 26, 2022

To the Stockholders of Sports Entertainment Acquisition Corp.:

NOTICE IS HEREBY GIVEN that a special meeting (the “special meeting”) of stockholders of Sports Entertainment Acquisition Corp., a Delaware corporation (“SEAC,” the “Company,” “we,” “us” or “our”), will be held at 10:00 AM, Eastern Time, on January 26, 2022 (the “special meeting”). The special meeting will be a virtual meeting conducted exclusively via live webcast in order to facilitate stockholder attendance while safeguarding the health and safety of our stockholders, directors and management team. You are cordially invited to attend the special meeting online by visiting https://www.cstproxy.com/sportsentcorp/2022 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the virtual meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in this proxy statement.

At the special meeting, you will be asked to consider and vote on proposals to:

 

(a)

Proposal No. 1 — the Business Combination Proposal — to approve and adopt the Business Combination Agreement (the “Business Combination Agreement”), dated as of April 23, 2021, by and among SEAC, SGHC Limited, a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey (“SGHC”), Super Group (SGHC) Limited, a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey (“NewCo”), Super Group (SGHC) Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NewCo (“Merger Sub” and, together with NewCo, SGHC and SGHC’s direct and indirect subsidiaries, the “Target Companies”), and Sports Entertainment Acquisition Holdings LLC, a Delaware limited liability company (the “Sponsor”), pursuant to which: (i) immediately prior to the closing of the Business Combination (the “Closing”), each issued and outstanding share of SEAC Class B Common Stock (the “Class B Shares”) will automatically convert into one share of SEAC Class A Common Stock (the “Class A Shares,” and, together with the Class B Shares, the “common stock”); and (ii) on the date of Closing, Merger Sub will merge with and into SEAC, with SEAC continuing as the surviving company, as a result of which (A) SEAC will become a wholly-owned subsidiary of NewCo; (B) each issued and outstanding unit of SEAC, consisting of one Class A Share and one-half of one warrant (the “SEAC Warrants”), will be automatically detached; (C) each issued and outstanding Class A Share of SEAC (other than treasury shares) will be canceled and converted into the right to receive one ordinary share of NewCo (a “NewCo Ordinary Share”); and (D) each issued and outstanding SEAC Warrant to purchase a Class A Share will be converted into a warrant exercisable for one NewCo Ordinary Share.

The Business Combination Agreement provides, among other things, that prior to Closing SGHC will undergo a pre-closing reorganization (the “Reorganization”), wherein all existing shareholders of SGHC (the “Pre-Closing Holders”) will exchange their shares of SGHC for newly issued NewCo Ordinary Shares and SGHC will become a wholly-owned subsidiary of NewCo. Following the Reorganization, the Pre-Closing Holders will hold that number of NewCo Ordinary Shares equal to the quotient obtained by dividing (i) the Aggregate Stock Consideration (defined as $4,750,000,000, plus the amount by which the cash and cash equivalent balance of the Target Companies exceeds $300,000,000, less the amount by which the cash and cash equivalent balance of the Target Companies

PROXY STATEMENT FOR SPECIAL MEETING

OF STOCKHOLDERS OF

SPORTS ENTERTAINMENT ACQUISITION CORP.

PROSPECTUS FOR UP TO 541,250,000 ORDINARY SHARES

AND 22,500,000 ORDINARY SHARES ISSUABLE UPON THE EXERCISE OF WARRANTS OF

SUPER GROUP (SGHC) LIMITED

The board of directors of Sports Entertainment Acquisition Corp., a Delaware corporation (“SEAC,” “we,” “us,” and “our”), has unanimously approved the Business Combination Agreement, dated as of April 23, 2021 (the “Business Combination Agreement”), by and among SEAC, SGHC Limited, a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey (“SGHC”), Super Group (SGHC) Limited, a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey (“NewCo”), Super Group (SGHC) Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NewCo (“Merger Sub” and, together with NewCo, SGHC and SGHC’s direct and indirect subsidiaries, the “Target Companies”), and Sports Entertainment Acquisition Holdings LLC, a Delaware limited liability company ( “Sponsor”), pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, the following shall occur: (i) immediately prior to the closing of the Business Combination (the “Closing”), each issued and outstanding share of SEAC Class B Common Stock (the “Class B Shares”) will automatically convert into one share of SEAC Class A Common Stock (the “Class A Shares,” and, together with the Class B Shares, the “common stock”); and (ii) on the date of Closing, Merger Sub will merge with and into SEAC, with SEAC continuing as the surviving company, as a result of which (A) SEAC will become a wholly-owned subsidiary of NewCo; (B) each issued and outstanding unit of SEAC, consisting of one Class A Share and one-half of one warrant (the “SEAC warrants”), shall be automatically detached; (C) each issued and outstanding Class A Share of SEAC (other than treasury shares) will be canceled and converted into one ordinary share of NewCo (a “NewCo Ordinary Share”); and (D) each issued and outstanding SEAC warrant to purchase a Class A Share will be converted into a warrant exercisable for one NewCo Ordinary Share.

The Business Combination Agreement provides, among other things, that SGHC will undergo a pre-closing reorganization (the “Reorganization”) wherein all existing shareholders of SGHC (the “Pre-Closing Holders”) will exchange their shares of SGHC for newly issued NewCo Ordinary Shares. Following the Reorganization, the Pre-Closing Holders will hold that number of NewCo Ordinary Shares equal to the quotient obtained by dividing (i) the Aggregate Stock Consideration (defined as $4,750,000,000, plus the amount by which the cash and cash equivalent balance of the Target Companies exceeds $300,000,000, less the amount by which the cash and cash equivalent balance of the Target Companies is less than $300,000,000; provided, that in no event shall the Aggregate Stock Consideration exceed $4,850,000,000), by (ii) $10.00 (the “Aggregate Stock Consideration Shares”). Pursuant to the Business Combination Agreement, effective immediately following and conditioned upon the Closing, NewCo will purchase NewCo Ordinary Shares from certain Pre-Closing Holders (the “Repurchased Shares”) in exchange for cash consideration equal to $10.00 per NewCo Ordinary Share as set forth in Repurchase Agreements (as described further in the section titled “— Repurchase Agreements” below) executed by such Pre-Closing Holders (the “Repurchase”). The transactions contemplated by the Business Combination Agreement are referred to herein as the “Business Combination.”

In addition, the Pre-Closing Holders will be entitled to a right to receive contingent consideration in the form of additional shares of NewCo based on the number of NewCo Ordinary Shares held immediately prior to Closing, after taking into account those NewCo Ordinary Shares to be sold pursuant to Repurchase Agreements (as if the Repurchase occurred immediately prior to the Closing), in the form of three potential earn-out payments. The earn-out payments will become payable at or after the Closing as follows, if the following share price trigger events occur any time during the period beginning on the date of the Business Combination Agreement and ending on the five (5) year anniversary of the Closing: (a) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $11.50 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.025; (b) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $12.50 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.025; and (c) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $14.00 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.05 (collectively, the “Earnout Shares”).

The maximum number of shares that can be repurchased by the Company pursuant to the Repurchase, is 50,171,438, each of which will be repurchased for $10 per share, for a maximum aggregate cash consideration of $501,714,380. The earnout consideration will consist solely of shares of the Company, with a maximum aggregate number of earnout shares issuable to the Pre-Closing Holders of 48,314,251. As to the earnout consideration, the earnout shares will become issuable in three tranches upon the satisfaction of the Triggering Event applicable to such tranche, with a maximum of 12,078,559 shares being issuable upon satisfaction of Triggering Event I, 12,078,559 issuable upon satisfaction of Triggering Event II, and 24,157,133 issuable upon satisfaction of Triggering Event III.

Immediately following the Closing, after taking into account the Repurchase as if it had occurred on June 30, 2021 and including the dilutive effect of Earnout Shares and SEAC warrants, it is expected that the SEAC public stockholders will own approximately 11.85% of the issued and outstanding NewCo Ordinary Shares, the Founders will own approximately 3.91% of the issued and outstanding NewCo Ordinary Shares and the Sellers will own approximately 84.25% of the issued and outstanding NewCo Ordinary Shares (assuming SGHC’s cash and cash equivalents balance at closing is $327.5 million, converted at the historical closing exchange rate, as of June 30, 2021, of €0.8301 to $1.00 and no redemption of public shares).

Proposals to approve the Business Combination Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the special meeting of stockholders of SEAC scheduled to be held at 10:00 AM, Eastern Time, on January 26, 2022 (the “special meeting”). The special meeting will be a virtual meeting conducted exclusively via live webcast in order to facilitate stockholder attendance while safeguarding the health and safety of our stockholders, directors and management team. You are cordially invited to attend the special meeting online by visiting https://www.cstproxy.com/sportsentcorp/2022 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the virtual meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in this proxy statement/prospectus.

Our units, Class A Shares and warrants are currently listed on the New York Stock Exchange (the “NYSE”) under the symbols “SEAH.U,” “SEAH” and “SEAH WS,” respectively. NewCo intends to apply for listing, to be effective at Closing, of the NewCo Ordinary Shares and warrants on the NYSE under the symbols “SGHC” and “SGHC WS,” respectively. NewCo will not have units traded following the consummation of the Business Combination. It is a condition to the consummation of the Business Combination that the NewCo Ordinary Shares and warrants are approved for listing on the NYSE, but there can be no assurance such listing condition will be met. If such listing condition is not met, the Business Combination may not be consummated unless such condition is waived by the parties.

SEAC is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirements.

This proxy statement/prospectus provides you with detailed information about the Business Combination and other matters to be considered at the special meeting of SEAC’s stockholders. SEAC encourages you to carefully read this entire document. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 38.

These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated January 13, 2022, and is first being mailed to SEAC stockholders on or about January 13, 2022.

TABLE OF CONTENTS

 

ABOUT THIS PROXY STATEMENT/PROSPECTUS			ii
FINANCIAL STATEMENT PRESENTATION			iii
CONVENTIONS WHICH APPLY TO THIS PROXY STATEMENT/PROSPECTUS AND EXCHANGE RATE PRESENTATION			iv
INDUSTRY AND MARKET DATA			v
FREQUENTLY USED TERMS			vi
TRADEMARKS, TRADE NAMES AND SERVICE MARKS			ix
SUMMARY OF THE MATERIAL TERMS OF THE BUSINESS COMBINATION			1
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS			4
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS			13
RISK FACTORS			38
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			103
SPECIAL MEETING OF SEAC STOCKHOLDERS			104
THE BUSINESS COMBINATION PROPOSAL			110
THE BUSINESS COMBINATION AGREEMENT			155
THE ADJOURNMENT PROPOSAL			179
SELECTED HISTORICAL FINANCIAL INFORMATION OF SEAC			180
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA OF SGHC			182
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			185
INFORMATION ABOUT MANAGEMENT, DIRECTORS AND NOMINEES			187
EXECUTIVE AND DIRECTOR COMPENSATION			193
OTHER INFORMATION RELATED TO SEAC			195
BUSINESS OF SUPER GROUP			208
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			234
SUPER GROUP’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS			250
BENEFICIAL OWNERSHIP OF SECURITIES			283
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS			286
DESCRIPTION OF NEWCO’S SECURITIES			289
PRICE RANGE OF SECURITIES AND DIVIDENDS			306
COMPARISON OF SHAREHOLDER RIGHTS			307
SHARES ELIGIBLE FOR FUTURE SALE			318
APPRAISAL RIGHTS			320
SUBMISSION OF STOCKHOLDER PROPOSALS			321
OTHER STOCKHOLDER COMMUNICATIONS			322
EXPERTS			323
DELIVERY OF DOCUMENTS TO STOCKHOLDERS			324
WHERE YOU CAN FIND MORE INFORMATION			324
INDEX OF FINANCIAL STATEMENTS			F-1
Annex A — Business Combination Agreement			A-1
Annex B — Amended and Restated Memorandum of Incorporation of NewCo			B-1
Annex C — Amended and Restated Articles of Incorporation of NewCo			C-1
Annex D — Equity Incentive Plan Proposal			D-1
Annex E — Employee Stock Purchase Plan Proposal			E-1
Annex F — Pre-Closing Reorganization			F-1

 

i

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission, or the “SEC,” constitutes a prospectus of NewCo under Section 5 of the U.S. Securities Act of 1933, as amended, or the “Securities Act,” with respect to the NewCo Ordinary Shares to be issued to SEAC stockholders and the NewCo Ordinary Shares underlying the SEAC warrants being assumed by NewCo as part of the Business Combination, if the Business Combination described herein is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act,” with respect to the Special Meeting of SEAC stockholders at which SEAC stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the adoption of the Business Combination Agreement, among other matters.

 

ii

FINANCIAL STATEMENT PRESENTATION

NewCo was incorporated on March 29, 2021 for the purpose of effectuating the Business Combination described herein. NewCo has nominal assets and no liabilities, contingencies, or commitments, which will not have conducted any operations prior to the consummation of this offering other than acquiring 100% of the equity interests of SGHC Limited. Following these exchanges, SGHC Limited will be a wholly-owned subsidiary of NewCo. Accordingly, no financial statements of NewCo have been included in this proxy statement/prospectus. The Business Combination will first be accounted for as a capital reorganization whereby NewCo is the successor to its predecessor SGHC. As a result of the first step described above, the existing shareholders of SGHC will continue to retain control through ownership of NewCo. The capital reorganization will be immediately followed by the acquisition of SEAC, which is accounted for within the scope of International Financial Reporting Standards (“IFRS”) 2, Share-based Payments (“IFRS 2”). Under this method of accounting, SEAC will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of NewCo issuing NewCo Ordinary Shares for the net assets of SEAC, accompanied by a recapitalization.

 

iii

CONVENTIONS WHICH APPLY TO THIS PROXY STATEMENT/PROSPECTUS AND EXCHANGE RATE PRESENTATION

In this proxy statement/prospectus, unless otherwise specified or the context otherwise requires:

 

•

“$” and “USD” each refer to the United States dollar;

 

•

“£,” “GBP” and “pounds” each refer to the British pound sterling; and

 

•

“€” and “EUR” each refer to the Euro.

Certain amounts described herein have been expressed in U.S. dollars for convenience, and when expressed in U.S. dollars in the future, such amounts may be different from those set forth herein due to intervening exchange rate fluctuations. The exchange rate used for conversion between U.S. dollars and pounds is based on the historical exchange rate of the pound released by the Federal Reserve, the central bank of the United States.

 

iv

INDUSTRY AND MARKET DATA

In this proxy statement/prospectus, we present industry data, information and statistics regarding the markets in which SGHC competes, as well as statistics, data and other information provided by third parties relating to markets, market sizes, market shares, market positions and other industry data (collectively, “Industry Analysis”). Such information is supplemented where necessary with SGHC’s internal estimates, taking into account publicly available information about other industry participants and the judgment of SGHC’s management where information is not publicly available. This information appears in “Business of Super Group” and other sections of this proxy statement/prospectus.

Industry publications, research, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this proxy statement/prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in any forecasts or estimates.

 

v

FREQUENTLY USED TERMS

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:

“Adjournment Proposal” means the proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if SEAC is unable to consummate the Business Combination.

“Board” means the board of directors of SEAC.

“Business Combination” means the transactions contemplated by the Business Combination Agreement.

“Business Combination Agreement” means the Business Combination Agreement, dated as of April 23, 2021, by and among SEAC, SGHC, NewCo, Merger Sub and Sponsor, which is attached hereto as Annex A, and as may be amended from time to time.

“Business Combination Proposal” means the proposal to approve the Business Combination described in this proxy statement/prospectus.

“Class A Shares” means SEAC’s Class A common stock, par value $0.0001.

“Class B Shares” means SEAC’s Class B common stock, par value $0.0001.

“Closing” means the closing of the Business Combination.

“common stock” means the Class A Shares together with the Class B Shares of SEAC.

“Company” means the business and operations of SGHC prior to the Business Combination and to the business and operations of NewCo following the Business Combination.

“Continental” means Continental Stock Transfer & Trust Company.

“Current Charter” means SEAC’s current amended and restated certificate of incorporation.

“DGCL” means the Delaware General Corporation Law as the same may be amended from time to time.

“DTC” means the Depository Trust Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Founders” means the Sponsor and the following independent directors of SEAC: Natara Holloway and Timothy Goodell.

“Founder Shares” means the Class B Shares purchased by the Sponsor and the following independent directors of SEAC: Natara Holloway and Timothy Goodell.

“Guernsey Companies Law” means the Companies (Guernsey) Law, 2008 (as amended).

“IFRS” means the International Financial Reporting Standards as set forth by the International Accounting Standards Board.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“IPO” means SEAC’s October 6, 2020 initial public offering of units, with each unit consisting of one Class A Share and one-half of one warrant, raising total gross proceeds of approximately $450,000,000.

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.

 

vi

“Merger Sub” means Super Group (SGHC) Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NewCo.

“NewCo” means Super Group (SGHC) Limited, a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey, and its subsidiaries when the context requires.

“NewCo Board” means the board of directors of Newco, upon the consummation of the Business Combination.

“NewCo Governing Documents” means the NewCo Amended and Restated Memorandum of Incorporation and the NewCo Amended and Restated Articles of Incorporation.

“NewCo Ordinary Shares” means the ordinary redeemable shares of NewCo, of no par value.

“NewCo Sponsor warrants” means the NewCo warrants converted from the SEAC warrants issued by SEAC to the Sponsor or PJT Partners Holdings LP.

“NYSE” means the New York Stock Exchange.

“Ordinary Resolution” means a resolution passed as an ordinary resolution in accordance with the Guernsey Companies Law by a simple majority of the votes of the shareholders entitled to vote and voting in person or by attorney or by proxy at a meeting or by a simple majority of the total voting rights of eligible shareholders (being the shareholders entitled to vote on the circulation of the written resolution) by written resolution.

“private placement warrants” means the warrants issued to the Sponsor and PJT Partners Holdings LP in a private placement simultaneously with the closing of the IPO as well as in connection with the closing of the partial exercise by the underwriters of their over-allotment option, with each such warrant entitling the holder thereof to purchase one Class A Share at a price of $11.50 per share.

“public shares” means the Class A Shares issued in the IPO held by public shareholders other than the Founders.

“public warrants” means the 22,500,000 redeemable warrants sold as part of the units in the IPO.

“Repurchase” means the buyback/repurchase and cancellation of certain NewCo Ordinary Shares as part of the Reorganization. For purposes of the percentages in this joint proxy/prospectus, we have assumed 49,842,684 shares were repurchased in exchange for $498,426,840 of cash as of June 30, 2021, unless specified otherwise.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

“SEAC Merger” means the merger of SEAC with and into the Merger Sub pursuant to the Business Combination Agreement.

“SEAC unit” means a unit of SEAC consisting of (a) one Class A Share and (b) one-half of one SEAC public warrant.

“SEAC warrant” means, collectively, the private and public warrants of SEAC, each entitling the holder to purchase one Class A Share per warrant at a price of $11.50 per share.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Sellers” means certain shareholders who are officers and employees of the Target Companies (“Management”) and certain other existing shareholders of SGHC (the “Co-Investors”).

“SGHC” means SGHC Limited, a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey.

 

vii

“special meeting” means the special meeting of SEAC stockholders, called for the purpose of approving the Business Combination and the other proposals set forth herein.

“Special Resolution” means a resolution passed as a special resolution in accordance with the Guernsey Companies Law by a majority of not less than seventy five percent of the votes of the shareholders entitled to vote and voting in person or by attorney or by proxy at a meeting or by seventy five percent of the total voting rights of eligible shareholders (being the shareholders entitled to vote on the circulation of the written resolution) by written resolution.

“Sponsor” means Sports Entertainment Acquisition Holdings LLC, a Delaware limited liability company.

“Target Companies” means, collectively, SGHC, NewCo, Merger Sub and all direct and indirect subsidiaries of SGHC.

“Transfer Agent” means Continental Stock Transfer & Trust Company.

“underwriters” means Goldman Sachs & Co. LLC and PJT Partners LP.

“warrants” means the private placement warrants and public warrants.

 

viii

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

SGHC, NewCo, Merger Sub, SEAC and their respective subsidiaries own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their businesses. In addition, their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks appearing in this proxy statement/prospectus are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus are listed without the applicable ^®, ^™ and SM symbols, but such references are not intended to indicate, in any way, that we or the owners thereof will not assert, to the fullest extent under applicable law, our or their rights to these trademarks, trade names and service marks.

 

ix

SUMMARY OF THE MATERIAL TERMS OF THE BUSINESS COMBINATION

Pursuant to the Business Combination Agreement, (i) immediately prior to the Closing, each issued and outstanding Class B Share will automatically convert into one Class A Share; and (ii) on the date of Closing, Merger Sub will merge with and into SEAC, with SEAC continuing as the surviving company, as a result of which (A) SEAC will become a wholly-owned subsidiary of NewCo; (B) each issued and outstanding unit of SEAC, consisting of one Class A Share and one-half of one SEAC warrant, will be automatically detached; (C) each issued and outstanding Class A Share of SEAC (other than treasury shares) will be canceled and converted into the right to receive one NewCo Ordinary Share; and (D) each issued and outstanding SEAC Warrant to purchase a Class A Share will be converted into a warrant exercisable for one NewCo Ordinary Share.

In addition, prior to the Closing, SGHC will undergo the Reorganization wherein all Pre-Closing Holders will exchange their shares of SGHC for newly issued NewCo Ordinary Shares and SGHC will become a wholly-owned subsidiary of NewCo. Following the Reorganization, the Pre-Closing Holders will hold in the aggregate that number of NewCo Ordinary Shares equal to the quotient obtained by dividing (i) the Aggregate Stock Consideration (defined as $4,750,000,000, plus the amount by which the cash and cash equivalent balance of the Target Companies exceeds $300,000,000, less the amount by which the cash and cash equivalent balance of the Target Companies is less than $300,000,000; provided, that in no event shall the Aggregate Stock Consideration exceed $4,850,000,000), by (ii) $10.00. Pursuant to the Business Combination Agreement, effective immediately following and conditioned upon the Closing, NewCo will purchase NewCo Ordinary Shares from certain Pre-Closing Holders in exchange for cash consideration equal to $10.00 per NewCo Ordinary Share. See the section titled “The Business Combination Agreement.”

Immediately following and conditioned upon the Closing, NewCo will purchase NewCo Ordinary Shares from certain Pre-Closing Holders (the “Repurchased Shares”) in exchange for cash consideration equal to $10.00 per NewCo Ordinary Share (the “Aggregate Cash Consideration”) as set forth in Repurchase Agreements (as described further in the section titled “— Repurchase Agreements” below) executed by such Pre-Closing Holders (the “Repurchase”).

In addition, the Pre-Closing Holders will be entitled to a right to receive contingent consideration based on the number of NewCo Ordinary Shares held immediately prior to Closing, after taking into account those NewCo Ordinary Shares to be sold pursuant to Repurchase Agreements (as if the Repurchase occurred immediately prior to the Closing), in the form of three potential earn-out payments. The earn-out payments will become payable at or after the Closing as follows, if the following share price trigger events occur any time during the period beginning on the date of the Business Combination Agreement and ending on the five (5) year anniversary of the Closing: (a) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $11.50 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.025; (b) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $12.50 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.025; and (c) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $14.00 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.05 (collectively, the “Earnout Shares”).

The maximum number of shares that can be repurchased by the Company pursuant to the Repurchase, is 50,171,438, each of which will be repurchased for $10 per share, for a maximum aggregate cash consideration of $501,714,380. The earnout consideration will consist solely of shares of the Company, with a maximum

 

1

aggregate number of earnout shares issuable to the Pre-Closing Holders of 48,314,251. As to the earnout consideration, the earnout shares will become issuable in three tranches upon the satisfaction of the Triggering Event applicable to such tranche, with a maximum of 12,078,559 shares being issuable upon satisfaction of Triggering Event I, 12,078,559 issuable upon satisfaction of Triggering Event II, and 24,157,133 issuable upon satisfaction of Triggering Event III.

Following the Closing, after taking into account the Repurchase as if it had occurred on June 30, 2021 and including the dilutive effect of Earnout Shares and SEAC warrants, the SEAC public shareholders will hold approximately 11.85% of the issued and outstanding NewCo Ordinary Shares, the Founders will hold approximately 3.91% of the issued and outstanding NewCo Ordinary Shares and the Sellers will hold approximately 84.25% of the issued and outstanding NewCo Ordinary Shares (assuming SGHC’s cash and cash equivalents balance at closing is $327.5 million, converted at the historical closing exchange rate, as of June 30, 2021, of €0.8301 to $1.00 and no public shares are redeemed as described in this proxy statement/prospectus).

The Closing is subject to certain customary conditions, including, among other things, that (i) the Minimum Cash Condition has been satisfied, (ii) SEAC’s stockholders approve the Business Combination Proposal, (iii) the Reorganization has been effected, (iv) certain regulatory approvals are obtained and (v) the absence of communications from certain gaming regulators that they manifest a clear intention/are minded to refuse certain change of control applications in connection with the transaction.

The Business Combination Agreement also contemplates the execution by the parties of various agreements at the Closing, including, among others, the below.

Exchange Agreement

Concurrently with the execution of the Business Combination Agreement, NewCo, SGHC and each Pre-Closing Holder entered into an Exchange Agreement, pursuant to which, on the Closing Date but prior to the Closing (and conditioned upon the Closing), the Company will undergo the Reorganization which provides for, among other things, the transfer by the Pre-Closing Holders of all issued ordinary shares of the Company in exchange for newly issued NewCo Ordinary Shares.

Founder Holders Consent Letter

Concurrently with the execution of the Business Combination Agreement, the Founders, SGHC, NewCo and SEAC entered into the Founder Holders Consent Letter, pursuant to which, among other things, the Founders waived any and all anti-dilution rights described in the Current Charter with respect to Class B Shares held by the Founders and acknowledge the conversion of such Class B Shares into Class A Shares, as more fully described in the Founder Holders Consent Letter.

Amended and Restated Registration Rights Agreement

At the Closing, SEAC, SGHC, NewCo, the Founders, certain Pre-Closing Holders and PJT Partners Holdings LP (“PJT Holdings”) will enter into an Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”) (i) amending and restating SEAC’s Registration Rights Agreement, dated as of October 6, 2020, in its entirety, and (ii) pursuant to which, among other things, NewCo will provide certain registration rights for the NewCo Ordinary Shares and NewCo warrants held by the parties to the A&R Registration Rights Agreement, subject to certain exceptions and as more fully described in the A&R Registration Rights Agreement.

Lock-Up Agreement

At the Closing, SEAC, SGHC, NewCo, the Founders, and all Pre-Closing Holders will enter into Lock-Up Agreements (the “Lock-Up Agreements”) pursuant to which, among other things, the Founders and the

 

2

Pre-Closing Holders will agree not to transfer, sell, assign or otherwise dispose of the NewCo Ordinary Shares held by such person for 12 months following the Closing (with respect to the Founders) and six months following the Closing (with respect to the Pre-Closing Holders), in each case subject to certain exceptions and as more fully described in the Lock-Up Agreement.

In connection with the execution of the Lock-Up Agreements, SEAC, the Sponsor, Eric Grubman, John Collins, the Founders and PJT Holdings will amend their Letter Agreement, dated October 6, 2020 (the “Amendment to Letter Agreement”), to, among other things, terminate certain transfer restrictions with respect to SEAC’s securities, subject to certain exceptions and as more fully described in the Amendment to Letter Agreement.

Restrictive Covenant Agreement

At the Closing, NewCo will enter into a Restrictive Covenant Agreement (the “Restrictive Covenant Agreement”) with each of Eric Grubman and John Collins pursuant to which, among other things, each of Mr. Grubman and Mr. Collins will agree not to, for the period during which they sit on the NewCo board of directors and for 18 months thereafter, directly or indirectly, engage in a competing business with SGHC or NewCo, or form or participate in a SPAC (as a founder or as a 10% or greater economic or voting investor) which acquires a business that competes with SGHC or NewCo, subject to certain exceptions and as more fully described in the Restrictive Covenant Agreement.

Transaction Support Agreements

Concurrently with the execution of the Business Combination Agreement, NewCo, SGHC, SEAC and all Pre-Closing Holders entered into Transaction Support Agreements (the “TSAs”), pursuant to which, among other things, each Pre-Closing Holder agreed to vote their outstanding shares of SGHC at any meeting of SGHC’s shareholders in favor of the transactions contemplated by the Business Combination Agreement and provided a power of attorney to SGHC to take certain actions in connection with the transactions contemplated by the Business Combination Agreement on behalf of such shareholders.

Repurchase Agreements

Concurrently with the execution of the Business Combination Agreement, NewCo, SGHC, and certain Pre-Closing Holders entered into Repurchase Agreements pursuant to which NewCo will repurchase NewCo Ordinary Shares from such shareholders in exchange for cash consideration equal to $10.00 per NewCo Ordinary Share, effective immediately following and conditioned upon the Closing.

Founder Holders Deferral Agreement

Concurrently with the execution of the Business Combination Agreement, NewCo, SEAC, the Sponsor, PJT Holdings, Eric Grubman and John Collins entered into a Founder Holders Deferral Agreement (the “Founder Holders Deferral Agreement”) pursuant to which, among other things, (i) NewCo will be granted a cash redemption right divided into two tranches with respect to the NewCo Sponsor warrants (including the underlying NewCo Ordinary Shares acquired following a permitted exercise of the NewCo Sponsor warrants) which shall entitle NewCo to redeem, with respect to the first tranche, 5,500,000 of the NewCo Sponsor warrants at a price per warrant equal to $6.50, and with respect to the second tranche, 5,500,000 of the NewCo Sponsor warrants at a price per warrant equal to $12.50, upon the trading price of the NewCo Ordinary Shares hitting certain price targets which, with respect to the first tranche, shall be $18.00 for any 20 trading days out of any consecutive 30-day trading period, and with respect to the second tranche, shall be $24.00 for any 20 trading days out of any consecutive 30-day trading period, as more fully described in the Founder Holders Deferral Agreement, and (ii) any NewCo Sponsor warrants (or NewCo Ordinary Shares acquired upon a permitted exercise of the NewCo Sponsor warrants) directly or indirectly owned by Eric Grubman and John Collins (or their affiliates) will be subject to additional restrictions on payment, as more fully described in the Founder Holders Deferral Agreement.

 

3

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the special meeting and the proposals to be presented at the special meeting, including with respect to the Business Combination. The following questions and answers do not include all the information that is important to SEAC stockholders. Stockholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the Business Combination and the voting procedures for the special meeting.

 

Q.	Why am I receiving this proxy statement/prospectus?

 

A.

SEAC and SGHC have agreed to a business combination under the terms of the Business Combination Agreement that is described in this proxy statement/prospectus. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A, and SEAC encourages its stockholders to read it in its entirety. SEAC’s stockholders are being asked to consider and vote upon, among other things, a proposal to adopt the Business Combination Agreement. See the sections titled “The Business Combination Proposal” and “The Business Combination Agreement.”

Consummation of the Business Combination Proposal requires the approval of holders of at least a majority of the Class A Shares of SEAC and Class B Shares of SEAC that are voted in person (which would include presence at the virtual special meeting) or by proxy at the special meeting. Additionally, SEAC must provide all holders of public shares with the opportunity to have their public shares redeemed in connection with its initial business combination. Holders who wish to exercise their redemption rights must, prior to 10:00 AM, Eastern Time, on January 24, 2022 (two business days prior to the vote at the special meeting): (i) submit a written request to the Transfer Agent that SEAC redeem their public shares for cash and (ii) deliver their public shares to the Transfer Agent physically or electronically using the Depository Trust Company’s (“DTC”) Deposit and Withdrawal at Custodian (“DWAC”) system.

YOUR VOTE IS IMPORTANT. STOCKHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS.

 

Q.	Are there any other matters being presented to stockholders at the special meeting?

 

A.	In addition to voting on the Business Combination, the stockholders of SEAC will vote on the below proposals.

(a) Proposal No. 2 — the Equity Incentive Plan Proposal — to consider and vote, on an advisory and non-binding basis, upon a proposal to approve, assuming the Business Combination Proposal is approved and adopted, the 2021 Equity Incentive Plan (the “Equity Incentive Plan”). A copy of the Equity Incentive Plan is attached to this proxy statement/prospectus as Annex D, and SEAC encourages its stockholders to read it in its entirety. See the section titled “The Business Combination Agreement — The Equity Incentive Plan Proposal.”

(b) Proposal No. 3 — the Employee Stock Purchase Plan Proposal — to consider and vote, on an advisory and non-binding basis, upon a proposal to approve, assuming the Business Combination Proposal is approved and adopted, the 2021 Employee Stock Purchase Plan (the “ESPP”). A copy of the ESPP is attached to this proxy statement/prospectus as Annex E, and SEAC encourages its stockholders to read it in its entirety. See the section titled “The Business Combination Agreement — The Employee Stock Purchase Plan Proposal.”

(c) Proposal No. 4 — the Adjournment Proposal — to approve the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal. See the section titled “The Adjournment Proposal.”

 

4

SEAC will hold the special meeting to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.

Consummation of the Business Combination is conditional on approval of the Business Combination Proposal.

 

Q.	I am a holder of SEAC public shares. Why am I receiving this proxy statement/prospectus?

 

A.

Upon consummation of the Business Combination, and without any action on the part of any party or any other person, in consideration for the acquisition of all of the issued and outstanding SEAC Class A Shares (as a result of the Business Combination), NewCo will issue one NewCo Ordinary Share for each SEAC Class A Share acquired by virtue of the Business Combination (the “Merger Consideration”). Immediately following the Closing, after taking into account the Repurchase as if it had occurred on June 30, 2021 and including the dilutive effect of Earnout Shares and SEAC warrants, it is expected that the SEAC public shareholders will own approximately 11.85% of the issued and outstanding NewCo Ordinary Shares, the Founders will own approximately 3.91% of the issued and outstanding NewCo Ordinary Shares and the Sellers will own approximately 84.25% of the issued and outstanding NewCo Ordinary Shares (assuming SGHC’s cash and cash equivalents balance at the Closing is $327.5 million, converted at the historical closing exchange rate, as of June 30, 2021, of €0.8301 to $1.00 and no redemptions). This proxy statement/prospectus includes important information about NewCo and the business of NewCo and its subsidiaries following consummation of the Business Combination. SEAC urges you to read the information contained in this proxy statement/prospectus carefully.

 

Q.	I am a SEAC warrant holder. Why am I receiving this proxy statement/prospectus?

 

A.

Upon consummation of the Business Combination, the SEAC warrants will, by their terms, be assumed by NewCo and thereby entitle the holders to purchase NewCo Ordinary Shares (and not SEAC) at a purchase price of $11.50 per share. This proxy statement/prospectus includes important information about NewCo and the business of NewCo and its subsidiaries following consummation of the Business Combination. SEAC urges you to read the information contained in this proxy statement/prospectus carefully.

 

Q.	Why is SEAC proposing the Business Combination?

 

A.

SEAC is a blank check company formed to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On October 6, 2020, SEAC completed its IPO of units, with each unit consisting of one Class A Share of SEAC and one-half of one redeemable warrant, with each whole warrant entitling the holder thereof to purchase one Class A Share of SEAC at a price of $11.50 per share, raising total gross proceeds of approximately $450,000,000. Since the IPO, SEAC’s activity has been limited to the evaluation of business combination target companies.

The prospectus for SEAC’s IPO provided the general guidelines that SEAC intended to use to evaluate potential acquisition targets. Based on its due diligence investigations of NewCo and the industry in which it operates, SEAC believes that NewCo generally meets such guidelines. For more information, see the section titled “The Business Combination Proposal — The Board’s Reasons for the Approval of the Business Combination.”

 

Q.	Did the Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A.

The Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. The officers and directors of SEAC and SEAC’s advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of

 

5

industries and concluded that their experience and backgrounds, together with the experience and sector expertise of SEAC’s financial advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, SEAC’s officers and directors and SEAC’s advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on their own judgment as well as the judgment of the Board in valuing SGHC’s business.

 

Q.	Do I have redemption rights?

 

A.

If you are a holder of public shares, you have the right to demand that SEAC redeem such shares for a pro rata portion of the cash held in SEAC’s trust account, including interest earned on the trust account. SEAC sometimes refers to these rights to demand redemption of the public shares as “redemption rights.” SEAC’s initial stockholders entered into a letter agreement, pursuant to which they have agreed to waive their redemption rights with respect to their Founder Shares and public shares in connection with the completion of a business combination. Notwithstanding the foregoing, a holder of public shares, together with any affiliate or any other person with whom he, she or it is acting in concert or as a partnership, syndicate or other group, will be restricted from seeking redemption with respect to more than 15% of the issued and outstanding public shares. Accordingly, all public shares in excess of 15% held by a stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as contemplated under Section 13 of the Exchange Act), will not be redeemed.

Additionally, SEAC’s Current Charter provides that SEAC may not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001 (such that SEAC is not subject to the SEC’s “penny stock” rules). The Closing is subject to certain customary conditions, including, among other things, that (i) the Minimum Cash Condition has been satisfied and (ii) SEAC’s stockholders approve the Business Combination Proposal. Consequently, if accepting all properly submitted redemption requests would cause SEAC’s net tangible assets to be less than $5,000,001 as described above or make SEAC unable to satisfy the Minimum Cash Condition, the Business Combination may not be consummated.

 

Q.	Will my ability to exercise redemption rights be impacted by how I vote on the Business Combination Proposal?

 

A.

No. You may exercise your redemption rights irrespective of whether you vote your public shares for or against the Business Combination Proposal or any other proposal described by this proxy statement/prospectus. As a result, the Business Combination Agreement can be approved by stockholders who will redeem their public shares and no longer remain stockholders, leaving stockholders who choose not to redeem their public shares holding shares in a company with a less liquid trading market, fewer stockholders, less cash and the potential inability to meet the listing standards of NYSE.

 

Q.	How do I exercise my redemption rights?

 

A.

If you are a holder of public shares or units and wish to exercise your redemption rights, you must, (i) if you hold your public shares through units, elect to separate your units into the underlying public shares and warrants and (ii) prior to 10:00 AM, Eastern Time, on January 24, 2022, (A) submit a written request to the Transfer Agent that SEAC redeem your public shares for cash and (B) deliver your public shares to the Transfer Agent physically or electronically using the DTC’s DWAC System. Any holder of public shares will be entitled to demand that such holder’s public shares be redeemed for a full pro rata portion of the amount then in the trust account, including interest earned on the trust account (which, for illustrative purposes, was approximately $450,133,793.82, or $10.00 per public share, as of January 11, 2022). Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly upon consummation of the Business Combination.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the deadline for submitting redemption requests and thereafter, with SEAC’s consent, until the Closing. If

 

6

you deliver your public shares for redemption to the Transfer Agent and later decide to withdraw such request prior to the deadline for submitting redemption requests, you may request that the Transfer Agent return the shares (physically or electronically). You may make such request by contacting the Transfer Agent at the address listed at the end of this section.

Any corrected or changed proxy card or written demand of redemption rights must be received by the Transfer Agent prior to the vote taken on the Business Combination Proposal at the special meeting. No demand for redemption will be honored unless the holder’s public shares have been delivered (either physically or electronically) to the Transfer Agent prior to the deadline for submitting redemption requests.

If the redemption demand is properly made as described above, then, if the Business Combination is consummated, SEAC will redeem these public shares for a pro rata portion of funds deposited in the trust account. If you exercise your redemption rights, then you will be exchanging your public shares for cash and will not be entitled to NewCo Ordinary Shares upon consummation of the Business Combination.

If you are a holder of public shares and you exercise your redemption rights, it will not result in the loss of any warrants that you may hold. Your warrants will become exercisable to purchase NewCo Ordinary Shares in lieu of SEAC Class A Shares for a purchase price of $11.50 per share upon consummation of the Business Combination.

 

Q.	What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A.

Whether the redemption is subject to U.S. federal income tax depends on the particular facts and circumstances. It is possible that you may be treated as selling such SEAC Class A Shares and, as a result, recognize capital gain or capital loss. It is also possible that the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of SEAC Class A Shares that you own or are deemed to own (including through the ownership of warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, please see the sections titled “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations — Tax Consequences for U.S. Holders Exercising Redemption Rights With Respect to SEAC Class A Shares” and “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations — Tax Consequences to Non-U.S. Holders Exercising Redemption Rights with respect to SEAC Class A Shares.” We urge you to consult your tax advisors regarding the tax consequences of exercising your redemption rights, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws.

 

Q.	What are the U.S. federal income tax consequences as a result of the Business Combination?

 

A.

Subject to the limitations, exceptions, and qualifications described in “The Business Combination Proposal — Material Tax Consideration — Material U.S. Federal Income Tax Considerations — Tax Consequences of the Merger to U.S. Holders” below, the Business Combination should qualify as a tax-deferred transaction described by Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”). Assuming the Business Combination so qualifies, U.S. Holders and Non-U.S. Holders (as defined in “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations”) exchanging SEAC Class A Shares for NewCo Ordinary Shares generally should not recognize gain or loss for U.S. federal income tax purposes, except as otherwise described in “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations.”

As discussed in the section entitled “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations”, the appropriate U.S. federal income tax treatment of SEAC public warrants in connection with the Merger is uncertain because it is unclear whether the Merger, in addition to qualifying as an exchange described in Section 351(a) of the Code, will also qualify as a “reorganization” within the meaning of Section 368(a) of the Code (a “Reorganization”). There are

 

7

significant factual and legal uncertainties as to whether the Merger will meet the requirements to qualify as a Reorganization. Accordingly, our U.S. counsel expresses no opinion with respect to the tax treatment of the Merger as a transaction qualifying as a Reorganization.

If the Merger qualifies as a Reorganization, subject to Section 367(a) of the Code, a U.S. holder of SEAC public warrants generally should not recognize any gain or loss upon the exchange of SEAC public warrants for NewCo public warrants pursuant to the Business Combination. However, it is unclear whether the requirements of Section 368 of the Code can be satisfied and such qualification is not a condition of the Business Combination. If the Merger does not qualify as a Reorganization, a U.S. holder of SEAC public warrants could be treated as transferring its SEAC public warrants to NewCo in exchange for NewCo public warrants in an exchange governed only by Section 351 of the Code. If so treated, a U.S. holder should be required to recognize gain (but not loss) in an amount equal to the lesser of (i) the amount of gain realized by such holder (generally, the excess of (x) the sum of the fair market values of the NewCo public warrants treated as received by such holder and the NewCo Ordinary Shares received by such holder, if any, over (y) such holder’s aggregate adjusted tax basis in the SEAC public warrants and SEAC Class A Shares, if any, exchanged therefor) and (ii) the fair market value of the NewCo public warrants received by such holder in such exchange.

The tax consequences of the Business Combination are complex and will depend on your particular circumstances. For a more complete discussion of the U.S. federal income tax considerations of the Business Combination, see the sections entitled “The Business Combination Proposal — Material Tax Consideration — Material U.S. Federal Income Tax Considerations — Tax Consequences of the Merger to U.S. Holders.” If you are a U.S. Holder whose Class A Shares are exchanged, or whose public warrants are assumed by NewCo, in the Business Combination, you are urged to consult your tax advisor to determine the tax consequences thereof.

The summary above is qualified in its entirety by the more detailed discussion provided in the section entitled “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations.”

 

Q.	Do I have appraisal rights if I object to the proposed Business Combination?

 

A.	No. Neither our stockholders nor our warrant holders have appraisal rights in connection with the Business Combination under the DGCL.

 

Q.	What happens to the funds deposited in the trust account after consummation of the Business Combination?

 

A.

Upon consummation of the IPO, SEAC deposited $450,000,000 in the trust account. Upon consummation of the Business Combination and subject to the limitations in the Business Combination Agreement, the funds in the trust account will be used to pay holders of the public shares who properly exercise redemption rights or to fund NewCo’s or its subsidiaries’ working capital, growth and general corporate purposes, to pay certain fees and expenses incurred in connection with the Business Combination (including aggregate fees of $15,750,000, or 3.5% of the trust account, assuming no redemptions, 5.25% of the trust account, assuming maximum redemptions, or 4.2% of the trust account, assuming the mid-point redemption scenario, as deferred underwriting commissions), and to pay for the SGHC Repurchase.

 

Q.	What happens if the Business Combination is not consummated?

 

A.

If SEAC does not complete the Business Combination for whatever reason, SEAC would search for another target business with which to complete a Business Combination. If SEAC does not complete an initial business combination by October 6, 2022, SEAC must redeem 100% of the outstanding public shares, at a per share price, payable in cash, equal to the amount then held in the trust account, including interest earned

 

8

on the funds held in the trust account and not previously released to SEAC (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of outstanding public shares. The Founders have no redemption rights in respect of their SEAC Class A Shares contained in the private placement warrants or their SEAC Class B Shares in the event a business combination is not effected in the required time period, and, accordingly, such shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to SEAC’s outstanding warrants. Accordingly, the warrants will expire worthless.

 

Q.	How do the Founders intend to vote on the proposals?

 

A.

Pursuant to the terms of the letter agreement entered into at the time of the IPO, the Founders agreed to vote their Founder Shares, and any public shares purchased by them, in favor of the Business Combination Proposal. As of the date of this proxy statement/prospectus, the Founders own an aggregate of 11,250,000 shares of SEAC common stock, which, in the aggregate, represents 20% of SEAC’s total outstanding shares on the date of this proxy statement/prospectus.

 

Q.	When do you expect the Business Combination to be completed?

 

A.

It is currently anticipated that the Business Combination will be consummated as soon as practicable following the special meeting which is set for 10:00 AM, Eastern Time, on January 26, 2022; however, such meeting could be adjourned, as described above. For a description of the conditions to the completion of the Business Combination, see the section titled “The Business Combination Agreement — Conditions to the Closing of the Business Combination.”

 

Q:	Can SEAC or SGHC waive the conditions to the consummation of the Business Combination?

 

A:

SEAC or SGHC may agree to waive, in whole or in part, one or more of the conditions to SEAC’s or SGHC’s obligations to complete the Business Combination, to the extent permitted by SEAC’s or SGHC’s organizational documents Current Charter and bylaws and applicable laws. SEAC may not waive the condition that SEAC public stockholders approve the Business Combination Proposal. See the section titled “The Business Combination Agreement — Conditions to the Closing of the Business Combination.”

 

Q:	Following the Business Combination, will SEAC’s securities continue to trade on a stock exchange?

 

A:

No. SEAC anticipates that, following consummation of the Business Combination, SEAC will be wholly-owned by NewCo, and the SEAC Class A Shares will be delisted from the NYSE and deregistered under the Exchange Act. However, in connection with the Business Combination, NewCo intends to apply to list the NewCo Ordinary Shares and warrants on the NYSE under the symbols “SGHC” and “SGHC WS,” respectively, upon the Closing.

 

Q.	What impact will the COVID-19 pandemic have on the Business Combination?

 

A.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on the businesses of SEAC, SGHC and NewCo, and there is no guarantee that efforts by SEAC, SGHC and NewCo to address the adverse impacts of COVID-19 will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or its impact, among others. In the event of any business disruption, if SEAC or the Target Companies are unable to recover on a timely basis, the Business Combination and NewCo’s business, financial condition and results of operations following the completion of the Business Combination may be adversely affected. The Business Combination may also be delayed and adversely affected by COVID-19 and become more costly. Each of SEAC, SGHC and NewCo may also incur additional costs to remedy damages caused by any disruptions, which could adversely affect their respective financial condition and results of operations.

 

9

Q.	What do I need to do now?

 

A.

SEAC urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes, and to consider how the Business Combination will affect you as a stockholder and/or warrant holder of SEAC. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

 

Q.	How do I vote?

 

A.

The special meeting will be held via live webcast at 10:00 AM, Eastern Time, on January 26, 2022. The special meeting can be accessed by visiting https://www.cstproxy.com/sportsentcorp/2022, where you will be able to listen to the special meeting live and vote during the special meeting. Please note that you will only be able to access the special meeting by means of remote communication. If you are a holder of record of shares of common stock on the record date, you may vote at the special meeting or by submitting a proxy for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. Any stockholder wishing to attend the virtual meeting should register for the special meeting by January 21, 2022. To register for the special meeting, please follow these instructions as applicable to the nature of your ownership of common stock:

 

•

If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the virtual meeting, go to https://www.cstproxy.com/sportsentcorp/2022, enter the 12-digit control number included on your proxy card or notice of the special meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the special meeting you will need to log back into the special meeting site using your control number. Pre-registration is recommended but is not required in order to attend.

 

•

Beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the virtual meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive an e-mail prior to the special meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact Continental Stock Transfer & Trust Company at least five business days prior to the special meeting date in order to ensure access.

 

Q.	If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A.	No. Your broker, bank or nominee cannot vote your shares unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.

 

Q.	What constitutes a quorum?

 

A.

A quorum of our stockholders is necessary to hold a valid meeting. The presence, in person (which would include presence at the virtual special meeting) or by proxy, of stockholders holding a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting constitutes a quorum at the special meeting. In the absence of a quorum, the chairperson of the special meeting has the power to adjourn the special meeting. There are currently 56,250,000 shares of common stock outstanding, and therefore, as of the record date for the special meeting, 28,125,001 shares of SEAC common stock would be required to achieve a quorum.

 

10

Q.	What vote is required to approve each proposal at the special meeting?

 

A.	The following votes are required for each proposal at the special meeting:

 

•

Business Combination Proposal: Approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of the outstanding votes cast by holders of the shares of SEAC Class A common stock and SEAC Class B common stock present in person (which would include presence at the virtual special meeting) or by proxy at the special meeting and entitled to vote thereon, voting as a single class.

 

•

Equity Incentive Plan Proposal: Approval of the Equity Incentive Plan Proposal requires the affirmative vote of the holders of at least a majority of the votes cast by holders of the shares of SEAC Class A common stock and SEAC Class B common stock present in person (which would include presence at the virtual special meeting) or by proxy at the special meeting and entitled to vote thereon, voting as a single class.

 

•

Employee Stock Purchase Plan Proposal: Approval of the Equity Incentive Plan Proposal requires the affirmative vote of the holders of at least a majority of the votes cast by holders of the shares of SEAC Class A common stock and SEAC Class B common stock present in person (which would include presence at the virtual special meeting) or by proxy at the special meeting and entitled to vote thereon, voting as a single class.

 

•

Adjournment Proposal: Approval of the Adjournment Proposal requires the affirmative vote of the holders of at least a majority of the votes cast by holders of the shares of SEAC Class A common stock and SEAC Class B common stock present in person (which would include presence at the virtual special meeting) or by proxy at the special meeting and entitled to vote thereon, voting as a single class.

 

Q.	What happens if I sell my SEAC Class A Shares before the special meeting?

 

A.

The record date for the special meeting is earlier than the date of the special meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your SEAC Class A Shares after the applicable record date, but before the special meeting, unless you grant a proxy to the transferee, you will retain your right to vote at the special meeting.

 

Q.	May I change my vote after I have mailed my signed proxy card?

 

A.

Yes. Stockholders may send a later-dated, signed proxy card to the Transfer Agent at the address set forth at the end of this section, so that it is received prior to the vote at the special meeting, or attend the special meeting in person (which would include presence at the virtual special meeting) and vote. Stockholders also may revoke their proxy by sending a notice of revocation to SEAC’s Chief Executive Officer, which must be received prior to the vote at the special meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.

 

Q.	What happens if I fail to take any action with respect to the special meeting?

 

A.

If you fail to take any action with respect to the special meeting and the Business Combination is approved by stockholders and consummated, you will become a shareholder of NewCo and/or your SEAC warrants will be converted into warrants to purchase NewCo Ordinary Shares on the same terms as your SEAC warrants. However, if you fail to take any action with respect to the special meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination, provided you follow the instructions in this proxy statement for redeeming your shares. If you fail to take any action with respect to the special meeting and the Business Combination Proposal is not approved, you will continue to be a stockholder and/or warrant holder of SEAC.

 

11

Q.	What should I do with my share and/or warrants certificates?

 

A.

Those stockholders who do not elect to have their SEAC Class A Shares redeemed for their pro rata share of the funds in the trust account should not submit their share certificates now. After the consummation of the Business Combination, NewCo will send instructions to SEAC stockholders regarding the exchange of their Class A Shares for NewCo Ordinary Shares. SEAC stockholders who exercise their redemption rights must deliver their share certificates to the Transfer Agent (either physically or electronically) prior to the deadline for submitting redemption requests described above. Upon consummation of the Business Combination, the SEAC warrants, by their terms, will be assumed by NewCo and thereby entitle holders to purchase NewCo Ordinary Shares (and not SEAC common stock) on the same terms as your SEAC warrants. Therefore, warrant holders need not deliver their SEAC warrants to SEAC or NewCo at that time.

 

Q.	What should I do if I receive more than one set of voting materials?

 

A.

Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares of common stock.

 

Q.	Who can help answer my questions?

 

A.	If you have questions about the Business Combination or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact:

Sports Entertainment Acquisition Corp.

Golden Bear Plaza 11760 US Highway 1, Suite W506

North Palm Beach, FL 33408

Tel: (561) 402-0741

Email: jcollins@seahllc.com

You may also obtain additional information about SEAC from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver your public shares (either physically or electronically) to the Transfer Agent at the address below prior to the vote at the special meeting. If you have questions regarding the certification of your position or delivery of your shares, please contact:

Continental Stock Transfer & Trust Company

1 State Street 30th Floor

New York, New York 10004

Tel: (212) 509-4000

or:

Okapi Partners LLC

1212 Avenue of the Americas, 24th Floor

New York, NY 10036

Banks and Brokerage Firms, Please Call: (212) 297-0720

Shareholders and All Others Call Toll-Free: (877) 869-0171

E-mail: info@okapipartners.com

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

23

 

24

 

25

 

26

 

27

 

28

 

29

 

30

 

31

 

32

 

33

 

34

 

35

 

36

 

37

RISK FACTORS

Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus. Unless the context otherwise suggests, in this section, “Super Group Holding Company”, “Super Group”, “SGHC”, “we,” “us,” “our” and the “Company” refer to the business and operations of SGHC prior to the Business Combination and to the business and operations of NewCo following the Business Combination. The occurrence of one or more of the events or circumstances described in these risk factors, including those related to COVID-19, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, may heighten the effects of the other risk factors described below and may have a material adverse effect on the business, cash flows, financial condition and results of operations of NewCo following the Business Combination. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by SGHC, NewCo and SEAC, which later may prove to be incorrect or incomplete. SGHC, NewCo and SEAC may face additional risks and uncertainties that are not presently known to such entity, or that are currently deemed immaterial, which may also impair their business or financial condition. This proxy statement/prospectus also contains forward-looking statements that involve risks and uncertainties and actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this proxy statement/prospectus. See “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Super Group’s Business

Our business depends on the success, including win or hold rates, of existing and future online betting and gaming products, which rely on a variety of factors and are not completely controlled by us.

The sports betting and online casino gaming industries are characterized by an element of chance. Accordingly, we employ theoretical win rates, probability distributions and related models to estimate what a certain type of sports bet or online casino game, on average, will win or lose in the long run. Our revenue is impacted by variations in the hold percentage (the ratio of net win to total amount wagered), or actual outcome, on the sports betting and online casino games that we offer to our customers. We use the hold percentage as an indicator of an online casino game’s or sports bet’s performance against its expected outcome. Although each sports bet or online casino game generally performs within a defined statistical range of outcomes, actual outcomes may vary for any given period, particularly in the short term.

In the short term, for online casino wagering and online sports wagering, the element of chance may affect win rates (hold percentages); these win rates, particularly for online sports wagering, may also be affected in the short term by factors that are largely beyond our control, such as unanticipated event outcomes, a customer’s skill, experience and behavior, the mix of games played or wagers placed, the financial resources of customers, the volume of wagers placed and the amount of time spent gambling. For online casino games, it is possible a random number generator outcome or game will malfunction or is otherwise misprogrammed to pay out wins in excess of the game’s mathematical design and award errant prizes. Factors that are nominally within our control, such as the level of incentives or bonuses or comps given to customers, might, for various reasons both within and beyond our control, not be well-controlled and hence in turn might impact win rates. For online sports wagering, it is possible that our platform erroneously posts odds or is otherwise misprogrammed to pay out odds that are highly favorable to bettors, and bettors place wagers before the odds are corrected. Additionally, odds compilers and risk managers are capable of human error, so even if our wagering products are subject to a capped payout, significant volatility can occur. Similarly, inadvertently over-incentivizing customers can convert a sports wager or casino game that would otherwise have been expected to be profitable for the Company into one with a positive expectation for the player.

As a result of the variability in these factors, the actual win rates on our sports betting and online casino gaming offerings may differ from the theoretical win rates we have estimated and could result in the winnings of

 

38

our sports betting or online casino gaming customers exceeding those anticipated. The variability of win rates (hold rates) also has the potential to negatively impact our business, financial condition, results of operations, prospects and cash flows.

Our business relies for its success on entertaining customers by means of a wide range of potential wagering opportunities. In recent years an increasing percentage of sports betting wagering has been derived from “in-play” or “in-game” wagering, which refers to the wagers that customers make during the course of a sports event (as opposed to “pre-game” or “ante-post” wagers made before the start of a sports event) on the outcome of related events that occur pursuant to the primary event. Examples of this include “Scorer of the next goal” in a soccer match, or “Winner of the next point” in a tennis match. Where such wagers are allowed, there can be no assurance that regulators will not in the future seek to prohibit such forms of wagering, and where such wagers are not yet allowed there can be no assurance that regulators will ever allow them. If such “in-play” wagering is prohibited in any market then our business, financial condition, results of operations, prospects and cash flows might be negatively impacted.

Similarly, for casino games there can be no assurance that existing casino game features will always be allowed or that new casino game features will be allowed or that regulators will not seek to constrain the operation of games in any way, for example by limiting the rate or speed of game play. If game features or other relevant aspects of casino game design are constrained then our business, financial condition, results of operations, prospects and cash flows might be negatively impacted.

The success of our business depends on the quality of our strategy and our ability to execute on it.

Our business strategy makes a number of assumptions about the current and future state of the industry that we operate in, including but not limited to environmental factors such as the current and future state of the markets and economies that we operate in, the current and expected future actions of governments around the world, the current and future capacity and effectiveness of our competitors, and the current and future desires and wants and means of our customers. Our strategy also makes assumptions about the current and future state of our own business, including our capacity and effectiveness and our ability to respond to all of the aforementioned environmental factors, amongst others. All of these assumptions are informed by data and information that is publicly available and which we gather for ourselves and by our ability to process and understand such data and information. Any or all of our assumptions may prove to be faulty and/or our data and/or information may be inaccurate or incomplete, in which case our strategy may prove to be incorrect or inadequate for the demands of our industry. Even if our strategy is a good one, we cannot be certain that our business is equipped to execute the plans and actions that might be necessary to achieve success. If any of our assumptions are incorrect and/or our strategy is poor and/or we are unable to execute on our strategy then our business, financial condition, results of operations, prospects and cash flows might be negatively impacted.

The success of our business depends in part on our ability to anticipate and satisfy customer preferences in a timely manner.

As we operate in a dynamic environment characterized by rapidly changing industry and legal standards, our products are subject to changing consumer preferences that cannot be predicted with certainty. We need to continually introduce new offerings and identify future product offerings that complement our existing platforms, respond to our customers’ needs and improve and enhance our existing platforms to maintain or increase our customer engagement and growth of our business. We may not be able to compete effectively if our sports betting odds pricing and casino game design are not competitive and/or unless our product selection keeps up with trends in the digital sports entertainment and gaming industries in which we compete, or trends in new gaming products. If we are unable to anticipate and satisfy customer preferences in a timely manner and/or we are unable to provide competitive and appealing products to our customers, then our business, financial condition, results of operations, prospects and cash flows might be negatively impacted.

 

39

Competition within the broader entertainment industry is intense and our existing and potential customers may be attracted to competing betting and gaming options, as well as other forms of entertainment such as video games, television, movies and sporting events. If our offerings do not continue to be popular with existing customers and attract potential customers, our business would be harmed.

We operate in the global entertainment betting and gaming industries within the broader entertainment industry with our business-to-consumer offerings, including sports betting and online casino gaming. Our customers are offered a vast array of entertainment choices. Other forms of entertainment, such as television, movies, sporting events, other forms of non-gambling games and in-person casinos, are well established and may be perceived by our customers to offer greater variety, affordability, interactivity and enjoyment. New and alternative product categories are continuously evolving that may be perceived by our customers to offer equivalent or better entertainment, including casual games, daily fantasy sports (a variation on fantasy sports leagues), and apps and websites that offer the trading of financial instruments in a manner that incorporates elements that are similar to gambling. We compete with these other forms of entertainment for the discretionary time and income of our customers. If we are unable to sustain sufficient interest in our product offerings in comparison to other forms of entertainment, including new forms of entertainment, our business model may not continue to be viable.

The specific industries in which we operate are characterized by dynamic customer demand and technological advances, and there is intense competition among online gaming and entertainment providers. A number of established, well-financed companies producing online gaming and/or interactive entertainment products and services compete with our offerings, and other well-capitalized companies may introduce competitive services. Such competitors may spend more money and time on developing and testing products and services, undertake more extensive marketing campaigns, adopt more aggressive pricing or promotional policies or otherwise develop more commercially successful products or services than ours, which could negatively impact our business. Our competitors may also develop products, features, or services that are similar to ours or that achieve greater market acceptance. Furthermore, new competitors, whether licensed or not, may enter the online gaming industry. There has also been considerable consolidation among competitors in the entertainment, betting and gaming industries and such consolidation and future consolidation could result in the formation of larger competitors with increased financial resources and altered cost structures, which may enable them to offer more competitive products, gain a larger market share, expand offerings and broaden their geographic scope of operations. If we are not able to maintain or improve our market shares, or if our offerings do not continue to be popular, our business could suffer.

COVID-19 has affected our business and operations in a variety of ways. The pandemic restrictions may have affected our business, financial condition, results of operations and prospects, including as a result of the reduction in the quantity of global sporting events, closures or restrictions on business operations of our suppliers, partners and sports organizations and a decrease in consumer spending, and it may continue to do so in the future. On the other hand, we cannot assure you that consumers will not decrease online gaming activities as pandemic restrictions are loosened. These cross-currents may have unknown and adverse effects that are impossible for us to predict.

On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak to be a pandemic. Actions taken around the world to help mitigate the spread of COVID-19 include restrictions on travel, cancellation of sporting events, quarantines in certain areas and forced closures for certain types of public places and businesses. COVID-19 and actions taken to mitigate its spread have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in which we operate. COVID-19 and these actions have also had a significant impact on our business, our suppliers and our customers. The direct impact on our business, beyond disruptions in normal business operations, was driven by the suspension, postponement and cancellation of major sports seasons and events. While many sports have since restarted, some have been played on a reduced or uncertain schedule, and there can be no assurance that such sports seasons and events will not be cancelled or further impacted again due

 

40

to the ongoing COVID-19 pandemic. The ultimate impact of COVID-19 on our financial performance will depend on the length of time that these disruptions exist. Conversely, hard lockdowns, stay-at-home or shelter-in-place orders for the general populace in many jurisdictions accelerated the shift to online commerce, which management believes has benefited the business in some areas. The extent to which the removal of such restrictions will have lasting effects on the business is not yet known and may take some time to become clear, particularly if subsequent waves of the pandemic lead to the reinstatement of similar restrictions in the future.

As the COVID-19 pandemic continues to evolve, the ultimate extent of the impact on our business, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the pandemic, the pandemic’s impact on global economies and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic in the United States and national, provincial/state/regional and local responses elsewhere around the world. The COVID-19 pandemic has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, stay-at-home or shelter-in-place orders, and business shutdowns. These measures may adversely impact our relationships with existing and potential new business partners globally, our employees and operations and the operations of our business partners, and may negatively impact our business. Our sports betting revenues are dependent on interest in sporting events, which have been, and may be in the future, substantially limited during times of business shutdowns, the prohibition or reduction of physical participation in such activities or the cancellation or postponement of sporting events, such as the postponement of the 2020 Summer Olympic Games. In addition, global travel restrictions could impact our relationships with existing or potential new partners around the world.

In recent periods coinciding with the COVID-19 pandemic, we have seen significant growth in online sports betting and casino gaming revenues from existing and new customers, as the COVID-19 pandemic has shifted customers to online entertainment. As government restrictions ease, this trend may not continue or could even be reversed as customers seek to spend their entertainment dollars through physical participation and not online activities, resulting in a decrease in our share of the entertainment wallet. These effects make the comparison of our current and historical performance very difficult. In particular, the growth or otherwise in our active wagering customer numbers and our revenues may be distorted and hence our historic growth may not be a useful or accurate guide to our expected future performance.

There is no certainty that any actions taken by us will be sufficient to mitigate the risks posed by the COVID-19 pandemic or that any of the secular factors arising from COVID-19 (such as the general trend towards online commerce that has benefited all digital businesses) will continue to be of benefit to us, especially in light of potential new strains of the virus. These factors related to COVID-19 are beyond our knowledge and control and, as a result, at this time, we are unable to predict the ultimate impact, both in terms of severity and duration, that the COVID-19 pandemic will have on our business, operating results, cash flows and financial condition.

We have not historically reported our financial results as a consolidated group. Our forecasts included in this proxy statement/prospectus are based on unaudited, unconsolidated results and therefore may be different from results reported in accordance with International Financial Reporting Standards on a consolidated basis and with pro forma results for historical periods presented in accordance with Article 11 of Regulation S-X under the Securities Act of 1933, as amended.

Certain of our historical results and forecasts included in this proxy statement/prospectus were based on unaudited, unconsolidated results. Therefore, this financial information may not necessarily reflect what our results of operations and financial condition would have been on a consolidated basis, and may be different from the pro forma results for the historical periods presented. Accordingly, you should not place undue reliance on our historical results in assessing our future results of operations and financial condition.

 

41

Our results of operations may fluctuate due to seasonality and other factors and, therefore, our periodic operating results will not be guarantees of future performance.

Although the sporting calendar is year-round, there is seasonality in sporting events that may impact our operations. The broad geographical mix of our customer base also impacts the effect of seasonality as customers in different territories will place differing importance on different sporting competitions and those competitions will often have different sporting calendars. Sports organizations have their own significant sporting events such as the playoffs and championship games, which may cause increases in our revenues, and their own respective off-seasons, which may cause decreases in our revenues. Certain sports only hold events during portions of the calendar year. For example, our revenues are significantly impacted by the calendars of the major European and African football (soccer) leagues, international and Indian Premier League cricket, major American sports leagues, marquee horse racing events and major professional tennis tournaments. Our revenues may also be affected by the scheduling of major sporting events that do not occur annually, such as the FIFA World Cup, or the cancellation or postponement of sporting events. Similarly, management believes that there is some evidence that seasonality in casino gaming may occur at the time of certain major national holidays and/or vacation periods and hence it may occur that revenues and cashflow might be adversely affected during times of year when customers are naturally more likely to engage with other non-gaming activities. Such fluctuations and uncertainties may negatively impact our cash flows.

Because a significant portion of our sports betting business is based on open-air, live events, extreme weather conditions may result in the postponement or cancellation of such events and negatively impact our associated revenues.

Extreme weather conditions may interrupt live sporting events, causing their postponement or, in unusual circumstances, their cancellation. In such circumstances, because our sports betting operations rely on such events being carried out in accordance with pre-set timetables, we may be forced to reverse wagers already placed or remove future betting propositions. Climate change may make past weather conditions unrepresentative of future weather conditions and extreme weather conditions may increase in number or severity in the future. While certain sporting events may shift to closed environments, other sporting events may be ill-suited or less popular in such environments. We do not currently maintain insurance coverage applicable to cover either the costs or loss of revenue that we may incur due to the postponement or cancellation of events caused by extreme weather conditions. These circumstances may adversely affect our revenues and our customer relationships.

We make use of machine learning and other data science and analytics techniques and technologies throughout our business and attempt to integrate this into customer-facing systems in ways that may have significant effects on our revenues and profits. The nature of such systems is that their outcomes cannot always be predicted and, therefore, our periodic operating results will not be guarantees of future performance.

We use machine learning and data science and analytics methodologies and techniques to seek to understand individual customer preferences and attributes as well as to detect fraud and manage risk. Machine learning systems are by their nature often opaque and can evolve over time. If we fail to implement or maintain adequate controls over such systems, then they may evolve to produce outcomes that could adversely affect our results of operations.

Our machine learning and data science and analytics models are designed to analyze data attributes in order to identify complex transaction and behavior patterns. We do this for a number of purposes, including but not limited to fraud detection, determination of when and how to intervene in customer wagering activity for responsible gaming purposes, generation of personalized wagering and game recommendations in order to remove customer interface friction, and generation of personalized incentives (or disincentives, as the case may be) in order to optimize customer satisfaction, enjoyment and profitability. Our ability to continuously train and/or improve these systems will have material impacts on our revenues, especially as methods of committing fraud

 

42

evolve and become more sophisticated and as competitors become better at evaluating and incentivizing and interacting with customers. However, it is possible that these systems may prove to be less accurate than we expect, or than they have been in the past, for a variety of reasons, including inaccurate assumptions or other errors made in building or training such systems, incorrect interpretations of the results of such systems, increased fraud sophistication beyond the capabilities of such systems, the emergence of very high value but very low volume or short-term transient risks that models of this nature might struggle to detect, and failure to timely update system assumptions and parameters. Further, the successful performance of our machine learning and data science and analytics models relies on the ability to constantly review and process large amounts of transactions and other data.

If we are unable to attract new customers or retain existing customers, or if our systems for capturing and processing data were to degrade or fail in any way, then the amount of data reviewed and processed by our machine learning and data science and analytics models will be reduced or fail to grow at a pace that will allow us to continue to improve the efficiency of our models, which may reduce the accuracy of such systems. Additionally, such systems may not be able to effectively account for matters that are inherently difficult to predict or are otherwise beyond our control, such as social engineering and other methods of perpetrating fraud that do not lend themselves well to risk-based analysis. Material errors or inaccuracies in such machine learning and data science and analytics models could lead us to make inaccurate or sub-optimal operational or strategic decisions, which could adversely affect our business, financial condition and results of operations.

We rely on third-party service providers such as (i) third-party providers to validate the identity and identify the location of our customers, (ii) third-party payment processors to process deposits and withdrawals made by our customers into our platforms, (iii) third-party marketing and customer communications systems providers, (iv) third-party casino content, product and technology providers, (v) third-party sportsbook technology providers, (vi) third-party sports data providers for real-time and accurate data for sporting events, and (vii) third-party outsourced services providers, among others. If our third-party providers do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition and results of operations could be adversely affected.

There is no guarantee that the third-party geolocation and identity verification systems that we rely on will perform adequately or will be effective. We rely on our geolocation and identity verification systems to ensure that we are in compliance with certain laws and regulations, and any service disruption to those systems would prohibit us from operating our platform, and would adversely affect our business. Additionally, incorrect or misleading geolocation and identity verification data with respect to our current or potential customers received from third-party service providers may result in us inadvertently allowing access to our offerings to individuals who should not be permitted to access them, or otherwise inadvertently deny access to individuals who should be able to access our offerings, in each case based on inaccurate identity or geographic location determination. Our third-party geolocation service providers rely on their ability to obtain information necessary to determine geolocation from mobile devices, operating systems, and other sources. Changes, disruptions or temporary or permanent failure to access such sources by our third-party service providers may result in their inability to accurately determine the location of our customers. Moreover, our inability to maintain our existing contracts with third-party service providers, or to replace them with equivalent third parties, may result in our inability to access geolocation and identity verification data necessary for our day-to-day operations. If any of these risks materializes, we may be subject to disciplinary action, fines, lawsuits, and our business, financial condition, results of operations and prospects could be adversely affected.

We also rely on a limited number of third-party payment processors to process deposits and withdrawals made by our customers into our platform. If any of our third-party payment processors terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate payment processor, and may not be able to secure similar terms or replace such payment processor in an acceptable time frame. Further, the software and services provided by our third-party payment processors may not meet our expectations, contain errors or vulnerabilities, be compromised or experience outages. Any of these

 

43

risks could cause us to lose our ability to accept online payments or other payment transactions or make timely payments to customers on our platform, any of which could make our platform less trustworthy and convenient and adversely affect our ability to attract and retain our customers.

All of our payments are made by credit card, debit card or through other third-party payment services, which subjects us to certain regulations and to the risk of fraud. We may in the future offer new payment options to customers that may be subject to additional regulations and risks and/or may incur higher transaction charges. We are also subject to a number of other laws and regulations relating to the payments we accept from our customers, including with respect to money laundering, money transfers, privacy and information security. Although we have implemented processes and have dedicated teams to ensure compliance with applicable rules and regulations, there have in the past, and there may be in the future, incidences where certain relevant information relating to “know your customer” (“KYC”) and/or anti-money laundering (“AML”) is not detected or established. If we fail to comply with applicable rules and regulations, we may be subject to civil or criminal penalties, fines and/or higher transaction fees and may lose our ability to accept online payments or other payment card transactions, which could make our offerings less convenient and attractive to our customers. If any of these events were to occur, our business, financial condition, results of operations and prospects could be adversely affected.

For example, if we are deemed to be a money transmitter as defined by applicable regulation, we could be subject to certain laws, rules and regulations enforced by multiple authorities and governing bodies in the United States and numerous state and local agencies who may define money transmitter differently. For example, certain U.S. states may have a more expansive view of who qualifies as a money transmitter. Additionally, we could be subject to additional laws, rules and regulations related to the provision of payments and financial services, and if we expand into new jurisdictions, the various regulations and regulators governing our business that we are subject to will expand as well. In addition to fines, penalties for failing to comply with applicable rules and regulations could include criminal and civil proceedings, forfeiture of significant assets or other enforcement actions. We could also be required to make changes to our business practices or compliance programs as a result of regulatory scrutiny.

Additionally, our payment processors require us to comply with payment card network operating rules, which are set and interpreted by the payment card networks. The payment card networks could adopt new operating rules or interpret or reinterpret existing rules in ways that might prohibit us from providing certain offerings to some customers, be costly to implement or difficult to follow. We have agreed to reimburse our payment processors for fines they are assessed by payment card networks if we or the customers on our platform violate these rules. Any of the foregoing risks could adversely affect our regulatory licensure, business, financial condition, results of operations and prospects.

Additionally, outages in our connectivity with our payment processors or their connectivity with downstream processors and networks might inhibit our ability to successfully process deposits and withdrawals on behalf of our customers. Errors in any of these systems may cause transactions to be processed multiple times or not at all, which may in turn result in customers being overcharged, overpaid or not paying us. Overcharging customers might result in representations, returns or chargebacks which might in turn jeopardize our relationships with our payment processors and potentially lead to fines and additional transaction costs or even the termination of our relationships with our payment processors. If we do not detect these errors timeously then we might over-credit to or under-deduct from our customers’ sports betting or casino accounts which might in turn result in customers being inadvertently given risk-free opportunities to gamble and thereby potentially win even larger amounts. We cannot guarantee that we will detect such outages or errors timeously nor that we will be able to recover any resulting losses from customers or third-party providers. Any attempts by us to recover such losses from our customers may cause our customers to have a negative experience and our brand or reputation may be negatively affected and our customers may be less inclined to continue or resume utilizing our products or recommend our platform to other potential customers. As such, any such outages or errors could harm our reputation, business, financial condition, results of operations, cash flows and prospects.

 

44

Furthermore, if any of our payment processors terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we might need to find an alternate provider. Given the sometimes unique benefits and features of different payment options, exact replacement might not be possible and we may not be able to secure similar terms or benefits or features or replace such payment processors in an acceptable time frame. Any of these risks could increase our costs and adversely affect our business, financial condition, results of operations or prospects. Further, any negative publicity related to any of our payment processors, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

We rely on third-party service providers for components of our marketing and customer communications processes and systems. Failures or outages in these systems may inhibit our ability to acquire new customers or retain existing customers. The nature of these processes means that certain customer personal information may be transmitted through these systems. If these systems are compromised in any way then customer personal data might be compromised and in turn our customers’ perception of our reliability and security might be impacted. Any of the foregoing risks could adversely affect our business, financial condition, results of operations and prospects.

Furthermore, if any of our marketing and customer communications providers terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we might need to find an alternate provider. Given the sometimes unique benefits and features of different marketing and customer communications systems, exact replacement might not be possible and we may not be able to secure similar terms or benefits or features or replace such systems in an acceptable time frame. Any of these risks could increase our costs and adversely affect our business, financial condition, results of operations or prospects. Further, any negative publicity related to any of our marketing and customer communications providers, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

We rely on third-party providers for nearly all of our casino games. These third parties are responsible for the design, development and maintenance of these games. In the past there have been outages during which time one or more games have been unavailable. There have also been incidents where errors in the design or development or maintenance of these games has result in erroneous payouts to customers, including instances where games have erroneously produced positive expected returns to customers and hence losses for the casino. We cannot be certain that we will always detect such outages and errors timeously nor that we will be able to recover any losses resulting from errors either from customers or third-party providers. Any outages or attempts by us to recover such losses from errors from our customers may cause our customers to have a negative experience and our brand or reputation may be negatively affected and our customers may be less inclined to continue or resume utilizing our products or recommend our platform to other potential customers. As such, any such outages and errors could harm our reputation, business and operating results.

Furthermore, if any of our casino game suppliers terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we might need to find an alternate provider. Given the unique design of each casino game, exact replacement would not be possible and we may not be able to secure similar terms or product features or extent of product range or replace such providers in an acceptable time frame. Any of these risks could increase our costs and adversely affect our business, financial condition, results of operations or prospects. Further, any negative publicity related to any of our third-party casino game supplier partners, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

We rely on third-party providers for the majority of our sports betting product platforms. These third parties are responsible for the design, development and maintenance of these platforms. In the past there have been outages during which time wagering was either severely inhibited, delayed or unavailable. We cannot be certain that we will always detect such outages timeously nor that we will be able to recover any resulting losses from

 

45

third-party providers. Any such outages may cause our customers to have a negative experience and our brand or reputation may be negatively affected and our customers may be less inclined to continue or resume utilizing our products or recommend our product to other potential customers. As such, any such outages could harm our reputation, business and operating results.

Furthermore, if any of our third-party sports betting product platform providers terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we might need to find an alternate provider. Given the sometimes unique features of different sports betting platforms, exact replacement might not be possible and we may not be able to secure similar terms or features or replace such sports betting product platform providers in an acceptable time frame. Any of these risks could increase our costs and adversely affect our business, financial condition, results of operations or prospects. Further, any negative publicity related to any of our sports betting product platform providers, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

We also rely on third-party sportsbook technology providers with whom we have long-term relationships. We have agreements with Apricot Investments Limited (“Apricot”), one of the leading gaming software and content providers, for the exclusive provision of the Apricot sportsbook software and Player Account Management (“PAM”) system in a number of Super Group’s most significant markets. Apricot supplies a significant portion of the casino games available for play across all Super Group websites and apps. Any disruption in or termination of these relationships could harm our strategic growth.

We also rely on third-party sports data providers to obtain accurate information regarding schedules, results, performance and outcomes of sporting events. We rely on this data to display sporting events, odds and outcomes to customers and/or to determine when and how bets are settled. We have experienced, and we may continue to experience, errors in this data feed which may result in us incorrectly displaying events, odds and outcomes and/or settling bets. If we cannot adequately resolve any such issues then our customers may have a negative experience with our offerings, our brand or reputation may be negatively affected and our customers may be less inclined to continue or resume utilizing our products or recommend our platform to other potential customers. As such, a failure or significant interruption in our service could harm our reputation, business and operating results.

Furthermore, if any of our sports data partners terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate provider, and may not be able to secure similar terms or product features or replace such providers in an acceptable time frame.

Any of these risks could increase our costs and adversely affect our business, financial condition, results of operations or prospects. Further, any negative publicity related to any of our third-party sports data partners, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

We also rely on third-party outsourced services providers for a variety of services or components thereof, including but not limited to customer support, risk and fraud prevention, “know-your-customer” and anti-money-laundering, software development, information technology and infrastructure maintenance and support, information and data security, database management, data analysis, marketing and related services, and product and website design and development. We rely on these third-party outsourced services providers to enable some of our products and offerings and in our interactions with suppliers and customers. If any of our third-party outsourced services providers provide inadequate or substandard service then our customers may have a negative experience with our offerings, our brand or reputation may be negatively affected and our customers may stop utilizing our products and/or be less inclined to continue or resume utilizing our products or recommend our platform to other potential customers. As such, inadequate or substandard service from any of our third-party outsourced services providers could harm our reputation, business and operating results.

 

46

Furthermore, if any of our third-party outsourced services providers terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate provider, and may not be able to secure similar terms or services or replace such third-party providers in an acceptable time frame. Any of these risks could increase our costs and adversely affect our business, financial condition, results of operations or prospects. Further, any negative publicity related to any of our third-party outsourced services providers, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

We license the Betway brand, for a fixed fee, for use by DGC USA in the United States and, for a fixed fee plus an additional fee equal to a percentage of Betway’s global brand marketing spend, to a third party for use in China and Thailand. A decline in such third-party operators’ financial performance or a termination of the brand licenses by such third parties could have an adverse effect on our business.

We license the Betway brand to DGC USA for a fixed fee in the United States and, for a fixed fee plus an additional fee equal to a percentage of Betway’s global brand marketing spend, to a third-party operator for use in China and Thailand. Our financial performance depends in part on maintaining our licenses with these third-party operators. Fees earned from third-party operators accounted for approximately 7% of our revenue in the year ended December 31, 2020. A decline in the third-party operators’ financial performance, competition from competitors or a deterioration in our relationships for other reasons could lead to termination of the brand licenses by such third-party operators, which could have an adverse effect on our business, financial condition, results of operations, cash flows and prospects.

Our business depends on a strong brand, and if we are not able to develop, maintain and enhance our brand and reputation, including as a result of negative publicity, our business and operating results may be harmed.

We believe that developing, maintaining and enhancing our brands, especially our single-brand sportsbook Betway but also our multi-brand portfolio of casinos, Spin, is critical to achieving widespread acceptance of our products and services, attracting new customers, retaining existing customers, persuading existing customers to adopt additional products and services and hiring and retaining our employees. We believe that the importance of our brand will increase as competition in our markets further intensifies. Successful promotion of our brand will depend on a number of factors, including the effectiveness of our marketing efforts, our ability to provide high-quality, reliable and cost-effective products and services, the perceived value of our products and services and our ability to provide quality customer support. Brand promotion activities require us to make substantial expenditures. To date, we have made significant investments in the promotion of our brands, including more than 60 Betway brand partnerships with sports teams and leagues worldwide. The promotion of our brand, however, may not generate customer awareness or increase revenue to the extent we anticipate, or at all, and any increase in revenue may not offset the expenses we incur in building and maintaining our brand.

We operate in a public-facing industry where negative publicity, including from our customers, whether or not justified, can spread rapidly through, among other things, social media. To the extent that we are unable to respond timeously and appropriately to negative publicity or to the extent our responses to negative publicity are not fairly published or not positively received, our reputation and brands could be harmed. Moreover, even if we are able to respond in a timely and appropriate manner, we cannot predict how negative publicity may affect our reputation and business.

We and our employees also use social media to communicate externally. There is risk that the use of social media by us or our employees to communicate about our business or for any other purpose even in a personal capacity may give rise to negative publicity or to liability or result in public exposure of personal information of our employees or customers, each of which could affect our reputation, revenue, business, results of operations and financial condition.

 

47

We rely on several different marketing channels to acquire and retain customers and to promote our brands and our products. If we are not able to effectively acquire and retain customers via such channels then our business and operating results may be harmed.

The Company undertakes a variety of marketing initiatives, include traditional marketing channels (such as television, print and radio), digital marketing (such as online display advertising, search engine marketing, social media and “affiliates” marketing) and retention marketing (including via email, text messages and social media). Traditional marketing channels are by their nature difficult to measure. Digital marketing is typically more measurable but somewhat more complex to undertake. Retention marketing is subject to customer consent which is not always granted or may be revoked. Our ability to execute on our marketing plans is subject to regulatory constraints in each market and it is not unusual for marketing-related regulations to change from time to time. If our ability to monitor and measure performance of any of these channels is compromised or if our ability to execute our plans in any of these channels is in any way inhibited then our ability to acquire and retain customers may be hampered and our business, financial condition, results of operations, cash flows and prospects may suffer.

In some regions and for some brands or products we may rely extensively on independent third-party marketers, known as “affiliates” marketers. “Affiliates” is an industry term that describes independent third-parties which assist the Company to acquire new customers and which are generally paid on a revenue-share or cost-per-acquisition basis. Despite the word “affiliate”, these are independent parties that are not otherwise affiliated with the Company in the ordinary sense of the word. Notwithstanding that in some jurisdictions for license purposes we are deemed to control these “affiliates” marketers, their actions in the marketing of our brands are not directly within our control and hence actions, errors, omissions or intentional malfeasance on their part may cause damage to our brands, our business, our prospects and our financial results before we are able to detect such actions, errors, omissions or intentional malfeasance and/or do anything to mitigate the effects thereof. In particular, we can be held accountable by regulatory authorities for actions by such third parties in contravention of our license in a given jurisdiction, which in turn may lead to fines, license suspension, loss of license or other censure, which may in turn harm our business, our prospects and/or our financial performance. Our agreements with such marketers are sometimes such that we are obliged to pay them an ongoing share of revenues derived from customers that they introduce to us, or sometimes such that we are required to pay them a “cost per acquisition” capitation fee for each customer introduced, or sometimes a combination of both. Such third-party “affiliates” are under no obligation to continue introducing customers to us, but we may be obliged to continue to pay them future revenue shares where applicable nonetheless.

In some regions and for some brands we may make use of search engine marketing (SEM, which is the purchase of advertising against keywords on search engines) and search engine optimization (SEO, which is the adaptation of our websites and employment of other techniques in order to achieve more favorable rankings when customers search for gambling-related keywords on search engines). Search engines such as Google regularly change their internal proprietary and confidential algorithms by which SEM and SEO operate and typically do so in ways that are not predictable as to timing or effect. If we fail to adapt our marketing methods to these changes or if our competitors do so better than we do then our business, financial condition, results of operations, cash flows and prospects may suffer.

Several of our marketing channels rely on being able to successfully track customers across different websites and apps and/or to augment our own data with additional marketing data for purposes of measuring and monitoring the effectiveness of our marketing campaigns and/or effectively adapting or executing on our marketing campaigns. The ability to do this is under threat of restrictive legislation in some jurisdictions and technology platform providers such as Google and Apple have taken steps to restrict such tracking and augmentation and we expect that further restrictions may be added in future. Such restrictions may hamper our ability to acquire or retain customers and thereby cause our business, financial condition, results of operations, cash flows and prospects to suffer.

 

48

Our growth depends in part, on the success of our strategic relationships with third parties. Overreliance on certain third parties, or our inability to extend existing relationships or agree to new relationships may cause unanticipated costs for us and impact our financial performance in the future.

We rely on relationships with sports teams and leagues worldwide, advertisers, casinos and other third parties in order to attract and retain customers to our offerings. These relationships along with providers of online services, search engines, social media, directories and other websites and ecommerce businesses direct consumers to our offerings. In addition, many of the parties with whom we have advertising arrangements provide advertising services to other companies, including other online betting and online casino gaming products with whom we compete. While we believe that there are other third parties that could drive customers to our offerings, adding or transitioning to them may disrupt our business and increase our costs. In the event that any of our existing relationships or our future relationships fail to provide services to us in accordance with the terms of our arrangement, or at all, and we are not able to find suitable alternatives, this could impact our ability to attract and retain customers cost effectively and harm our business, financial condition, results of operations and prospects.

Our growth prospects may suffer if we are unable to develop successful offerings or if we fail to pursue additional offerings. In addition, if we fail to make the right investment decisions in our offerings and technology, we may not attract and retain customers and partners, and our revenue and results of operations may decline.

The industries in which we operate are subject to rapid and frequent changes in standards, technologies, products and service offerings, as well as in customer demands and expectations and regulations. We must continuously make decisions regarding in which offerings and technology we should invest to meet customer demand in compliance with evolving industry standards and regulatory requirements and must continually introduce and successfully market new and innovative technologies, offerings and enhancements to remain competitive and effectively stimulate customer demand, acceptance and engagement. Our ability to engage, retain, and increase our customer base and to increase our revenue will depend on our ability to successfully create new offerings, both independently and together with third parties. We may introduce significant changes to our existing technology and offerings or develop and introduce new and unproven products and services, with which we have little or no prior development or operating experience. The process of developing new offerings and systems is inherently complex and uncertain, and new offerings may not be well received by customers, even if well-reviewed and of high quality. If we are unable to develop technology and products that address customers’ needs or enhance and improve our existing technology and offerings in a timely manner, this could have a material adverse effect on our business, financial condition, results of operations and prospects.

Although we intend to continue investing in our research and development efforts, if new or enhanced offerings fail to engage our customers, we may fail to attract or retain customers or to generate sufficient revenue, operating margin, or other value to justify our investments, any of which may seriously harm our business. In addition, management may not properly ascertain or assess the risks of new initiatives, and subsequent events may alter the risks that were evaluated at the time that we decided to execute any new initiative. Creating additional offerings can also divert our management’s attention from other business issues and opportunities. Even if our new offerings attain market acceptance, those new offerings could exploit the market share of our existing product offerings or share of our customers’ wallets in a manner that could negatively impact our business. Furthermore, such expansion of our business increases the complexity of our business and places an additional burden on our management, operations, technical systems and financial resources and we may not recover the often-substantial up-front costs of developing and marketing new offerings, or recover the opportunity cost of diverting management and financial resources away from other offerings. In the event of continued growth of our operations, products or in the number of third-party relationships, we may not have adequate resources, operationally, technologically or otherwise to support such growth and the quality of our technology, offerings or our relationships with third parties could suffer. In

 

49

addition, failure to effectively identify, pursue and execute new business initiatives, or to efficiently adapt our processes and infrastructure to meet the needs of our innovations, may adversely affect our business, financial condition, results of operations and prospects.

Additionally, we may make bad or unprofitable decisions regarding these investments. If new or existing competitors offer more attractive offerings, we may lose customers or customers may decrease their spending on our offerings. New customer demands, superior competitive offerings, new industry standards or changes in the regulatory environment could render our existing offerings unattractive, unmarketable or obsolete and require us to make substantial unanticipated changes to our technology or business model. Our failure to adapt to a rapidly changing market or evolving customer demands could harm our business, financial condition, results of operations and prospects.

Negative events or negative media coverage relating to, or a declining popularity of, online sports betting, online casino gaming or the underlying sports or athletes on which sports betting is derived, or other negative coverage may adversely impact our ability to retain or attract customers, which could have an adverse impact on our business.

Public opinion can significantly influence our business. Unfavorable publicity regarding, for example, us, our product changes, product quality, litigation, or regulatory activity, or regarding the actions of third parties with whom we have relationships or the underlying sports (including declining popularity of the sports or athletes) could harm our reputation. In addition, a negative shift in the perception of sports betting and online casino gaming by the public or by politicians, lobbyists or others could affect future legislation of sports betting and online casino gaming, which could cause jurisdictions to impose new restrictions on or prohibit sports betting or online casino gaming in jurisdictions in which we currently operate. Furthermore, illegal betting activity by athletes could result in negative publicity for our industry and could harm our brand reputation. Negative public perception could also cause jurisdictions to abandon current plans or proposals to legalize sports betting and online casino gaming, thereby limiting our future growth potential. Such negative publicity could also adversely affect the size, demographics, engagement, and loyalty of our customer base and result in decreased revenue or slower customer growth rates, which could harm our business.

Fraud, corruption or negligence related to sports events, of any sort, whether by or involving our employees or not, may adversely affect our business, financial condition and results of operations and negatively impact our reputation.

Our reputation and the strength of our brand are key competitive strengths. To the extent that the sports and sports betting industry as a whole or the Company, relative to its competitors, suffers a loss in credibility, our business will be significantly impacted. Factors that could potentially have an impact in this regard include fraud, corruption or negligence related to sports events, including as a result of actual or attempted or alleged match fixing, whether this involves our employees or not. Damage to reputation and credibility could have a material adverse impact on our regulatory licensure, business, financial condition and results of operations.

If we fail to detect fraud or theft related to our offerings, including by our customers and employees, we will suffer financial losses and our reputation may suffer which could harm our brand and reputation and negatively impact our business, financial condition and results of operations and can subject us to investigations and litigation, which could ultimately lead to regulatory penalties, including potential loss of licensure.

We have in the past incurred, and may in the future incur, losses from various types of financial fraud, including use of stolen or fraudulent credit card data, claims of unauthorized payments by customers and attempted payments by customers with insufficient funds. Bad actors use increasingly sophisticated methods to engage in illegal activities involving personal information, such as unauthorized use of another person’s identity, account information or payment information and unauthorized acquisition or use of credit or debit card details,

 

50

bank account information and mobile phone numbers and accounts. Under current credit card practices, we may be liable for use of funds on our platform with fraudulent credit card data, even if the associated financial institution approved the credit card transaction, and may be subject to fines or other sanctions including the termination of our payment processing relationships. If we are unable to detect or are delayed in detecting the actions of successful perpetrators of fraud then such customers may be able to effectively gamble risk-free, and may be able to withdraw and be paid any resulting winnings before we have been able to detect the fraud. In such cases we are unlikely to be able to recover the proceeds.

Acts of fraud may involve various tactics, including collusion. Successful exploitation of our systems could have negative effects on our product offerings, services and customer experience and could harm our reputation. Failure to discover such acts or schemes in a timely manner could result in harm to our operations. In addition, negative publicity related to such schemes could have an adverse effect on our reputation, potentially causing a material adverse effect on our business, financial condition, results of operations and prospects. In the event of the occurrence of any such issues with our existing platform or product offerings, substantial engineering and marketing resources and management attention may be diverted from other projects to correct these issues, which may delay other projects and the achievement of our strategic objectives.

In addition, any misappropriation of, or access to, customers’ or other proprietary information or other breach of our information security could result in legal claims or legal proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, including for failure to protect personal information or for misusing personal information, which could disrupt our operations, force us to modify our business practices, damage our reputation and expose us to claims from our customers, regulators, employees and other persons, any of which could have an adverse effect on our business, financial condition, results of operations and prospects.

Other potential sources of financial loss to our business may include attempts in contravention of our terms and conditions to exploit incentives or bonuses or comps in conjunction with certain casino game design features or arbitrage sports bets in order to obtain positive expectation for the customer as well as attempts by individual customers to register multiple accounts in order to claim or receive incentives or bonuses or comps multiple times or to disguise collusive betting patterns in order to evade betting limits or to exploit profitable arbitrage betting opportunities. Similar activities might be undertaken by syndicates acting in concert.

Despite measures that we have taken to detect and reduce the occurrence of fraudulent or other malicious activity on our platform, we cannot guarantee that any of our measures will be effective or will scale efficiently with our business. Our failure to adequately detect or prevent fraudulent transactions could result in substantial financial losses and harm our reputation or brand, result in litigation or regulatory action and lead to expenses that could adversely affect our business, financial condition, results of operations and prospects. Even if we are successful in preventing or mitigating the effects of fraudulent transactions, doing so successfully may in some circumstances require placing severe restrictions on honest customers, which will in turn hamper the enjoyment of our customers and in turn the prospects and revenues of our business.

We rely on strategic relationships with land-based casinos, sports teams, event planners, local licensing partners and advertisers in order to be able to offer and market our products in certain jurisdictions. If we cannot maintain these relationships and establish additional relationships, our business, financial condition and results of operations could be adversely affected.

In certain jurisdictions in which we operate, such as Belgium, it is necessary to obtain a land-based license in order to offer our online products. In addition, under some U.S. states’ gaming laws, online betting is limited to a finite number of retail operators, such as casinos, tribes or tracks, who own a “skin” or “skins” under that state’s law. A “skin” is a legally-authorized license from a state to offer online betting services provided by a casino. The “skin” provides a market access opportunity for mobile operators to operate in the jurisdiction pending licensure and other required approvals by the state’s regulator. The entities that control those “skins”,

 

51

and the numbers of “skins” available, are typically determined by a state’s gaming laws. Super Group has entered into a definitive agreement to acquire Digital Gaming Corporation Limited (“DGC”), which is the parent of Digital Gaming Corporation USA (“DGC USA”), which holds the exclusive license to use the Betway brand in the United States. On April 7, 2021, SGHC entered into a definitive agreement to acquire DGC, subject to certain regulatory approvals and customary closing conditions. DGC USA has secured market access in an initial 12 regulated or expected-to-be regulated states in the U.S. In most of the jurisdictions in which DGC USA offers sports betting and online casino gaming, it currently relies on a casino, tribe or track in order to get a “skin.” These “skins” are what allows DGC USA to gain access to jurisdictions where online operators are required to have a retail relationship. If we cannot establish, renew or manage our land-based international or U.S. relationships, they could terminate and we would not be allowed to operate in those jurisdictions until we enter into new relationships, which might not be possible if no other potential operators are available or willing to partner with us, or could be at significantly higher cost. As a result, our business, financial condition and results of operations could be adversely affected.

Some of our and DGC USA’s market access agreements provide for minimum guaranteed payments to the third party. If we are unable to generate sufficient revenue to offset the minimum guaranteed payments, this could have a material adverse effect on our business, results of operations, cash flows and financial condition. Certain of our and DGC USA’s market access agreements grant the market access partner rights to audit the financial calculations of payments under these agreements. Disputes with market access partners over terms could result in the payment of additional amounts or penalties by us or DGC USA, cancellation or non-renewal of the underlying agreement or litigation.

Participation in the sports betting industry exposes us to trading, liability management and pricing risk. We may experience lower than expected profitability and potentially significant losses as a result of a failure to determine accurately the odds in relation to any particular event and/or any failure of our sports risk management processes.

Our fixed-odds betting products involve betting where winnings are paid on the basis of the stake placed and the odds quoted. Odds are determined with the objective of providing an average return to the bookmaker over a large number of events and therefore, over the long term, our gross win percentage has remained reasonably in line with expectations. However, there can be significant variation in gross win percentage event-by-event and day-by-day. We have systems and controls that seek to reduce the risk of daily losses occurring on a gross-win basis, but there can be no assurance that these will be effective in reducing our exposure, and consequently our exposure to this risk in the future. This is particularly true in respect of parlay or accumulator wagers, where multiple individual wagers are combined into one to create the possibility of significant aggregate payouts. As a result, in the short term, there is less certainty of generating a positive gross win percentage, and we may experience (and we have from time to time experienced) significant losses with respect to individual events or betting outcomes, in particular if large individual bets are placed on an event or betting outcome or series of events or betting outcomes or if a number of parlay or accumulator wagers are successful. Odds compilers and risk managers are capable of human error, thus even allowing for the fact that a number of betting products are subject to capped pay-outs, significant volatility can occur. In some markets we rely on third-party odds compilers and risk managers and hence do not always have real-time oversight of their activities. In certain instances it is possible for customers to engage in positive expectation arbitrage betting which we might not always be able to detect. It is also possible for customers to exploit incentives or bonuses or comps for positive expectation for the customer and we might not always be able to detect or otherwise to prevent this even when we do detect it. In addition, it is possible that there may be such a high volume of trading during any particular period that even automated systems would be unable to address and eradicate all risks. Any significant losses on a gross-win basis could have an adverse effect on our business, financial condition and results of operations. In addition, if a jurisdiction where we hold or wish to apply for a license imposes a high turnover tax for betting (as opposed to a gross-win tax), this too would impact profitability, particularly with high value/low margin bets, and likewise have a material adverse effect on our business.

 

52

We may have difficulty accessing the services of banks, credit card issuers and payment processing services providers due to the nature of our business, which may make it difficult to sell our products and offerings.

Although financial institutions and payment processors are permitted to provide services to us and others in our industry, banks, credit card issuers and payment processing service providers may be hesitant to offer banking and payment processing services to real money gaming and online sports betting businesses. Consequently, businesses involved in our industry, including our own, may encounter difficulties in establishing and maintaining banking and payment processing relationships with a full scope of services and generating market rate interest. Similarly, our customers’ banks and/or credit card providers might decline to allow our customers to effect transactions with online gaming or sports betting businesses or might block such attempted transactions. If we are unable to maintain our bank accounts or our customers are unable to use their credit cards, bank accounts or e-wallets to make deposits and withdrawals from our platforms, it would be difficult for us to operate our business and increase our operating costs, and would pose additional operational, logistical and security challenges which could result in an inability to implement our business plan and harm our business, financial condition, results of operations and prospects.

The requirements of being a public company, including compliance with the requirements of the Sarbanes-Oxley Act and maintaining effective internal controls over financial reporting, may strain our resources and divert management’s attention, and the increases in legal, accounting and compliance expenses that will result from the Business Combination may be greater than we anticipate.

As a result of the Business Combination we will become a public company, and as such, we will incur significant legal, accounting and other expenses (and particularly after we are no longer an “emerging growth company”) that we did not incur as a private company. We will be subject to the reporting requirements of the Exchange Act, and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the rules and regulations subsequently implemented by the SEC and the listing standards of the NYSE, including changes in corporate governance practices and the establishment and maintenance of effective disclosure and financial controls. Compliance with these rules and regulations can be burdensome. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our historical legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance than we obtained as a private company, and could also make it more difficult for us to attract and retain qualified members of our Board. In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an “emerging growth company”. We may need to hire additional accounting and financial staff, and engage outside consultants, all with appropriate public company experience and technical accounting knowledge and maintain an internal audit function, which will increase our operating expenses. Moreover, we could incur additional compensation costs in the event that we decide to pay cash compensation to our directors, officers and employees closer to that of other public companies, which would increase our general and administrative expenses and could adversely affect our profitability. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to the delisting of our common stock and warrants, fines, sanctions and other regulatory action and potentially civil litigation. We are evaluating these rules and regulations, and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

 

53

As a private company, we have not been required to document and test internal controls over financial reporting nor was our management required to certify the effectiveness of internal controls or have our auditors opine on the effectiveness of our internal control over financial reporting. As a result, we have not instituted a system of internal controls that covers the consolidated group of the Company and its subsidiaries. Failure to maintain adequate financial, information technology and management processes and controls could result in material weaknesses which could lead to errors in our financial reporting, which could adversely affect our business when we are a public company.

We have not been required to document and test our internal controls over financial reporting, our management has not been required to certify the effectiveness of our internal controls and our auditors have not been required to opine on the effectiveness of our internal control over financial reporting. Similarly, as an “emerging growth company,” SGHC and SEAC have so far been exempt from the SEC’s internal control reporting requirements. In the future, we will be required to document and test our internal controls over financial reporting and our management will be required to certify the effectiveness of our internal controls. In addition, we may lose our emerging growth company status and become subject to the SEC’s auditor attestation requirements in the year in which we are deemed to be a large accelerated filer, which would occur once we are subject to Exchange Act reporting requirements for 12 months, have filed at least one SEC annual report and the market value of our common equity held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. In addition, our current controls and any new controls that we develop may become inadequate because of poor design and changes in our business, including increased complexity resulting from any international expansion. Any failure to implement and maintain effective internal controls over financial reporting could adversely affect the results of assessments by our independent registered public accounting firm and their attestation reports.

If we are unable to certify the effectiveness of our internal controls, or if our internal controls have a material weakness, we may not detect errors timeously, our consolidated financial statements could be misstated, and we could be subject to regulatory scrutiny and a loss of confidence by stakeholders, which could harm our business and adversely affect the market price of our common stock.

We identified material weaknesses in connection with our internal control over financial reporting. Although we are taking steps to remediate these material weaknesses, there is no assurance we will be successful in doing so in a timely manner, or at all, and we may identify other material weaknesses.

In connection with the audits of our consolidated financial statements for fiscal year 2020 and fiscal year 2019, and our interim condensed consolidated financial statements, our management and independent registered public accounting firm identified material weaknesses in our internal control over financial reporting. The material weaknesses related to (i) a lack of consistent application of IFRS reporting requirements across the enlarged business and (ii) the fact that policies and procedures with respect to the review, supervision and monitoring of our accounting and reporting functions were either not operating effectively and consistently for the full period across the entire business or were not designed appropriately and in place. As a result, a number of adjustments to our consolidated financial statements were identified and made during the course of the audit process including adjustments related to indirect taxes, amortisation of intangible assets, capitalisation of development costs and classification of processor receivables.

We are currently not required to comply with Section 404 of the Sarbanes-Oxley Act, and are therefore not required to make an assessment of the effectiveness of our internal control over financial reporting. However, as a public company, we will be required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. In addition, we will be required to furnish a report by our management on the effectiveness of our internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act, at the time we file our second annual report on Form 20-F with the SEC, which will be for the year ending December 31, 2023. Further, our independent registered public accounting firm is not required and has not been engaged to express, nor have they expressed, an opinion on the effectiveness of our internal control over financial reporting. Had we and our independent registered public accounting firm performed an

 

54

evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional control deficiencies may have been identified by our management or independent registered public accounting firm, and such control deficiencies could have also represented one or more material weaknesses in addition to those previously identified. We are currently in the process of remediating these material weaknesses and we are taking steps that we believe will address their underlying causes. We are in the process of revising our procedures and review, supervision and monitoring functions in respect of the capitalisation of development costs. We have enlisted the help of external advisors to provide assistance in the area of IFRS accounting in the short term, and are evaluating the longer-term resource needs of our finance function. These remediation measures may be time-consuming and costly, and might place significant demands on our financial, accounting and operational resources. In addition, there is no assurance that we will be successful in hiring any necessary personnel in a timely manner, or at all.

Assessing our procedures to improve our internal control over financial reporting is an ongoing process. We can provide no assurance that our remediation efforts described herein will be successful and that we will not have material weaknesses in the future. Any material weaknesses we identify could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements.

If our existing material weaknesses persist or we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operation, which may adversely affect investor confidence in us and, as a result, the value of our ordinary shares and our overall business.

The Sarbanes-Oxley Act requires, among other things, that we assess the effectiveness of our internal control over financial reporting annually and the effectiveness of our disclosure controls and procedures quarterly. In particular, Section 404(a) of the Sarbanes-Oxley Act, or Section 404(a), will require us to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting. Section 404(b) of the Sarbanes-Oxley Act, or Section 404(b), also requires our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting. As an ‘emerging growth company’ we expect to avail ourselves of the exemption from the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b). However, we may no longer avail ourselves of this exemption when we are no longer an ‘emerging growth company.’ When our independent registered public accounting firm is required to undertake an assessment of our internal control over financial reporting, the cost of our compliance with Section 404(b) will correspondingly increase. Our compliance with applicable provisions of Section 404 will require that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements.

Furthermore, investor perceptions of our company may suffer if additional deficiencies are found in our internal control over financial reporting, and this could cause a decline in the market price of our Class A common stock and accordingly our overall business. Regardless of compliance with Section 404, our failure to remediate the material weaknesses which have been identified or any additional failure of our internal control over financial reporting could have a material adverse effect on our stated operating results and harm our reputation. If we are unable to implement these requirements effectively or efficiently, it could harm our business, financial condition, liquidity, results of operation, cash flows or prospects and could result in an adverse opinion on our internal controls from our independent registered public accounting firm.

 

55

Our business includes significant international operations, and we are likely to be exposed to foreign currency transaction and translation risks. As a result, changes in the valuation of any major currency with which we conduct business in relation to other currencies could have positive or negative effects on our profitability and financial position.

Our global operations are likely to expose us to foreign currency transaction and translation risks. Currency transaction risk occurs in conjunction with purchases and sales of products and services that are made in currencies other than the local currency of the subsidiary involved, for example if the parent company pays, or transfers British pound sterling to a subsidiary in order to fund its expenses in local currencies. Currency translation risks occurs when the income statement and balance sheet of a foreign subsidiary is converted into currencies other than the local currency of the company involved, for example when the results of these subsidiaries are consolidated in the results of a parent company with a different reporting currency.

Due to our international operations, a significant portion of our business is denominated in foreign currencies. As a result, fluctuations in foreign currency and exchange rates may have an impact on our business, results of operations and financial position. Foreign currency exchange rates have fluctuated and may continue to fluctuate. Significant foreign currency exchange rate fluctuations may negatively impact our international revenue, which in turn affects our consolidated revenue. Currencies may be affected by internal factors, general economic conditions and external developments in other countries, all of which can have an adverse impact on a country’s currency. Currently, we are not party to any hedging transactions intended to reduce our exposure to exchange rate fluctuations. We may seek to enter into hedging transaction in the future, but we may be unable to enter into these transactions successfully, on acceptable terms or at all. We cannot predict whether we will incur foreign exchange losses in the future. Further, significant foreign exchange fluctuations resulting in a decline in the respective local currency may decrease the value of our foreign assets, as well as decrease our revenues and earnings from our foreign subsidiaries, which would reduce our profitability and adversely affect our financial position.

Our business and results of operations may be adversely affected by political, economic and social instability risks, currency restrictions and devaluation, and various local laws associated with doing business in countries in emerging economies, including in South America, Africa and Asia.

We derive a portion of our revenue from our transactions in countries categorized as emerging economies, including countries in South America, Africa and Asia, and we expect to continue to grow our operations in these regions. As such, our business is subject to the various political, social, economic, fiscal and monetary policies and factors that affect companies operating in emerging economies, which could have a significant effect on our business, financial condition, results of operations and prospects. While certain emerging economies feature developed and sophisticated business sectors and financial and legal infrastructure at the core of their economy, they are also affected by socio-economic challenges such as high levels of unemployment, poverty and crime and large parts of the population, particularly in rural areas, do not have access to adequate education, health care, housing and other services, including water and electricity. Government policies aimed at alleviating and redressing the disadvantages suffered under previous governments of countries in the region may increase the costs and reduce the profitability of our business.

Our business model relies on an increase in internet penetration and digital literacy in emerging economies. Even though the main urban centers of many countries considered to be emerging economies typically offer reliable wired internet service, a substantial portion of the population are inhabitants of rural areas, which largely depend on mobile networks. Internet penetration in the markets in which we operate or may operate in the future may not reach the levels seen in more developed countries or other emerging markets for reasons that are beyond our control, including the lack of necessary network infrastructure or delayed implementation of performance improvements or security measures. The internet infrastructure in the markets in which we operate or may operate in the future may not be able to support continued growth in the number of customers, their frequency of use or their bandwidth requirements. Delays in telecommunication and infrastructure development or other

 

56

technology shortfalls may also impede improvements in internet reliability. If telecommunications services are not sufficiently available to support the growth of the internet, response times could be slower, which would reduce internet usage and harm our platform. Internet penetration in our target markets amongst emerging economies may even stagnate or decline. In addition, digital illiteracy among many customers in emerging economies presents obstacles to e-commerce growth. If internet penetration and digital literacy do not increase in our current and future markets of operation in emerging economies, it could have a material adverse effect on our business, financial condition, results of operations and prospects in emerging economies.

It is difficult to predict the future political, social and economic direction of emerging economies in which we operate or the manner in which any future governments of such countries will attempt to address regional inequalities. It is also difficult to predict the impact that addressing these inequalities will have on our business. Furthermore, there has been regional, political and economic instability in emerging economies generally, which could materially and adversely affect our business, results of operations and financial condition. While we believe that economic conditions in emerging economies will improve, poverty in emerging economies will decline and the purchasing power of customers in emerging economies will increase in the long term, there can be no assurance that these expected developments will materialize. The development of emerging economies, markets and levels of customer spending are influenced by many factors beyond our control, including customer perception of current and future economic conditions, acts of warfare and civil clashes, political uncertainty, employment levels, social and labor unrest due to economic and political factors, arbitrary interference with private ownership of rights in respect of land, inflation or deflation, real disposable income, poverty rates, wealth distribution, interest rates, taxation, currency exchange rates and weather conditions. An economic downturn, whether actual or perceived, currency volatility, a decrease in economic growth rates or an otherwise uncertain economic outlook in emerging economies could have a material adverse effect on our business, financial condition, results of operations and prospects in the region.

Additionally, governments of the emerging economies in which we operate may impose or tighten foreign currency exchange control restrictions, taxes or limitations with regard to repatriation of earnings and investments from these countries. If exchange control restrictions, taxes or limitations are imposed or tightened, our ability to receive dividends or other payments from affected jurisdictions could be reduced, which could have an adverse effect on our business, financial condition and results of operations. In addition, corporate, contract, property, insolvency, competition, securities and other laws and regulations in many of the emerging economies in which we operate have been, and continue to be, substantially revised. Therefore, the interpretation and procedural safeguards of the new legal and regulatory systems are in the process of being developed and defined, and existing laws and regulations may be applied inconsistently. Also, in some circumstances, it may not be possible to obtain the legal remedies provided for under these laws and regulations in a reasonably timely manner, if at all. Any of the foregoing factors could have a material adverse effect on our business, financial condition, results of operations and prospects in the region.

Asian geopolitical and other risks are of significant importance to our business owing to the revenue that we receive from a third party in respect of licensing the use of our Betway brand to that party. A decline in such third-party operator’s financial performance, for any reason could have an adverse effect on our business. See “Risk Factors — Risks Related to Super Group’s Business — We license the Betway brand, for a fixed fee, for use by DGC USA in the United States and, for a fixed fee plus an additional fee equal to a percentage of Betway’s global brand marketing spend, to a third party for use in China and Thailand. A decline in such third-party operators’ financial performance or a termination of the brand licenses by such third parties could have an adverse effect on our business.”

Our business is dependent on certain large markets, the loss of which or slower growth in which could adversely affect our business, financial condition and results of operations.

Our business derives a large percentage of its revenues from a small number of markets. For example, 48% of our revenue for the year ended December 31, 2020, was derived from the Americas, of which a majority was

 

57

derived from Canada. There can be no assurance that we would be able to recover or replace a significant reduction in revenue or growth thereof derived from one or more of these markets if that were to happen for any reason, which could adversely affect our business, financial condition and results of operations.

Economic downturns, reductions in discretionary consumer spending and political and market conditions beyond our control could adversely affect our business, financial condition and results of operations.

Our business is particularly sensitive to reductions from time to time in discretionary consumer spending. Demand for entertainment and leisure activities, including gaming, can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control. Unfavorable changes in general economic conditions, including recessions, economic slowdowns, sustained high levels of unemployment, and rising prices or the perception by consumers of weak or weakening economic conditions, may reduce our customers’ disposable income or result in fewer individuals engaging in entertainment and leisure activities, such as sports betting and online casino gaming. As a result, we cannot ensure that demand for our offerings will remain constant. Economic recessions have had, and may continue to have, far reaching adverse consequences across many industries, including the global entertainment and gaming industries, which may adversely affect our business, financial condition, results of operations and prospects. As a result of the ongoing COVID-19 pandemic, we are currently experiencing a global recession, and if recovery is slow or stalls, or we experience a further downturn as a result of a subsequent wave of the COVID-19 pandemic, we may experience a material adverse effect on our business, financial condition, results of operations or prospects.

In addition, changes in general market, economic and political conditions in domestic and foreign economies or financial markets, including fluctuation in stock markets resulting from, among other things, trends in the economy as a whole may reduce customers’ disposable income. Any one of these changes could have a material adverse effect on our business, financial condition, results of operations or prospects.

Litigation and Regulatory Risks

The gaming laws of different jurisdictions vary in both nature and application, and may be subject to alternate interpretations. Jurisdictions may or may not incorporate regulatory frameworks that provide a clear basis for the licensed provision of our gaming products and services to their residents. As a consequence, legal and enforcement risk may be unclear or uncertain in a number of the jurisdictions in which we operate and from which we generate a significant portion of our revenue, and there is a risk that regulators or prosecutors in these territories may seek to take legal action against us even in jurisdictions in which we believe our offerings are lawful based on advice from local counsel. Furthermore, we have in the past faced claims from customers contesting the legal basis of our services in certain jurisdictions, and may face similar claims again in future.

The gaming industry is highly regulated and we are required to maintain licenses and pay requisite gaming taxes and other fees in each jurisdiction from which we operate in order to continue our operations and remain compliant with our licenses. Aside from jurisdictions in which we operate by virtue of a locally awarded license, we also operate in other jurisdictions by virtue of relevant licenses awarded by other recognized regulatory authorities. Our reliance on such licenses is at times based on the lack of a local regulatory framework in that jurisdiction where our services are accessed and used by end users, or based on a specific legal position and interpretation of local legislation. Such interpretation, at times, includes, but is not limited to, a legal position based on EU law or supranational law. As gaming laws may be subject to alternate interpretations, including regarding their conformity with EU or supranational law, there is a risk that our interpretation would be contested by a governmental agency or regulator and our legal position ultimately rejected, which may result in administrative, civil or criminal prosecution or penalties. Furthermore, we have in the past faced claims from customers contesting the legal basis of our services in certain jurisdictions, such as Austria, where we have settled some claims and are contesting others, and may face similar claims again in future. This may materially adversely impact our profitability in such jurisdictions and/or our ability to carry on business in such jurisdictions and/or our ability to apply for or retain gaming licenses and/or could cause us to cease offering some or all of our

 

58

offerings in the impacted jurisdictions and thereby have a material adverse effect on our business, financial condition, results of operations or prospects.

Failure to comply with legal or regulatory requirements in a particular regulated jurisdiction, or the failure to successfully obtain a license or permit in a particular regulated jurisdiction, could impact our ability to comply with licensing and regulatory requirements in other regulated jurisdictions, or could cause the rejection of license applications or cancellation of existing licenses in other regulated jurisdictions, or could cause financial institutions, online and mobile platforms, advertisers and distributors to stop providing services to us which we rely upon to receive payments from, or distribute amounts to, our customers, or otherwise to deliver and promote our offerings.

Compliance with the various regulations applicable to sports betting and real money casino gaming is costly and time-consuming. Regulatory authorities of the jurisdictions in which we operate, or seek to operate, our business have broad powers with respect to the regulation and licensing of sports betting and casino gaming operations and may revoke, suspend, condition or limit our sports betting or casino gaming licenses, impose substantial fines on us and take other actions, any one of which could have a material adverse effect on our business, financial condition, results of operations and prospects. These laws and regulations are dynamic and subject to potentially differing interpretations, and various legislative and regulatory bodies may expand current laws or regulations or enact new laws and regulations regarding these matters. As such, we engage local counsel to advise on compliance with applicable laws and regulations and we will strive to comply with all applicable laws and regulations relating to our business. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules. Non-compliance or alleged non-compliance with any such law or regulations could expose us to claims, proceedings, litigation, investigations and prosecutions by private parties and enforcement and regulatory authorities, as well as substantial fines, negative publicity, detention or incarceration of management or other personnel, and revocation, suspension, condition or limitation of our sports betting and gaming licenses, each of which may adversely affect our business.

Any sports betting or gaming license could be revoked, suspended or conditioned at any time. The loss of a license in one jurisdiction could trigger the loss of a license or affect our eligibility for such a license in another jurisdiction, and any such losses, or potential for such loss, could cause us to cease offering some or all of our offerings in the impacted jurisdictions. We may be unable to obtain or maintain all necessary registrations, licenses, permits or approvals, and could incur fines or experience delays related to the licensing process, which could adversely affect our operations. Our delay or failure to obtain or maintain licenses in any jurisdiction may prevent us from distributing our offerings, increasing our customer base and/or generating revenues. We cannot assure you that we will be able to obtain and maintain the licenses and related approvals necessary to conduct our sports betting and online casino gaming operations. Any failure to maintain or renew our existing licenses, registrations, permits or approvals could have an adverse effect on our business, financial condition, results of operations and prospects.

We are subject to risks relating to revenue received from customers located in countries that are sanctioned or that prohibit gaming activities, which could result in fines or other liabilities and could harm our business.

Our global operations require us to comply with laws and regulations imposed by governments around the world with jurisdiction over our operations. Some of our customers may be located in countries that are subject to sanction laws or that prohibit gaming activities. Although we have taken precautions to prevent our product offerings from being provided or accessed in such jurisdictions, including systems and processes for the detection of willful and fraudulent attempts by end-users to circumvent our precautions such as the use of virtual private networks and other technologies, we cannot assure you that such precautions are or will be fully effective and we could inadvertently or unwittingly provide access to our product offerings to persons located in sanctioned countries or countries that prohibit gaming activities. In addition, we have systems and controls in place that are intended to detect and resolve such violations; however, we cannot assure you that such systems and controls will

 

59

be effective. If we are found to be in violation of any applicable sanctions or other laws and regulations, it could result in significant fines, prosecution or other liabilities and could harm our business, financial condition and results of operations.

Our failure to comply with the anti-corruption, anti-bribery, sanctions, anti-money laundering, privacy/personal information, responsible gaming, consumer protection and similar laws could result in legal penalties and fines, and/or negatively impact our reputation and results of operations.

Doing business on a worldwide basis requires us to comply with anti-corruption laws and regulations imposed by governments around the world with jurisdiction over our operations, which may include the U.S. Foreign Corrupt Practices Act (“FCPA”), the Prevention of Corruption (Bailiwick of Guernsey) Law, 2003 (as amended) (the “Guernsey Bribery Law”) and the U.K. Bribery Act 2010 (“U.K. Bribery Act”), as well as the laws of the other countries where we do business. These laws and regulations may restrict our operations, trade practices, investment decisions and partnering activities. The FCPA, the Guernsey Bribery Law, the U.K. Bribery Act and other applicable laws prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to “foreign officials” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The U.K. Bribery Act also prohibits non-governmental “commercial” bribery and accepting bribes. We are subject to the jurisdiction of various governments and regulatory agencies around the world, which may bring our personnel and representatives into contact with “foreign officials” responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations.

In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption. Our international operations expose us to the risk of violating, or being accused of violating, anti-corruption laws and regulations. Our failure to successfully comply with these laws and regulations may expose us to reputational harm, as well as significant sanctions, including criminal fines, imprisonment, civil penalties, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive. We are continuously developing and maintaining policies and procedures designed to comply with applicable anti-corruption laws and regulations. However, there can be no guarantee that our policies and procedures will effectively prevent violations by our employees or business partners acting on our behalf, and any such violation could adversely affect our reputation, business, financial condition and results of operations.

Furthermore, we are required to comply with the various responsible gaming regulations of those jurisdictions where we are licensed and from which we offer gambling services. These regulations, which in some jurisdictions are constantly being scrutinized, altered and broadened by the various legislators and/or regulators, may restrict our operations and partnerships, lead to enforcement actions that may result in fines, penalties, prosecutions or other sanctions, and at times may heavily impact our operations in and revenue from a certain jurisdiction. Consumer protection legislation and regulations apply to us as well, both of those jurisdictions from which we offer our services and of those where our services are consumed by our customers. These laws and regulations may have an impact on the scope of our offering and limit it significantly.

We have been the subject of governmental investigations and inquiries with respect to the operation of our businesses and we could be subject to future governmental investigations and inquiries, legal proceedings and enforcement actions. Any sanctions or costly regulatory settlements arising from governmental investigations, inquiries, proceedings or actions could adversely affect our business. Due to the nature of applicable regulatory frameworks, sanctions or enforcement or disciplinary actions in one jurisdiction may also have consequences in other jurisdictions, creating broader negative impacts on our business.

We have received formal and informal inquiries from time to time, from government authorities and regulators, including tax authorities and gaming regulators, regarding compliance with laws and other matters, and we may receive such inquiries in the future, particularly as we grow and expand our operations.

 

60

Violations of existing or future regulation, regulatory orders or consent decrees could subject us to substantial monetary fines, prosecutions and other penalties that could negatively affect our financial condition and operations. This could include sanctions ranging from a warning to revocation of our licenses or the licenses of our executives or employees. In addition, it is possible that future orders issued by, or inquiries or enforcement actions initiated by, government or regulatory authorities could cause us to incur substantial costs, expose us to unanticipated liability or penalties, or require us to change our business practices in a manner adverse to our business.

Palpable (obvious) errors in the posting of sports wagering odds or event times may occasionally occur in the normal course of business, sometimes for large liabilities. While it is a worldwide standard business practice to void bets associated with palpable errors or to correct the odds, there is no guarantee that regulators will approve voiding palpable errors moving forward in every case.

We offer a huge spectrum of betting markets across dozens of sports, and the odds are set through a combination of algorithmic and manual odds making. Bet acceptance is also a combination of automatic and manual acceptance. In some cases, the odds offered on the website constitute an obvious error. Examples of such errors are inverted lines between teams, or odds that are significantly different from the true odds of the outcome in a way that all reasonable persons would agree is an error. It is commonplace virtually worldwide for operators to void bets associated with such palpable errors, and in most mature jurisdictions these bets can be voided without regulatory approval at operator discretion. In some jurisdictions, it is unclear long term if regulators will consistently approve voids or re-setting odds to correct odds on such bets. In some cases, we require regulatory approval to void palpable errors ahead of time. If regulators were to not allow voiding of bets associated with large obvious errors in odds making, we could be subject to covering significant liabilities.

We follow the industry practice of restricting and managing sports betting limits at the individual customer level based on individual customer profiles and risk level to the enterprise; however there is no guarantee that countries or states will allow operators such as us to limit on the individual customer level.

Similar to a credit card company managing individual risk on the customer level through credit limits, it is customary for sports betting operators to manage customer betting limits at the individual level to manage enterprise risk levels. We believe that this practice is beneficial overall, because if it were not possible, betting options would be restricted globally and limits available to customers would be much lower to insulate overall risk due to the existence of a very small segment of highly sophisticated syndicates and algorithmic bettors, or bettors looking to take advantage of site errors and omissions. We believe that virtually all operators balance taking reasonable action from all customers against the risk of individual customers significantly harming the business viability. We cannot assure you that all jurisdictions and regulators will always allow operators to execute limits at the individual customer level, or at their sole discretion.

We evaluate the expected profitability of customers at the individual customer level based on individual customer profiles and behaviors and attempt to responsibly incentivize and/or encourage (or discourage, as the case may be) and reward customers accordingly; however there is no guarantee that countries or states will allow operators such as us to continue to do so or that our efforts to do so are currently or will in the future be profitable.

We collect and evaluate data regarding the behavior and activity of our customers on our websites and in our apps. This data is used to determine the expected profitability of each customer so that we can in turn recommend appropriate games and wagers to customers (based on our understanding of their preferences) and so that we can (subject to responsible gaming regulations and/or best practice, as the case may be) offer incentives or bonuses or comps in a manner that attempts to responsibly optimize the confluence of customer enjoyment and our profitability. Such incentives or bonuses or comps may be subject to terms and conditions that are customized per individual customer, including specific wagering requirements and/or game or wager limitations.

 

61

We believe that this practice is beneficial overall, because if it were not possible, our products, incentives, bonuses and comps would be restricted globally and such benefits available to customers would be much lower to insulate overall risk due to the existence of a very small segment of highly sophisticated syndicates and individuals looking to take advantage of such benefits for profit. We believe that virtually all operators balance taking reasonable action from all customers against the risk of individual customers significantly harming the business viability. We cannot assure you that all jurisdictions and regulators will always allow operators to collect the data that we do or to evaluate customers in the way that we do or to offer or promote products, incentives, bonuses and comps in the individualized manner that we do. There have been in the past and may also in the future be situations where we are restricted to offering uniform products, incentives, bonuses and comps equally to all customers regardless of expected profitability of such offers and/or where we are restricted in the manner in which such benefits and offers may be promoted and/or where we are restricted in the manner in or frequency with which such benefits and offers may be made available to customers.

We also cannot assure you that our methodologies and algorithms for determining how to interact, incentivize and/or encourage (or discourage, as the case may be) and reward customers are accurate or profitable now, or that they will be so in the future. If our methodologies and algorithms contain errors or omissions or otherwise incorrectly interact, incentivize, encourage, discourage or reward customers then we may suffer financial losses. In particular, customers seeking to exploit such errors or omissions may profit disproportionately from such situations and we may not detect such instances and/or may not be able to mitigate the resulting losses even if we do detect such situations.

Furthermore, despite our belief in the importance of responsible gaming and despite our efforts to ensure that our interactions, incentives, encouragements, discouragements or rewards do not encourage irresponsible or problem gaming, we cannot assure you that we will succeed in this regard. Failures in this regard may result in fines, sanctions, license conditions or forfeiture in one or more jurisdictions which in turn may result in damage to our reputation, prospects and financial results.

In some jurisdictions our key executives, certain employees or other individuals related to the business, including significant shareholders, will be subject to licensing or compliance requirements. Failure by such individuals to obtain the necessary licenses or comply with individual regulatory obligations, could cause the business to be non-compliant with its obligations, or imperil its ability to obtain or maintain licenses necessary for the conduct of the business. In some cases, the remedy to such situation may require the removal of a key executive or employee or significant shareholder and the mandatory redemption or transfer of such person’s equity securities, which could have an adverse effect on the overall market for our securities.

As part of obtaining our gaming licenses, the responsible gaming authority will generally determine suitability of certain directors, officers and employees and, in some instances, significant shareholders. The criteria used by gaming authorities to make determinations as to who requires a finding of suitability or the suitability of an applicant to conduct gaming operations varies among jurisdictions, but generally requires extensive and detailed application disclosures followed by a thorough investigation. Gaming authorities typically have broad discretion in determining whether an applicant should be found suitable to conduct operations within a given jurisdiction. If any gaming authority with jurisdiction over our business were to find an applicable officer, director, employee or significant shareholder of ours unsuitable for licensing or unsuitable to continue having a relationship with us, we would be required to sever our relationship with that person. Furthermore, such gaming authorities may require us to terminate the employment of any person who refuses to file required applications. Either result could have a material adverse effect on our business, operations and prospects.

Additionally, a gaming regulatory body may refuse to issue or renew a gaming license or restrict or condition the same, based on the past or present activities of SGHC, or our current or former directors, officers, employees, shareholders or third parties with whom we have relationships, which could adversely affect our operations or financial condition. If additional gaming regulations are adopted in a jurisdiction in which we operate, such regulations could impose restrictions or costs that could have a significant adverse effect on us.

 

62

From time to time, various proposals are introduced in the legislatures of some of the jurisdictions in which we have existing or planned operations that, if enacted, could adversely affect our directors, officers, key employees, or other aspects of the Company’s operations. To date, we have obtained all governmental licenses, findings of suitability, registrations, permits and approvals necessary (or advisable based upon the advice of local counsel) for our operations. However, we can give no assurance that any additional licenses, permits and approvals that may be required will be given or that existing ones will be renewed or will not be revoked. Renewal is subject to, among other things, continued satisfaction of suitability requirements of our directors, officers, key employees and shareholders. Any failure to renew or maintain our licenses or to receive new licenses when necessary would have an adverse effect on us.

Any change in existing laws and regulations, or their interpretation or enforcement, or the regulatory climate applicable to our products and offerings, could adversely impact our ability to operate some or all of our business as currently conducted or as we seek to operate in the future, which could have an adverse effect on our business, financial condition and results of operations.

We are generally subject to laws and regulations relating to sports betting and online casino gaming in the jurisdictions in which we conduct our business or in some circumstances, of those jurisdictions in which we offer or make available our services, as well as the general laws and regulations that apply to all e-commerce businesses, such as those related to privacy and personal information, tax, anti-money laundering, competition and consumer protection. These laws and regulations vary from one jurisdiction to another and future legislative, regulatory and enforcement action, court decisions or other governmental action, which may be affected by, among other things, political pressures and changes in government leadership or legislative or governmental priorities, may have an adverse impact on our operations and financial results. In particular, some jurisdictions have introduced regulations attempting to restrict or prohibit online gaming or the marketing thereof, while others have taken the position that online gaming should be licensed and regulated and have adopted or are in the process of considering legislation and regulations to enable online gaming in their jurisdictions. Additionally, some jurisdictions in which we may operate could presently be unregulated or partially regulated and therefore more susceptible to the enactment or change of laws and regulations. Some jurisdictions do not have laws that grant us rights in the data we collect. Any enactment of laws in these jurisdictions would require a change in how we conduct business in such jurisdictions.

We have foreign licenses and operate under those licenses in a number of jurisdictions. In addition, we have entered into a definitive agreement to acquire DGC, subject to certain regulatory approvals and customary closing conditions. DGC’s subsidiary DGC USA has secured market access in an initial 12 regulated or expected-to-be regulated states in the U.S. Any of our licenses in foreign jurisdictions or U.S. states could be revoked, suspended or conditioned at any time. Our license applications may also be denied or conditioned. The loss or denial of a license in one jurisdiction could trigger the loss or denial of a license or affect our eligibility for such a license in another jurisdiction, and any of such losses or denials, or potential for such loss or denial, could cause us to cease offering some or all of our offerings in the impacted jurisdictions. As laws and regulations change, we may need to obtain and maintain licenses or registrations in additional jurisdictions. In addition, once licensed, we may be subject to various ongoing requirements, including supervision by the respective governmental agency of certain transfers of ownership and acquisitions.

In May 2018, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992 (“PASPA”) as unconstitutional. This decision has the effect of lifting federal restrictions on sports betting and thus allows U.S. states to determine by themselves the legality of sports betting. Since the repeal of PASPA, several states have legalized online sports betting. To the extent new real money gaming or sports betting jurisdictions are established or expanded, we cannot guarantee that we will be successful in penetrating such new jurisdictions or expanding our business or customer base in line with the growth of existing jurisdictions. If we are unable to effectively develop and operate directly or indirectly within these new jurisdictions or if our competitors are able to successfully penetrate geographic jurisdictions that we cannot access or where we face other restrictions, there could be a material adverse effect on our business, operating results and financial

 

63

condition. Our failure to obtain or maintain the necessary regulatory approvals and licenses in jurisdictions, whether individually or collectively, could have a material adverse effect on our business. To expand into new jurisdictions, we may need to be licensed and obtain approvals of our product offerings. This is a time-consuming process that can be extremely costly. Any delays in obtaining or difficulty in maintaining regulatory approvals or licenses needed for expansion within existing jurisdictions or into new jurisdictions can negatively affect our opportunities for growth, including the growth of our customer base, or delay our ability to recognize revenue from our offerings in any such jurisdictions.

The Parliament of Canada recently passed legislation allowing provinces to regulate single-event wagering within their jurisdictions, although at this point it is unclear as to the approach which each province will take in such regard. Historically, provincially-regulated offerings were limited to parlay sports betting (which required bets to be made on multiple discrete events) offered by provincial Crown corporations. Sport-betting businesses, like our Betway brands, that operate outside of the provincially-regulated frameworks, have until now also offered single-event betting with limited competition from such Crown corporations, due to the general preference of customers to not be limited to parlay bets only. In addition, certain of our private operator competitors elected not to carry on meaningful sports-betting operations in Canada. However, as a consequence of the legislative change, the Crown corporations and many of our private operator competitors, as well as new market entrants (some of which are well-funded and involve major business interests) have announced their intentions to begin or expand sports betting operations in Canada. Independently, several Canadian provinces have been considering altering their approach to regulated online gaming (including both casino games and sports betting), to permit private operators like us to enter the provincially-regulated system. In particular, the Province of Ontario has moved ahead with its plans to permit provincially-regulated online gaming by private operators under a new regulatory framework. While the full extent of the regulatory framework (including the fee or tax rate) is not known at this time, a new provincial commercial contracting party has been established and both it and the provincial regulator have created engagement and licensing mechanisms and begun to register interested applicants. In addition, information on standards, eligibility and other key elements have been published. The new regulatory framework is intended to commence operation in the first quarter of 2022. Other Canadian provinces are expected to follow suit eventually. In the past, when other countries have introduced regulatory frameworks, our financial results have been impacted by, amongst other things, increased taxation and compliance costs, offset by improvements in other costs of doing business such as payment processing and product costs. In some cases the introduction of a restrictive regulatory regime has resulted in a decrease in the size of the market, whereas in others a liberal regulatory regime has led to an increase in the size of the market. Although it is possible that all of the above will expand the size of the total addressable market in Canada and/or improve the profitability of the Canadian market for us, at this point this cannot be said for certain and it is possible that parties like us that have pre-existing Ontario or Canadian operations may be at a disadvantage under these new frameworks unless we are prepared to agree to certain conditions. While we actively seek out regulated jurisdictions for the expansion of our business and therefore welcome the recently passed legislation and the proposed Ontario regulatory framework and intend to participate therein to the fullest extent possible, we cannot be certain about the future impacts of these changing circumstances on our business, operations or financial prospects. The Americas accounted for 48% of our business revenue in the year ended December 31, 2020, and Canada is our largest market in the Americas. To the extent that competition in these key markets is increased and we are unable to maintain our related business, it may have a material adverse effect on them.

Future legislative and regulatory action, and court decisions or other governmental action, may have a material impact on our operations and financial results. Governmental authorities could view us as having violated applicable laws or regulations, despite our efforts to obtain and maintain all applicable licenses or approvals and despite, based upon advice of local counsel, our belief that we are acting lawfully. There is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities or incumbent providers, or private individuals, could be initiated against us, Internet service providers, credit card and other payment processors, advertisers and others involved in sports betting and online gaming industries. Such potential proceedings could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed upon us or our business partners, while diverting the

 

64

attention of key executives. Such proceedings could have an adverse effect on our business, financial condition, results of operations and prospects, as well as impact our reputation.

There can be no assurance that legally enforceable legislation will not be proposed and passed in jurisdictions relevant or potentially relevant to our business to prohibit, legislate or regulate various aspects of sports betting and online gaming industries and/or the marketing thereof (or that existing laws in those jurisdictions will not be interpreted negatively). Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations, either as a result of our determination that a jurisdiction should be blocked, or because a local license or approval may be costly for us to obtain and/or such licenses or approvals may contain other commercially undesirable conditions or where our marketing strategy is prohibited or hindered.

Even where enabling legislation is passed, there can be no assurance that such legislation and accompanying regulations and interpretation thereof will be positive for our business, either at the outset or upon subsequent revision. In the past, there have been instances where business-friendly legislation and/or regulations have been enacted only for subsequent revisions or interpretations to follow with the effect of severely restricting our ability to do business profitably. Examples of this include changes to rules and regulations governing or restrictions placed on marketing, sponsorships, customer incentives, customer deposit mechanisms and limits, customer withdrawal mechanisms and limits, and customer loss and other limits that have in some instances been enacted or amended some time after initial enabling legislation and/or regulation, or subsequent increases to gaming and other taxes.

For example, with regards to the licenses that we hold for our operations in Great Britain, the Gambling Commission (“the GC”) regulates online gambling operators. Over time the GC has issued interpretations of and amendments to the regulations. Examples include the prohibition of customer reverse withdrawals, the prohibition of various casino game features, and the introduction of casino game speed of play limits that were all brought into effect on October 31, 2020. Furthermore, the Gambling Act 2005 (2005 c 19), which is an Act of the Parliament of the United Kingdom that was amended in 2014 and which governs gambling (including online gambling) in Great Britain, is currently under review, including potential restrictions on advertising and sponsorships, which may have an adverse impact on our ability to grow our business in the United Kingdom.

As another example, the Dirección General de Ordenación del Juego (“the DGOJ”) is the responsible regulator with regards to the license that we hold for our operations in Spain. Under Spanish law, the conduct of a gambling business includes explicit prescriptions such as default limits on the amounts that customers are allowed to deposit within defined periods into their wagering accounts. When we acquired our license to operate in Spain, the law allowed us to sponsor football (soccer) teams, which resulted in us sponsoring the La Liga teams Deportivo Alavés, Levante Unión Deportiva and Club Deportivo Leganes. However, with effect from the start of the 2020/21 La Liga football season, gambling trademarks or logos may no longer be incorporated into sports equipment (including football shirts) and nor may trademarks be used to identify sports facilities or incorporated into a team’s name. Accordingly it was not possible for our arrangements with the aforementioned teams to be extended. Similarly, when we acquired our license to operate in Spain, the law allowed us to advertise our products and offerings on television with relatively limited restrictions. However, with effect from September 1, 2021, television advertising for gambling and betting is restricted to the hours of 01:00 to 05:00. While we expect to be able to continue to grow our business in Spain by means of alternative marketing channels, these changes have had at least a temporary adverse impact on our ability to grow our business in Spain.

There can be no assurance that these or other jurisdictions where we hold licenses will not adopt additional or incremental changes to their laws or their regulations, or that we will foresee or otherwise be able to predict such changes or that we will be able to successfully mitigate them. Failure to successfully mitigate such changes could have an adverse effect on our business, financial condition, results of operations and prospects.

 

65

Due to the nature of our business, we are subject to taxation in a number of jurisdictions and may in the future be subject to taxation in new jurisdictions, and changes in, or new interpretation of, tax laws, tax rulings or their application by tax authorities could result in additional tax liabilities and could adversely affect our financial condition and results of operations.

Our tax obligations will be varied and include U.S. federal and state taxes as well as national, state, provincial and other taxes around the world due to the nature of our business. The tax laws that will be applicable to our business are subject to interpretation, and significant judgment will be required in determining our worldwide provision for income taxes. In the course of our business, there will be many transactions and calculations where the ultimate tax determination is uncertain. For example, compliance with the 2017 United States Tax Cuts and Jobs Act (“TCJA”) may require the collection of information not regularly produced within our Company, the use of estimates in our consolidated financial statements, and the exercise of significant judgment in accounting for its provisions. As regulations and guidance evolve with respect to the TCJA, and as we gather more information and perform more analysis, our results may differ from previous estimates and may adversely affect our consolidated financial statements.

The gaming industry represents a significant source of tax revenue to the jurisdictions in which we currently and in the future will operate. Companies in the gaming industry are currently subject to significant taxes and fees in addition to normal corporate income taxes, and such taxes and fees are subject to increase at any time. From time to time, various legislators and other government officials have proposed and adopted changes in tax laws, or in the administration or interpretation of such laws, affecting the gaming industry. In addition, any worsening of economic conditions and the large number of jurisdictions with significant current or projected budget deficits could intensify the efforts of governments to raise revenues through increases in gaming taxes and/or other taxes. It is not possible to determine with certainty the likelihood of changes in tax laws or in the administration or interpretation or enforcement of such laws. Any material increase, or the adoption of additional taxes or fees, could have an adverse effect on our business, financial condition, results of operations and prospects.

Additionally, tax authorities may impose indirect taxes on Internet-related commercial activity based on existing statutes and regulations which, in some cases, were established prior to the advent of the Internet. Tax authorities may interpret laws originally enacted for mature industries and apply it to newer industries, such as ours. The application of such laws may be inconsistent from jurisdiction to jurisdiction. Our in-jurisdiction activities may vary from period to period which could result in differences in nexus from period to period.

We are subject to periodic review and audit by domestic and foreign tax authorities. Tax authorities may disagree with certain positions that we have taken or that we will take, and any adverse outcome of such a review or audit could have a negative effect on our business, financial condition and results of operations. Although we believe that our tax provisions, positions and estimates are reasonable and appropriate, tax authorities may disagree with certain positions we have taken. In addition, economic and political pressures to increase tax revenue in various jurisdictions may make resolving tax disputes favorably more difficult.

We operate in an industry and across jurisdictions which increase our tax risk profile, and subjects us to numerous pieces of anti-avoidance legislation which are generally complex, require detailed analysis, and which positions are often not certain due to the breadth of the anti-avoidance rules. In addition, the indirect tax treatment of the services we provide in certain countries is often unclear. As a result of these risks, we may have significant tax exposures that we have not accounted for, including in key markets, which could adversely affect our financial condition and results of operations.

Due to the international scope of our operations and the industry in which we operate, we are subject to tax laws and regulations, including numerous anti-avoidance legislation, which are complex and subject to varying interpretations, imposed by taxing authorities around the world. Furthermore, tax laws are dynamic and therefore subject to change as new laws are passed and new interpretations of existing laws are issued or applied. Our

 

66

existing corporate structure and intercompany arrangements have been implemented in a manner which we consider to be in compliance with current prevailing tax laws. However, the tax treatment of our structure and of the offerings we provide in certain jurisdictions is often unclear and could be subject to material adjustment. For example, the taxing authorities in the jurisdictions in which we operate may interpret tax laws and regulations differently than we do and challenge tax positions that we have taken. This may result in differences in the treatment of revenues, deductions and/or credits or otherwise expose us to additional taxes, interest and/or penalties, including in key markets, which could adversely affect our financial condition and results of operations. In addition, future changes to tax laws and regulations could increase our tax obligations in jurisdictions where we do business or are deemed to do business for tax purposes, or require us to change the manner in which we conduct certain aspects of our business.

We are party to pending litigation and regulatory and tax audits in various jurisdictions and with various plaintiffs and we may be subject to future litigation and regulatory and tax audits in the operation of our business. An adverse outcome in one or more proceedings could adversely affect our business.

As a growing company with expanding operations, we in the past have been party to, and NewCo may in the future increasingly face the risk of, claims, lawsuits, and other proceedings involving competition and antitrust, anti-money laundering, OFAC, gaming, intellectual property, privacy, consumer protection, accessibility claims, securities, tax, labor and employment, commercial disputes, services and other matters, including claims by customers. Litigation to defend us against claims by third parties, or to enforce any rights that we may have against third parties, may be necessary, which could result in substantial costs and diversion of our resources, causing an adverse effect on our business, financial condition, results of operations and prospects.

Any litigation to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal, or in payments of substantial monetary damages or fines, the posting of bonds requiring significant collateral, letters of credit or similar instruments, or we may decide to settle lawsuits on similarly unfavorable terms. These proceedings could also result in reputational harm, criminal sanctions, consent decrees or orders preventing us from offering certain products or requiring a change in our business practices in costly ways or requiring development of non-infringing or otherwise altered products or technologies. Litigation and other claims and regulatory proceedings against us could result in unexpected disciplinary actions, expenses and liabilities, which could have an adverse effect on our business, financial condition, results of operations and prospects.

Intellectual Property and Data Privacy Risks

Failure to protect or enforce our intellectual property rights, the confidentiality of our trade secrets and confidential information, or the costs involved in protecting or enforcing our intellectual property rights and confidential information, could harm our business, financial condition and results of operations.

We rely on trademark, copyright, trade secret, and domain-name-protection laws to protect our rights in intellectual property. However, third parties may knowingly or unknowingly infringe our rights in intellectual property, third parties may challenge intellectual property rights held by us, and pending and future trademark and patent applications may not be approved or courts/tribunals may not uphold our objections or claims. In addition, effective intellectual property protection may not be available in every country in which we operate or intend to operate our business. In any of these cases, we may be required to expend significant time and expense to prevent infringement or to enforce our rights. There can be no assurance that others will not offer products or services that are substantially similar to ours and compete with our business.

Circumstances outside our control could pose a threat to our intellectual property rights. Also, the efforts we have taken to protect our intellectual property rights may not be sufficient or effective. For example, it may not always have been possible or commercially desirable to obtain registered protection for our products, software, databases or other technology and, in such situations, we rely on laws governing protection of unregistered

 

67

intellectual property rights, confidentiality and/or contractual exclusivity of and to underlying data and technology to prevent unauthorized use by third parties. As such, if we are unable to protect our proprietary offerings via relevant laws or contractual exclusivity, technology and features, competitors may copy them. In particular, the EU database right protection we enjoy in the EU does not apply outside the EU and, as such, we cannot be certain that we can rely on existing statutes, regulations and/or case law (including in the U.S.) to protect our unregistered intellectual property in the future or prevent third parties from making unauthorized uses of our data and other unregistered intellectual property. The position regarding the U.K. and the EU database right following Brexit also remains unclear. The loss of EU database right protection could adversely affect our business. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. If we are unable to protect our proprietary offerings and features, competitors may copy them. Also, protecting our intellectual property rights is costly and time-consuming. Any unauthorized use of our intellectual property or disclosure of our confidential information or trade secrets could make it more expensive to do business, thereby harming our operating results. Furthermore, if we are unable to protect our intellectual property rights or prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be diminished, and competitors may be able to more effectively mimic our offerings and service. Any of these events could harm our business, financial condition, results of operations and prospects.

Our collection, storage and use, including sharing and international transfers, of personal data are subject to applicable data protection and privacy laws, and any actual or perceived failure to comply with such laws may harm our reputation and business or expose us to fines, civil claims (including class actions), and other enforcement action. The protection of personal information is becoming increasingly regulated and changes in applicable laws may require changes to our policies, practices, procedures and personnel which may require material expenditures and harm our financial condition and results of operations.

We are, and will increasingly become as we seek to expand our business, subject to numerous domestic and foreign laws, regulations, rules and standards, as well as associated industry standards, policies and contractual or other obligations, relating to the collection, use, storage, safeguarding, retention, security, destruction. disclosure, transfer, and/or other processing of personal data (collectively, “Processing”) in the jurisdictions in which we operate (collectively, “Data Protection Requirements”). These Data Protection Requirements often vary significantly by jurisdiction. While we have taken steps to comply with Data Protection Requirements, we cannot assure you that our efforts to achieve and remain in compliance have been and/or will continue to be, fully successful. If we fail, or are perceived to have failed, to address or comply with any such Data Protection Requirements, this could result in enforcement actions against us that could include investigations, fines, penalties, audits and inspections, additional reporting requirements and/or oversight, temporary or permanent bans on all or some Processing of personal data or orders to destroy or not use personal data. Further, individuals or other relevant stakeholders could bring a variety of claims against us for our actual or perceived failure to comply with the Data Protection Requirements. Any of these events could have a material adverse effect on our reputation, business, or financial condition, and could lead to a loss of actual or prospective customers, collaborators or partners; result in an inability to Process personal data or to operate in certain jurisdictions; limit our ability to develop or commercialize current or prospective offerings or services; or require us to revise or restructure our operations.

For example, the European Union’s General Data Protection Regulation (“GDPR”) applies to any Processing operations carried out in the context of the activities of an establishment in the EEA, as well as to any other Processing operations relating to the offering of goods or services to individuals in the EEA and/or the monitoring of individuals’ behavior in the EEA. Also, notwithstanding the United Kingdom’s withdrawal from the EU, by operation of the so called ‘UK GDPR’ (i.e., the GDPR as it continues to form part of the law of the United Kingdom by virtue of section 3 of the EU (Withdrawal) Act 2018 and as subsequently amended) (“UK GDPR”) the GDPR continues to apply in substantially equivalent form to Processing operations carried out in the context of the activities of an establishment in the United Kingdom and any other Processing relating to the offering of goods or services to individuals in the United Kingdom and/or monitoring of individuals’ behavior in the United Kingdom. Therefore, reference to the GDPR herein also refers to the UK GDPR in the context of the

 

68

United Kingdom, unless the context requires otherwise. Furthermore, the GDPR provides that EEA Member States may introduce specific, supplementary requirements related to the Processing of “special categories of personal data”; as well as personal data related to criminal offences or convictions. In the United Kingdom, the UK Data Protection Act 2018 complements the UK GDPR in this regard. This fact may lead to greater divergence on the law that applies to the Processing of such personal data across the EEA and/or United Kingdom, which may increase our costs and overall compliance risk.

The GDPR and such supplementary requirements impose stringent data privacy and security requirements. In particular, the GDPR imposes several requirements relating to ensuring there is a lawful basis for Processing personal data, extends the rights of individuals to whom the personal data relates, materially expands the definition of what is expressly noted to constitute personal data, requires additional disclosures about how personal data is to be used, imposes limitations on retention of personal data, imposes strict rules on the transfer of personal data out of the EEA/UK to most third countries, creates mandatory data breach notification requirements in certain circumstances and establishes onerous new obligations on service providers, or processors, who Process personal data simply on behalf of others. It also significantly increased penalties for noncompliance.

Additionally, following the United Kingdom’s withdrawal from the European Union on January 31, 2020 and end of the post-Brexit transition period on December 31, 2020, as noted above, the United Kingdom has introduced the UK GDPR which currently makes the privacy regimes of the EEA and United Kingdom similar, though it is possible that either the European Union, and consequently those further states that make up the remainder of the EEA, or United Kingdom could elect to change their approach and create differences in legal requirements and regulation in this area. On June 28, 2021, the European Commission issued an adequacy decision under the GDPR which allows transfers (other than those carried out for the purposes of United Kingdom immigration control) of personal data from the EEA to the United Kingdom to continue without restriction for a period of four years ending June 27, 2025. After that period, the adequacy decision may be renewed, however, only if the United Kingdom continues to ensure an adequate level of data protection. During these four years, the European Commission will continue to monitor the legal situation in the United Kingdom and could intervene at any point if the United Kingdom deviates from the level of data protection in place at the time of issuance of the adequacy decision. If the adequacy decision is withdrawn or not renewed, transfers of personal data from the EEA to the United Kingdom will require a valid ‘transfer mechanism’ and we may be required to implement new processes and put new agreements in place (such as the then-current form of the European Commission-issued Standard Contractual Clauses), to enable transfers of personal data from the EEA to the United Kingdom to continue.

We are also subject to the Data Protection (Bailiwick of Guernsey) Law, 2017 (as amended) (the “Guernsey DP Law”), which largely follows GDPR and requires us to control and process personal data only for proper purposes and in accordance with statutory data protection principals, and the Data Protection Law of Colombia, which requires the consent of the customer to their data being transmitted outside of Colombia.

Because our products and services rely on the movement of data across national boundaries, global privacy and data security concerns could result in additional costs and liabilities to us or inhibit sales of our products and/or services globally. In particular, European data protection laws, such as the GDPR, generally prohibit the transfer of personal data from the EEA, United Kingdom and Switzerland to the United States, and most other countries, known as ‘third countries’, in respect of which the European Commission or other relevant regulatory body has not issued a so-called ‘adequacy decision’, unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data. One of the primary safeguards used for transfers of personal data to the United States was the E.U.-U.S. Privacy Shield framework administered by the U.S. Department of Commerce. On July 16, 2020, the Court of Justice of the European Union, or CJEU, in a decision known as ‘Schrems II’, invalidated the EU-U.S. Privacy Shield, under which personal data could be transferred from the EEA and the United Kingdom to U.S. entities that had self-certified under the Privacy Shield. To align with the CJEU’s decision in respect of the E.U.-U.S. Privacy Shield, on September 8, 2020, the UK government similarly

 

69

invalidated the use of the EU-U.S. Privacy Shield as a mechanism for lawful personal data transfers from the United Kingdom to the United States under the UK GDPR and the Swiss Federal Data Protection and Information Commissioner announced that the Swiss-U.S. Privacy Shield regime was also inadequate for the purposes of personal data transfers from Switzerland to the U.S. entities who had self-certified under the Swiss Privacy Shield. The CJEU Schrems II decision referenced above also cast doubt on the ability to use one of the primary alternatives to the E.U.-U.S. Privacy Shield and Swiss-U.S. Privacy Shield, namely, the European Commission’s Standard Contractual Clauses, to lawfully transfer personal data to the United States and most other third countries. On June 4, 2021, the European Commission published new versions of the Standard Contractual Clauses. These must be used for all new transfers of personal data from the EEA to third countries starting September 27, 2021, and all existing transfers of personal data from the EEA to third countries relying on the existing versions of the Standard Contractual Clauses must be replaced by December 27, 2022. The implementation of the new Standard Contractual Clauses will necessitate significant contractual overhaul of our data transfer arrangements with partners, sub-processors and vendors. Use of both the existing and the new Standard Contractual Clauses must, following the Schrems II decision, now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals, and additional supplementary technical, organizational and/or contractual measures and/or contractual provisions may need to be put in place; however, the nature of these additional measures is currently uncertain. At present, there are few if any viable alternatives to the Privacy Shield and the Standard Contractual Clauses and there remains some uncertainty with respect to the nature and efficacy of such supplementary measures in ensuring an adequate level of protection of personal data. As such, our transfers of personal data to third countries may not comply with European data protection laws and may increase our exposure to the GDPR’s heightened sanctions for violations of its cross-border data transfer restrictions, including fines of up to 4% of annual global revenue or €20,000,000/£17,500,000, whichever is higher, and injunctions against transfers. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the Standard Contractual Clauses can and cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate and/or engage providers and/or otherwise transfer personal data, it could affect the manner in which we receive and/or provide services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results and generally increase compliance risk. Additionally, other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of operating our business.

In recent years, U.S. and European lawmakers and regulators have expressed concern over electronic marketing and the use of third-party cookies, web beacons and similar technology for online behavioral advertising. On June 20, 2019, the U.K.’s Information Commissioner (the “ICO”) published a report setting out its views on advertising technology, specifically the use of personal data in “real time bidding”, and the key privacy compliance challenges arising from it. In its report, which is a status update rather than formal guidance, several key deficiencies were noted and marked for formal regulatory action. However, in May 2020, the ICO paused its investigation into real time bidding and the advertising technology industry, as it sought to prioritize activities responding to the COVID-19 pandemic. The ICO’s investigation resumed in January 2021. We are likely to be required to expend further capital and other resources to ensure compliance with the findings of the ICO’s report on advertising technology, and any relevant changing laws and regulations. While we have numerous mitigation controls in place, advertisements produced by us may be erroneously served on websites that are not suitable for the advertising content of gambling (e.g., websites predominantly aimed at children). There is also a risk that gambling advertisements are viewed by people who do not want to view them, or who have taken measures not to receive them (for example, individuals on “self-exclusion” lists). In each case this may have adverse legal and reputational effects on our business.

In the EU, rules relating to electronic direct marketing are currently set out in the ePrivacy Directive, which is likely to be replaced by a new ePrivacy Regulation. While no official time frame has been given for the

 

70

ePrivacy Regulation, there will be a transition period after the ePrivacy Regulation is agreed for compliance, and commentators consider it unlikely to come into force before 2023. The ePrivacy Regulation will be directly implemented into the laws of each of the EU Member States, without the need for further enactment. When implemented, the ePrivacy Regulation is expected to alter rules on third-party cookies, web beacons and similar technology for online behavioral advertising and to impose stricter requirements on companies using these tools. Regulation of cookies and web beacons may lead to broader restrictions on our online activities, including efforts to understand followers’ Internet usage and promote ourselves to them. The current draft of the ePrivacy Regulation significantly increases fining powers to the same levels as the GDPR. Given the delay in finalizing the ePrivacy Regulation, certain regulators have issued guidance (including ICO and French data protection regulators) on the requirement to seek strict opt-in, unbundled consent to use all nonessential cookies and similar technologies and the requirement to increase the standard of transparency relating to use of cookies and similar technologies. Our cookie consent management functionality and cookies notices may not meet the standards outlined in such guidance.

In the United States, the federal government, including Congress, the Federal Trade Commission and the Department of Commerce, has announced that it is reviewing the need for greater regulation for the collection of information concerning consumer behavior on the internet, including regulation aimed at restricting certain targeted advertising practices. Furthermore, the Federal Trade Commission and many state attorneys general continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination, and security practices that appear to be unfair or deceptive. Numerous states have enacted or are in the process of enacting state level data privacy laws and regulations governing the collection, use, and processing of state residents’ personal data.

For example, the California Consumer Privacy Act (“CCPA”) took effect on January 1, 2020. The CCPA establishes a new privacy framework for covered businesses such as ours and may require us to modify our data processing practices and policies and incur compliance related costs and expenses. The CCPA provides new and enhanced data privacy rights to California residents, such as affording consumers the right to access and delete their information and to opt out of certain sharing and sales of personal information. The law also prohibits covered businesses from discriminating against consumers (for example, charging more for services) for exercising any of their CCPA rights. The CCPA imposes severe statutory damages for certain violations of the law as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action is expected to increase the likelihood of, and risks associated with, data breach litigation. It remains unclear how various provisions of the CCPA will be interpreted and enforced. In November 2020, California voters passed the California Privacy Rights and Enforcement Act of 2020 (“CPRA”). The CPRA further expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements. The Stop Hacks and Improve Electronic Data Security Act, otherwise known as the SHIELD Act, is a New York State bill, the data protection portions of which became effective on March 23, 2020. The SHIELD Act requires companies to adopt reasonable safeguards to protect the security, confidentiality, and integrity of private information. A company should implement a data security program containing specific measures, including risk assessments, employee training, vendor contracts, and timely data disposal. Laws like the SHIELD Act, the CPRA and the CCPA may lead other states to pass comparable legislation, with potentially greater penalties, and more rigorous compliance requirements relevant to our business. For example, Virginia has enacted the Consumer Data Protection Act and Colorado has enacted the Colorado Privacy Act, each of which may impose obligations similar to or more stringent than those we may face under other data protection laws. Compliance with any newly enacted privacy and data security laws or regulations may be challenging and cost and time-intensive, and we may be required to put in place additional mechanisms to comply with applicable legal requirements.

Although we have implemented certain policies and procedures, and continue to review and improve such policies and procedures, that are designed to ensure compliance with applicable laws, rules and regulations, if our privacy or data security measures fail, or are perceived to have failed, to comply with applicable current or future laws and regulations, we may be subject to fines, litigation, regulatory investigations and penalties (including

 

71

potential suspension or loss of licensure), enforcement notices requiring us to change the way we use personal data or our marketing practices or other liabilities such as compensation claims by individuals affected by a personal data breach, as well as negative publicity and a potential loss of business. Fines are significant in some countries (e.g., the GDPR introduced fines of up to €20,000,000/£17,500,000 or up to 4% of the total worldwide annual turnover of the preceding financial year (whichever is higher)) as well as litigation, compensation claims by affected individuals (including class action type litigation where individuals suffer harm), regulatory investigations and enforcement notices requiring us to change the way we use personal data.

Our processing of cardholder data is subject, in addition to data protection and privacy laws, to strict industry standards and security procedures. Compliance with the requirements to process cardholder data can be onerous and may require the implementation of new procedures, policies and security measures or the amendment of existing ones which may require material expenditures and harm our financial condition and results of operations. Any actual or perceived failure to comply may result in the inability to process payments, monetary penalties and reputational damages which may require material expenditures and harm our financial condition and results of operations.

The Payment Card Industry Data Security Standard (“PCI DSS”) applies to the processing of cardholder data. PCI DSS consists of a set of policies and procedures intended to enhance the security of cardholder data during card transactions. PCI DSS was implemented by the five largest credit card brands—Visa, Mastercard, Discover, American Express, JCB. Compliance in this regard is important as SGHC does process cardholder data. Where there is actual or perceived non-compliance with PCI DSS, this may result in SGHC’s inability to process payments, monetary penalties and reputational damage. As part of PCI DSS compliance SGHC is required to undertake internal and external network vulnerability scans at least quarterly and after any significant change in the network and to carry out a formal risk assessment process at least annually and upon significant changes to the environment that identifies critical assets, threats, and vulnerabilities. Where such scans reveal any lack of compliance, the Company will take appropriate steps to ensure compliance in accordance with the relevant and applicable policies and procedures.

We will rely on licenses to use the intellectual property rights of third parties which are incorporated into our products and offerings. Failure to maintain, renew or expand existing licenses may require us to modify, limit or discontinue certain offerings, which could adversely affect our business, financial condition and results of operations.

We will rely on products, technologies and intellectual property that we license from third parties, for use in our offerings. A substantial portion of our offerings and services use intellectual property licensed from third parties. The future success of our business may depend, in part, on our ability to obtain, retain and/or expand licenses for popular technologies, data feeds, software platforms and games in a competitive market. We cannot assure that these third-party licenses, or support for such licensed products and technologies, will continue to be available to us on commercially reasonable terms, if at all. In the event that we cannot renew and/or expand existing licenses, we may be required to discontinue or limit our use of the products that include or incorporate the licensed intellectual property. We use data in respect of sporting feeds which we believe to be freely available in the public domain and/or which are made available to us at no charge. In the future, we may be forced to pay for usage of such data, including retrospectively, and third parties may assert rights to such data and/or such third parties may attempt to charge us for the right to use such data. In the event that this does happen, we cannot be certain that appropriate licenses will be available to us on commercially reasonable terms, if at all. In the event that we cannot agree on appropriate licenses, we may be required to discontinue or limit our use of the relevant data and, to the extent that certain of our offerings or products or components thereof are entirely reliant on such data, we may therefore be unable to continue to provide certain offerings or products or components thereof, in which case our business, our results of operations, our financial results and our prospects may suffer.

Some of our license agreements contain minimum guaranteed royalty payments to the third party. If we are unable to generate sufficient revenue to offset the minimum guaranteed royalty payments, it could have a

 

72

material adverse effect on our business, results of operations, cash flows and financial condition. Certain of our license agreements grant the licensor rights to audit our use of their intellectual property as well as the financial calculations of royalty payments under these agreements. Disputes with licensors over uses or terms could result in the payment of additional royalties or penalties by us, cancellation or non-renewal of the underlying license or litigation.

The regulatory review process and licensing requirements also may preclude us from using technologies owned or developed by third parties if those parties are unwilling to subject themselves to regulatory review or do not meet regulatory requirements. Some gaming authorities require gaming manufacturers to obtain approval, licensure or other requirements before engaging in certain transactions, such as acquisitions, mergers, reorganizations, financings, stock offerings and share repurchases. Obtaining such approvals can be costly and time consuming, and we cannot assure that such approvals will be granted or that the approval process will not result in delays or disruptions to our strategic objectives.

We rely on information technology and other systems and platforms, and any failures, errors, defects or disruptions in our systems or platforms could diminish our brand and reputation, subject us to liability, disrupt our business, affect our ability to scale our technical infrastructure and adversely affect our operating results and growth prospects. Our games and other software applications and systems, and the third-party platforms upon which they are made available could contain undetected errors.

Our technology infrastructure is critical to the performance of our platform and offerings and to customer satisfaction. We devote significant resources to network and data security to protect our systems and data. However, our systems may not be adequately designed with the necessary reliability and redundancy to avoid performance delays or outages that could be harmful to our business. We cannot assure you that the measures we take to prevent or hinder cyber-attacks and protect our systems, data and customer information and to prevent outages, data or information loss, fraud and to prevent or detect security breaches, including a disaster recovery strategy for server and equipment failure and back-office systems and the use of third parties for certain cybersecurity services, will provide absolute security. We currently use and may in the future make additional use of “cloud” computing services which are a form of computing infrastructure provided by third parties such as Amazon and Microsoft and as such are substantially not within our control and are subject to outages that we would not be able to prevent and would have significant difficulty mitigating should they occur. We have experienced, and we may in the future experience, website disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors and capacity constraints. Such disruptions have not had a material impact on us; however, future disruptions from unauthorized access to, fraudulent manipulation of, or tampering with our computer systems and technological infrastructure, or those of third parties, could result in a wide range of negative outcomes, each of which could adversely affect our business, financial condition, results of operations and prospects.

Additionally, our products may contain errors, bugs, flaws or corrupted data, and these defects may only become apparent after their launch and could result in a vulnerability that could compromise the security of our systems. If a particular product offering is unavailable when customers attempt to access it or navigation through our platforms is slower than they expect, customers may be unable to use our product offerings as desired and may be less likely to return to our platforms as often, if at all. Furthermore, programming errors, defects and data corruption could disrupt our operations, adversely affect the experience of our customers, harm our reputation, cause our customers to stop utilizing our platforms, divert our resources and delay market acceptance of our offerings, any of which could result in legal liability to us or harm our business, financial condition, results of operations and prospects.

If our customer base and engagement continue to grow, and the amount and types of offerings continue to grow and evolve, we will need an increasing amount of technical infrastructure, including network capacity and computing power, to continue to satisfy our customers’ needs. Such infrastructure expansion may be complex, and unanticipated delays in completing these projects or availability of components may lead to increased project

 

73

costs, operational inefficiencies, or interruptions in the delivery or degradation of the quality of our offerings. In addition, there may be issues related to this infrastructure that are not identified during the testing phases of design and implementation, which may only become evident after we have started to fully use the underlying equipment or software, that could further degrade the customer experience or increase our costs. As such, we could fail to continue to effectively scale and grow our technical infrastructure to accommodate increased demands. In addition, our business may be subject to interruptions, delays or failures resulting from adverse weather conditions, climate change, climate change-related events, other natural disasters, power loss, terrorism, cyber-attacks, public health emergencies (such as the coronavirus) or other catastrophic events.

If we do not continuously improve upon our systems and products and offerings then notwithstanding that the performance thereof might remain constant it might nonetheless also deteriorate when viewed relative to our competitors. This in turn might harm our reputation with our customers or reduce their enjoyment of our products and in turn harm our reputation, business, financial condition, results of operations and prospects.

We believe that if our customers have a negative experience with our offerings, or if our brand or reputation is negatively affected, customers may be less inclined to continue or resume utilizing our products or recommend our platform to other potential customers. As such, a failure or significant interruption in our service could harm our reputation, business, financial condition, results of operations and prospects.

Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by unauthorized third parties, hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information or data stored there could be accessed, publicly disclosed, lost, deleted, encrypted or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings (including class actions), liability under laws that protect the privacy of personal information, and regulatory penalties, disruption of our operations and the services we provide to customers, damage to our reputation, and a loss of confidence in our products and offerings, which could adversely affect our business.

The secure maintenance and transmission of customer information is a critical element of our operations. Our information technology and other systems that maintain and transmit customer information, or those of service providers, business partners or employee information may be compromised by a malicious third-party penetration of our network security, or that of a third-party service provider or business partner, or impacted by intentional or unintentional actions or inactions by our employees, or those of a third-party service provider or business partner. As a result, our customers’ information may be lost, disclosed, accessed or taken without consent. If any such access, disclosure or other loss of information should occur, then we would likely suffer attempts by the recipients of such data to divert our customers away from our products and would also suffer a substantial loss of trust and reputation with our customers and would likely lose a significant portion of their business as a result. We have experienced attempted cyber-attacks, attempts to breach our systems and other similar attempts in the past. For example, we have been and expect that we will continue to be subject to attempts to gain unauthorized access to or through our information systems, whether by our employees or third parties, including cyber-attacks by computer programmers and hackers who may develop and deploy viruses, worms or other malicious software programs. To date these attacks have not had a material impact on our operations or financial results, but we cannot provide assurance that they will not have a material impact in the future.

We rely on encryption and authentication technology licensed from third parties in an effort to securely transmit confidential and sensitive information, including credit card numbers. Advances in computer capabilities, new technological discoveries or other developments may result in the whole or partial failure of this technology to protect transaction data or other confidential and sensitive information from being breached or compromised. In addition, websites and/or externally exposed administrative systems are often attacked through compromised credentials, including those obtained through phishing and credential stuffing. Our security measures, and those of our third-party service providers, may not detect or prevent all attempts to breach our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering,

 

74

security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by our websites, networks and systems or that we or such third parties otherwise maintain, including payment card systems, which may subject us to fines or higher transaction fees or limit or terminate our access to certain payment methods. We and such third parties may not anticipate or prevent all types of attacks until after they have already been launched. Further, techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers.

In addition, security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by third parties. These risks may increase over time as the complexity and number of technical systems and applications we use also increases. Breaches of our security measures or those of our third-party service providers or cybersecurity incidents could result in unauthorized access to our sites, networks and systems; unauthorized access to and misappropriation of customer information, including customers’ personally identifiable information, or other confidential or proprietary information of ourselves or third parties; viruses, worms, spyware or other malware being served from our sites, networks or systems; deletion or modification of content or the display of unauthorized content on our sites; interruption, disruption or malfunction of operations; costs relating to breach remediation, deployment of additional personnel and protection technologies, response to governmental investigations and media inquiries and coverage; engagement of third-party experts and consultants; litigation, regulatory action and other potential liabilities. In the past, we have experienced social engineering, phishing, malware and similar attacks and threats of denial-of-service attacks, none of which to date has been material to our business; however, such attacks could in the future have a material adverse effect on our operations. If any of these breaches of security should occur and be material, our reputation and brand could be damaged, our business may suffer, we could be required to expend significant capital and other resources to alleviate problems caused by such breaches, and we could be exposed to a risk of loss, litigation or regulatory action and possible liability. We cannot guarantee that recovery protocols and backup systems will be sufficient to prevent data loss. Actual or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.

In addition, any party who is able to illicitly obtain a customer’s password could access the customer’s transaction data or personal information, resulting in the perception that our systems are insecure. Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data protection, data security, network and information systems security and other laws and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, results of operations and prospects. We continue to devote significant resources to protect against security breaches or we may need to in the future to address problems caused by breaches, including notifying affected subscribers and responding to any resulting litigation, which in turn, diverts resources from the growth and expansion of our business.

Some of our software systems contain third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to provide our offerings.

Some of our software systems contain software modules licensed to us by third-party authors under “open source” licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability of such software may make it easier for others to compromise our systems.

Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use, or grant other licenses to our intellectual property. If we combine our proprietary software with open source software in a certain manner, we

 

75

could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software.

Although we monitor our use of open source software to avoid subjecting our platform and our back-office and administrative and other systems to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their solutions. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Moreover, we cannot assure you that our processes for controlling our use of open source software in our software systems will be effective. If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face infringement or other liability, or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our systems, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition, results of operations and prospects.

If Internet and other technology-based service providers experience service interruptions, our ability to conduct our business may be impaired and our business, financial condition and results of operations could be adversely affected.

A substantial portion of our network infrastructure is provided by third parties, including Internet service providers and other technology-based service providers. We require technology-based service providers to implement cyber-attack-resilient systems and processes. However, if Internet service providers experience service interruptions, including because of cyber-attacks, or due to an event causing an unusually high volume of Internet use (such as a pandemic or public health emergency), communications over the Internet may be interrupted and impair our ability to conduct our business. Internet service providers and other technology-based service providers may in the future roll out upgraded or new mobile or other telecommunications services, such as 5G or 6G services, which may not be successful and thus may impact the ability of our customers to access our offerings in a timely fashion or at all. In addition, our ability to process e-commerce transactions depends on bank processing and credit card systems. To prepare for system problems, we continuously seek to strengthen and enhance our current facilities and the capabilities of our system infrastructure and support. Nevertheless, there can be no assurance that the Internet infrastructure or our own network systems will continue to be able to meet the demand placed on us by the continued growth of the Internet, the overall online gaming industry and our customers. Any difficulties these providers face, including the potential of certain network traffic receiving priority over other traffic (i.e., lack of net neutrality), may adversely affect our business, and we exercise little control over these providers, which increases our vulnerability to problems with the services they provide. Any system failure as a result of reliance on third parties, such as network, software or hardware failure, including as a result of cyber-attacks, which causes a loss of our customers’ property or personal information or a delay or interruption in our online services and products and e-commerce services, including our ability to handle existing or increased traffic, could result in a loss of anticipated revenue, interruptions to our offerings, cause us to incur significant legal, remediation and notification costs, degrade the customer experience and cause customers to lose confidence in our offerings, any of which could have an adverse effect on our business, financial condition, results of operations and prospects.

 

76

Risks Related to Projections

Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future legislation and changes in regulations of the jurisdictions in which we operate, or seek to operate, our business. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations.

We operate in a rapidly evolving and highly competitive industry and our projections are subject to the risks and assumptions made by management with respect to this industry. Operating results are difficult to forecast because they generally depend on our assessment of factors that are inherently beyond our control and impossible to predict with certainty, such as the timing of adoption of future legislation and regulations by different jurisdictions. Furthermore, if we invest in the development of new products or distribution channels that do not achieve commercial success, whether because of competition or otherwise, we may not recover the often material “up front” costs of developing and marketing those products and distribution channels, or recover the opportunity cost of diverting management and financial resources away from other products or distribution channels.

Additionally, our business may be affected by reductions in customer acquisition, customer persistency and customer spending as a result of numerous factors which may be difficult to predict. This may result in decreased revenue levels, and we may be unable to adopt timely measures to compensate for any unexpected shortfall in income. Our profitability projections make numerous assumptions about the expected future levels of various expense items. Historically most of these expense items have been relatively stable or predictable either in absolute terms or in relation to revenue but there is no certainty that such stability or predictability will continue into the future. These inabilities could cause our operating results in a given period to be higher or lower than expected. If actual results differ from our estimates, analysts may negatively react and our stock price could be adversely impacted.

Our growth prospects depend on the regulatory status of real-money gaming in various jurisdictions. Real-money gaming is an area of focus in several jurisdictions, and regulation may not occur in as many jurisdictions as we expect, or may occur at a slower pace than we anticipate. Additionally, even if additional jurisdictions regulate real money gaming, this may be accompanied by legislative or regulatory restrictions and/or taxes that make it commercially unviable to operate in those jurisdictions, or the process of implementing regulations or securing the necessary licenses to operate in a particular jurisdiction may take longer than we anticipate, which could adversely affect our future results of operations and make it more difficult to meet our expectations for financial performance.

A number of jurisdictions in which we operate, or seek to operate, our business have regulated, or are currently considering regulating, real money gaming, and our business, financial condition, results of operations and prospects are significantly dependent upon regulation of real money gaming. Our business plan is partially based upon the regulation of real money gaming in these jurisdictions; however, this regulation may not occur as we have anticipated. Additionally, if a large number of jurisdictions enact real money gaming legislation and we are unable to obtain, or are otherwise delayed in obtaining the necessary licenses to operate online sports betting or online casino gaming websites in those jurisdictions where such games are regulated, our future growth in online sports betting and online casino gaming could be impaired.

As we enter into new jurisdictions, governments may regulate real money gaming in a manner that is unfavorable to us. As a result, we may encounter legal, regulatory and political challenges that are difficult or impossible to foresee and which could result in an unforeseen adverse impact on planned revenues or costs associated with the new opportunity. For example, certain jurisdictions require us to have a relationship with a land-based, licensed casino for access to online sports betting and/or online casino gaming, which tends to increase our costs of revenue. Jurisdictions that have established government monopolies may limit opportunities for private sector participants like us. Governments in certain jurisdictions also impose substantial tax rates on online sports betting and gaming revenue, in addition to sales taxes in certain jurisdictions and an excise tax on the amount of each wager. As many relevant taxes apply to various measures of modified gross profit, tax rates

 

77

that are higher than we expect will make it more costly and less desirable for us to launch in a given jurisdiction, while tax increases in any of our existing jurisdictions may adversely impact our profitability.

The Parliament of Canada recently passed legislation allowing provinces to regulate single-event wagering within their jurisdictions, although at this point it is unclear as to the approach which each province will take in such regard. Historically, provincially-regulated offerings were limited to parlay sports betting (which required bets to be made on multiple discrete events) offered by provincial Crown corporations. Sport-betting businesses, like our Betway brands, that operate outside of the provincially-regulated frameworks, have until now also offered single-event betting with limited competition from such Crown corporations, due to the general preference of customers to not be limited to parlay bets only. In addition, certain of our private operator competitors elected not to carry on meaningful sports-betting operations in Canada. However, as a consequence of the legislative change, the Crown corporations and many of our private operator competitors, as well as new market entrants (some of which are well-funded and involve major business interests) have announced their intentions to begin or expand sports betting operations in Canada. Independently, several Canadian provinces have been considering altering their approach to regulated online gaming (including both casino games and sports betting), to permit private operators like us to enter the provincially-regulated system. In particular, the Province of Ontario has moved ahead with its plans to permit provincially-regulated online gaming by private operators under a new regulatory framework. While the full extent of the regulatory framework (including the fee or tax rate) is not known at this time, a new provincial commercial contracting party has been established and both it and the provincial regulator have created engagement and licensing mechanisms and begun to register interested applicants. In addition, information on standards, eligibility and other key elements have been published. The new regulatory framework is scheduled to commence operation in the first quarter of 2022. Other Canadian provinces are expected to follow suit eventually. In the past, when other countries have introduced regulatory frameworks, our financial results have been impacted by, amongst other things, increased taxation and compliance costs, offset by improvements in other costs of doing business such as payment processing and product costs. In some cases the introduction of a restrictive regulatory regime has resulted in a decrease in the size of the market, whereas in others a liberal regulatory regime has led to an increase in the size of the market. Although it is possible that all of the above will expand the size of the total addressable market in Canada and/or improve the profitability of the Canadian market for us, at this point this cannot be said for certain and it is possible that parties like us that have pre-existing Ontario or Canadian operations may be at a disadvantage under these new frameworks unless we are prepared to agree to certain conditions. While we actively seek out regulated jurisdictions for the expansion of our business and therefore welcome the recently passed legislation and the proposed Ontario regulatory framework and intend to participate therein to the fullest extent possible, we cannot be certain about the future impacts of these changing circumstances on our business, operations or financial prospects. The Americas accounted for 48% of our business revenue in the year ended December 31, 2020, and Canada is our largest market in the Americas. To the extent that competition in these key markets is increased and we are unable to maintain our related business, it may have a material adverse effect on them.

Therefore, even in cases in which a jurisdiction purports to license and regulate sports betting or gaming, the licensing and regulatory regimes can vary considerably in terms of their business-friendliness and at times may be intended to provide incumbent operators with advantages over new licensees. Therefore, some “liberalized” regulatory regimes are considerably more or less commercially attractive than others.

Our growth prospects in certain jurisdictions depend upon the ability of customers to deposit funds in order to participate in our gaming products. Payment providers in those jurisdictions may exercise independent judgment over whether our gaming operations comply with the requirements of local laws and regulations, and may also place independent limitations on businesses involved in the gaming industry as a whole based upon their own interpretations of regulatory or reputational risks. The inability to access sufficient payment processing resources has in the past and could in the future limit the growth of the business in those jurisdictions.

Our business depends in part on the ability of customers to deposit funds in order to utilize our betting and online casino gaming products. Payment providers in local jurisdictions provide this ability to our customers.

 

78

These payment providers require us to comply with their operating rules as well as local laws and regulations. The payment providers set their operating rules and have discretion to interpret the rules and change them at any time. Changes to these rules, laws or regulations or how they are interpreted could have a significant impact on our business and financial results. These operating rules, laws and regulations vary from one jurisdiction to another and future legislative and regulatory action, court decisions or other governmental action, which may be affected by, among other things, political pressures, attitudes and climates, as well as personal biases, may have a material impact on our operations and financial results. Future legislative and regulatory action, and court decisions or other governmental action, may have a material impact on our planned sports betting and/or online casino gaming operations. Payment providers could view us, or the sports betting and/or online casino gaming industry in general, as high risk, despite our efforts to obtain all applicable licenses or approvals. The inability to access sufficient payment processing resources has in the past, and could in the future, limit the growth of our business which could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as impact our reputation.

Our growth prospects and market potential will depend on our ability to obtain licenses to operate in a number of regulated jurisdictions and if we fail to obtain such licenses our business, financial condition, results of operations and prospects could be impaired.

Our ability to grow our business will depend on our ability to obtain and maintain licenses to offer our product offerings in a large number of jurisdictions or in heavily populated jurisdictions. If we fail to obtain and maintain licenses in large jurisdictions or in a greater number of mid-market jurisdictions, this may prevent us from expanding the footprint of our product offerings, increasing our customer base and/or generating revenues. We cannot be certain that we will be able to obtain and maintain licenses and related approvals necessary to conduct our online sports betting and gaming operations. Any failure to obtain and maintain licenses, registrations, permits or approvals could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our contemplated acquisition of DGC is subject to various conditions, including the requirement that certain regulatory approvals in the United States are obtained. Further, if we are able to successfully consummate our transaction with DGC, the integration of the DGC business, which is incorporated in a different country, with geographically dispersed operations from our own, and with its own business culture and compensation structure, may present significant management challenges. There can be no assurance that the DGC acquisition will be completed or, even if completed, that the integration, and the synergies expected to result from that integration, will be achieved to the extent currently anticipated.

From time to time, we expect that we will pursue acquisitions in support of our strategic goals. In furtherance of such goals, we have executed a binding, definitive agreement to acquire DGC. However, our contemplated acquisition of DGC is subject to various conditions, including regulatory approvals in the United States. There can be no assurance that such conditions will be satisfied or that we will be able to successfully complete our contemplated acquisition of DGC. Further, if we are able to successfully consummate our transaction with DGC, our ability to succeed in implementing our strategy will depend on some degree upon the ability of our management to successfully integrate the DGC business. The integration of the DGC business, which is incorporated in a different country, with geographically dispersed operations from our own, and with its own business culture and compensation structure, may present significant challenges to our management and may disrupt our ongoing business. In addition, we may incur unexpected costs or fail to realize the expected benefits from such acquisition.

We may require additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business.

We intend to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new offerings and features or enhance our

 

79

existing offerings and features, undertake large scale brand and other marketing campaigns, enter into strategic partnerships with multiple sports teams and leagues, enter into market access agreements, launch into new markets, improve our operating infrastructure or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. Our ability to obtain additional capital, if and when required, will depend on our business plans, investor demand, our operating performance, capital markets conditions and other factors. If we raise additional funds by issuing equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our currently issued and outstanding equity or debt, and our existing shareholders may experience dilution. If we are unable to obtain additional capital when required, or on satisfactory terms, our ability to continue to support our business growth or to respond to business opportunities, challenges or unforeseen circumstances could be adversely affected, and our business may be harmed.

Risks Related to SEAC and the Business Combination

Directors of SEAC have potential conflicts of interest in recommending that stockholders vote in favor of approval of the Business Combination and approval of the other proposals described in this proxy statement/prospectus.

When considering the Board’s recommendation that SEAC’s stockholders vote in favor of the approval of the Business Combination, SEAC’s stockholders should be aware that SEAC’s directors and executive officers, advisors and entities affiliated with them, have interests in the Business Combination that may be different from, or in addition to, the interests of SEAC’s stockholders. These interests include:

 

•

the continued indemnification of former and current directors and officers of SEAC and the continuation of directors’ and officers’ liability insurance after the Business Combination;

 

•

the fact that SEAC’s Founders have waived their right to redeem any of their Founder Shares in connection with a stockholder vote to approve a proposed initial business combination;

 

•

the fact that the Founders (including PJT Holdings, an affiliate of SEAC’s financial advisor PJT, which has a non-voting economic interest in the Sponsor) beneficially own or have an economic interest in Founder Shares and private placement warrants that they purchased prior to, or simultaneously with, the IPO, for which they have no redemption rights in the event an initial business combination is not effected in the required time period;

 

•

the fact that the Founders (including PJT Holdings through its economic interest in the Sponsor) paid an aggregate of $25,000 for the Class B Shares, which will convert into 11,250,000 Class A Shares in accordance with the terms of the Current Charter and the Founder Holders Consent Letter, subject to adjustment, and such securities could have a significantly higher value at the time of the Business Combination, estimated at approximately $112,000,000 based on the closing price of $9.96 per Class A Share on the NYSE on January 11, 2022, even if other SEAC stockholders ultimately experience a negative rate of return;

 

•

the fact that the Sponsor and PJT Holdings paid $10,388,888 and $611,112 for 10,388,888 and 611,112 private placement warrants, respectively, (i) with each such private placement warrant being exercisable commencing upon the later of 12 months following the IPO and 30 days following the closing of the Business Combination for one NewCo Ordinary Share at $11.50 per share (subject to any restrictions in the Founder Holders Deferral Agreement), subject to adjustment, and (ii) with such private placement warrants having aggregate market values of approximately $10,181,110 and $598,890, respectively, assuming the private placement warrants (for which there is currently no trading market) would be considered fungible with the public warrants by an investor, which public warrants had a closing price of $0.98 on April 23, 2021, the last trading date preceding the public announcement of the Business Combination;

 

•

the fact that Goldman Sachs and PJT, as SEAC’s underwriters in the IPO and the financial advisors in connection with the Business Combination, will each be entitled to receive a deferred underwriting

 

80

commission and financial advisory fee upon completion of the Business Combination, totaling an aggregate of $29,750,000, plus an additional sum in an amount between $7,000,000 and $10,000,000, payable at SEAC’s sole and absolute discretion;

 

•

the fact that SEAC issued an unsecured promissory note in the principal amount of up to $2,000,000 to the Sponsor, and that if SEAC does not complete an initial business combination, the promissory note will not be repaid and all amounts owed under it will be forgiven;

 

•

the fact that SEAC’s transaction expenses were estimated to total approximately $45,000,000 (including the deferred underwriting commissions and base financial advisory fees described above) upon the completion of an initial business combination; and

 

•

if the trust account is liquidated, including in the event SEAC is unable to complete an initial business combination within the required time period, the Sponsor has agreed that it will be liable to SEAC if and to the extent any claims by a third party for services rendered or products sold to it, or a prospective target business with which it has entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per public share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under the indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act.

These financial interests of the officers and directors, and entities affiliated with them (collectively, the “SEAC Related Parties”), may have influenced their decision to approve the Business Combination. For example, because of the benefit to the SEAC Related Parties if an initial business combination is completed, and the detriment to them if an initial business combination is not completed within the required time period (i.e., by October 6, 2022), the SEAC Related Parties may be incentivized to complete an initial business combination with a less favorable target company, or on terms less favorable to SEAC stockholders, rather than liquidate the trust account at the end of the required time period. You should consider these interests when evaluating the Business Combination and the recommendation of the Proposal to vote in favor of the Business Combination Proposal and other proposals to be presented to the stockholder.

SGHC directors and officers may have interests in the Business Combination different from the interests of its stockholders.

Executive officers of SGHC negotiated the terms of the Merger Agreement with their counterparts at SEAC, and the SGHC board of directors determined that entering into the Merger Agreement was in the best interests of SGHC and its stockholders. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that SGHC’s executive officers and directors may have interests in the Business Combination that may be different from, or in addition to, the interests of SGHC stockholders. The SGHC board of directors was aware of and considered these interests, among other matters, in reaching the determination to approve the terms of the Business Combination. For a detailed discussion of the special interests that SGHC’s directors and executive officers may have in the Business Combination, please see the section entitled “The Business Combination — Interests of SGHC’s Directors and Executive Officers in the Business Combination” beginning on page 125.

PJT and Goldman Sachs may have a potential conflict of interest regarding the Business Combination.

Each of PJT and Goldman Sachs served as underwriters in the IPO, and, upon consummation of the Business Combination, they will be entitled to receive $15,750,000 of deferred underwriting commission, which

 

81

represents 3.5% of the trust account, assuming no redemptions, 5.25% of the trust account, assuming maximum redemptions, or 4.2% of the trust account, assuming the mid-point redemption scenario, of which PJT is entitled to $3,150,000 and Goldman Sachs is entitled to $12,600,000. The underwriters of the IPO have agreed to waive their rights to the deferred underwriting commission held in the trust account in the event SEAC does not complete an initial business combination within 24 months of the closing of the IPO. Accordingly, if the Business Combination, or any other initial business combination, is not consummated by that time and SEAC is therefore required to be liquidated, PJT and Goldman Sachs will not receive any of the deferred underwriting commission and such funds will be returned to SEAC’s public stockholders upon its liquidation.

Furthermore, PJT and Goldman Sachs were engaged by SEAC as its financial advisors in connection with the Business Combination. SEAC decided to retain PJT and Goldman Sachs as its financial advisors based primarily on their extensive knowledge of online gaming and the sports betting industry, strong market position, positive reputations as leading advisors in SPAC business combinations, and their experienced and capable investment banking teams.

In addition to paying PJT and Goldman Sachs financial advisory fees upon the Closing of the Business Combination for their respective roles as financial advisors, SEAC agreed to reimburse PJT and Goldman Sachs for reasonable and documented out-of-pocket expenses, including the fees and disbursements of outside counsel, and to indemnify PJT and Goldman Sachs and certain related parties against liabilities, including liabilities under federal securities laws, in each case, in connection with its engagement.

Both PJT and Goldman Sachs have an interest in SEAC’s completing a business combination prior to the expiration of the 24 month period following the closing of the IPO, and they both may have a potential conflict of interest given that they are entitled to the deferred portion of their underwriting compensation, and their financial advisory fees are payable, only if an initial business combination is completed within the specified timeframe. In addition, an affiliate of PJT, PJT Holdings, beneficially owns or has an economic interest in private placement warrants and Founder Shares that it purchased simultaneously with, or prior to, the IPO, for which it has no redemption rights in the event an initial business combination is not effected in the required time period. In considering approval of the Business Combination, SEAC’s stockholders should consider the roles of PJT and Goldman Sachs in light of this potential conflict.

Following the completion of the Business Combination, Founders and Sellers, whose interests may differ from those of other holders of NewCo Ordinary Shares following the Business Combination, will have the ability to significantly influence NewCo’s business and management.

It is anticipated that, upon completion of the Business Combination: (i) SEAC’s public stockholders will own approximately 12.94% of NewCo; (ii) the Sponsor and current SEAC directors will own approximately 4.26% of NewCo; and (iii) Sellers will own approximately 82.80% of NewCo (excluding the Earnout Shares). These levels of ownership interest: (a) includes the impact of the warrants to purchase NewCo Ordinary Shares that will remain outstanding immediately following the Business Combination, (b) assume that no SEAC public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in SEAC’s trust account and (c) assumes SGHC’s cash and cash equivalents balance at the Closing is $327.5 million, converted at the historical closing exchange rate, as of June 30, 2021, of €0.8301 to $1.00. See “The Business Combination Proposal — General — Equity Ownership Upon Closing.” In addition, pursuant to the Business Combination Agreement, at the Closing, the board of directors of NewCo will be comprised of seven members, four of whom will be designated by NewCo unilaterally, one of whom will be designated by NewCo in consultation with SEAC, and two of whom will be Eric Grubman and John Collins. Accordingly, members of the Sponsor and the Sellers will be able to significantly influence the approval of actions requiring approval of the board of directors of NewCo through their voting power. As a result, the Founders and Sellers will retain significant influence with respect to NewCo’s management, business plans and policies, including the appointment and removal of its officers.

Further, certain Founders and Sellers are each in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with NewCo. Certain Founders and

 

82

Sellers, and their respective affiliates, may also pursue acquisition opportunities that may be complementary to NewCo’s business and, as a result, those acquisition opportunities may not be available to NewCo. NewCo’s Amended and Restated Articles of Incorporation will provide that NewCo renounces and waives any interest, expectancy or right to any business or corporate opportunity presented to Founders and certain shareholders and their respective affiliates. Prospective investors in NewCo Ordinary Shares should consider that the interests of Founders and Sellers may differ from their interests in material respects.

Super Group’s licenses and applications for licenses in certain regulated jurisdictions may be subject to a review procedure or an ownership change consent requirement by regulators as a result of the 2020 Reorganization and the Business Combination (including following its consummation), which could result in a license or application being delayed, canceled, withheld, or subjected to additional requirements or conditions.

Super Group and its subsidiaries hold certain licenses and have filed certain applications for licenses to operate iGaming and sports-betting products in various jurisdictions, including Malta and the United Kingdom. The regulatory bodies that oversee and issue these licenses and review such applications regularly review corporate transactions involving ownership changes to determine whether the ownership changes have any impact on current licenses held by, or applications pending with respect to, SGHC or its subsidiaries. Such regulatory bodies also have broad discretion in determining whether to deny applications, cancel existing licenses, withhold new licenses or require the business to comply with additional conditions as a result of a business combination. We cannot assure you that we will be able to obtain regulatory review of our applications or licenses in a timely fashion or without any limitations as a result of the Business Combination.

SEAC has identified a material weakness in its internal control over financial reporting. This material weakness could continue to adversely affect SEAC’s ability to report our results of operations and financial condition accurately and in a timely manner.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As described in SEAC’s Current Report on Form 8-K, filed with the SEC on November 24, 2021, we identified a material weakness in our internal control over financial reporting related to complex financial instruments. As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of December 31, 2020, March 31, 2021, June 30, 2021 and September, 30 2021.

Any failure to maintain internal control over our financial reporting could adversely impact SEAC’s ability to report its financial position and results from operations on a timely and accurate basis, which could delay or disrupt our efforts to consummate the Business Combination. If SEAC’s financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if SEAC’s financial statements are not filed on a timely basis, it or we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our ability to consummate an initial business combination.

We can give no assurance as to our ability to timely remediate the material weakness identified, if at all, or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls.

 

83

The Business Combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.

The completion of the Business Combination is subject to a number of conditions. The completion of the Business Combination is not assured and is subject to risks, including the risk that approval of the Business Combination by SEAC’s stockholders is not obtained or that there are not sufficient funds in the trust account, in each case, subject to certain terms specified in the Business Combination Agreement (as described under “The Business Combination Agreement — Conditions to the Closing of the Business Combination”), or that other closing conditions are not satisfied. If SEAC does not complete the Business Combination, it could be subject to several risks, including:

 

•

the parties may be liable for damages to one another under the terms and conditions of the Business Combination Agreement;

 

•

negative reactions from the financial markets, including declines in the price of SEAC’s Class A Shares due to the fact that current prices may reflect a market assumption that the Business Combination will be completed; and

 

•

the attention of its management will have been diverted to the Business Combination rather than its own operations and pursuit of other opportunities that could have been beneficial to SEAC.

Subsequent to the consummation of the Business Combination, NewCo may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and share price, which could cause you to lose some or all of your investment.

Although SEAC has conducted due diligence on NewCo, SEAC cannot assure you that this diligence revealed all material issues that may be present in its businesses, that it would be possible to uncover all material issues through a customary amount of due diligence or that factors outside of SEAC’s or NewCo’s control will not later arise. As a result, NewCo may be forced to later write-down or write-off assets, restructure its operations or incur impairment or other charges that could result in losses. Even if the due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with SEAC’s preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on SEAC’s liquidity, the fact that NewCo reports charges of this nature could contribute to negative market perceptions about NewCo or its securities. In addition, charges of this nature may cause NewCo to violate net worth or other covenants to which it may be subject. Accordingly, any stockholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their NewCo Ordinary Shares. Such shareholders are unlikely to have a remedy for such reduction in value, unless they are able to successfully claim that the reduction was due to the breach by SEAC’s officers or directors of a fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation materials, relating to the Business Combination contained an actionable material misstatement or material omission.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus may not be indicative of what NewCo’s actual financial position or results of operations would have been.

NewCo has been recently incorporated and has no operating history and no revenues. This document includes unaudited pro forma condensed combined financial statements for NewCo. The unaudited pro forma condensed combined financial information in this proxy statement/prospectus is presented for illustrative purposes only, is based on certain assumptions, addresses a hypothetical situation, and is not necessarily indicative of what NewCo’s actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated, or the future consolidated results of operations or financial position of NewCo. Accordingly, NewCo’s business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this document. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

 

84

The Board did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination.

The Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination with NewCo. In analyzing the Business Combination, the Board and management conducted due diligence on NewCo and researched the industry in which NewCo operates and concluded that the Business Combination was in the best interests of SEAC’s stockholders. Accordingly, investors will be relying solely on their own judgment as well as the judgment of the Board in valuing the NewCo’s businesses, and the Board may not have properly valued such businesses. The lack of a third-party valuation or fairness opinion may also lead an increased number of shareholders to vote against the Business Combination or demand redemption of their public shares for cash, which could potentially impact SEAC’s ability to consummate the Business Combination.

Each of SEAC and SGHC have incurred and will incur substantial costs in connection with the Business Combination and related transactions, such as legal, accounting, consulting and financial advisory fees.

As part of the Business Combination, each of SGHC and SEAC are utilizing professional service firms for legal, accounting and financial advisory. Although the parties have been provided with estimates of the costs for each advisory firm, the total actual costs may exceed those estimates.

NewCo may incur successor liabilities due to conduct arising prior to the completion of the Business Combination.

NewCo may be subject to certain liabilities of SGHC. SGHC at times may become subject to litigation claims in the operation of its business, including, but not limited to, with respect to employee matters and contract matters. From time to time, SGHC may also face intellectual property infringement, misappropriation, or invalidity/non-infringement claims from third parties, and some of these claims may lead to litigation. SGHC may initiate claims to assert or defend their own intellectual property against third parties. Any litigation may be expensive and time-consuming and could divert management’s attention from its business and negatively affect its operating results or financial condition. The outcome of any litigation cannot be guaranteed and adverse outcomes can affect NewCo and SGHC negatively.

SGHC may also face inquiry and investigation by governmental authorities, which could in turn lead to fines, as the regulatory landscape of sport betting and iGaming changes.

NewCo may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

NewCo will have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of its ordinary shares equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and certain issuances of ordinary shares and equity-linked securities) for any 10 trading days within the 20 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption, and provided further that there is an effective registration statement covering the ordinary shares issuable upon exercise of the warrants, and a current prospectus relating thereto, available throughout the 30-day redemption period, or NewCo has elected to require the exercise of the warrants on a “cashless basis,” and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by NewCo, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the public warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption of the outstanding warrants could force holders (i) to exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) to sell the warrants at the then-current market price when the holder might otherwise wish to hold its warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than

 

85

the market value of the warrants. The private placement warrants are not redeemable by NewCo, except as otherwise described in this proxy statement/prospectus, so long as they are held by the Sponsor or PJT Holdings or their permitted transferees.

In addition, NewCo will have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant if, among other things, the last reported sales price of NewCo’s Ordinary Shares equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 10 trading days within a 20 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption. In such a case, the holders will be able to exercise their warrants on a cashless basis prior to redemption for a number of NewCo Ordinary Shares determined based on the redemption date and the fair market value of NewCo Ordinary Shares. The value received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (2) where exercised on a cashless basis, may not compensate the holders for the value of the warrants, including because the number of shares received is capped at 0.361 NewCo Ordinary Shares per whole warrant (subject to adjustment) irrespective of the remaining life of the warrants.

The only principal asset of NewCo following the Business Combination will be its interest in SGHC, and accordingly, it will depend on distributions from SGHC to pay taxes and expenses.

Upon consummation of the Business Combination, NewCo will be a holding company and will have no material assets other than its interests in SGHC. NewCo is not expected to have independent means of generating revenue or cash flow, and its ability to pay taxes and operating expenses, as well as dividends in the future, if any, will be dependent upon the financial results and cash flows of SGHC. There can be no assurance that SGHC will generate sufficient cash flow to distribute funds to NewCo, or that applicable law and contractual restrictions, including negative covenants under any debt instruments, if applicable, will permit such distributions. If SGHC does not distribute sufficient funds to NewCo to pay its taxes or other liabilities, NewCo may default on contractual obligations or have to borrow additional funds. In the event that NewCo is required to borrow additional funds, it could adversely affect NewCo’s liquidity and subject it to additional restrictions imposed by lenders.

The Business Combination may give rise to a taxable event for U.S. Holders of SEAC Class A Shares and Public Warrants

Subject to the limitations, exceptions, and qualifications described in “Material Tax Considerations — Material U.S. Federal Income Tax Considerations” below, the Business Combination should qualify as a tax-deferred transaction described by Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”). Assuming the Business Combination so qualifies, U.S. Holders and Non-U.S. Holders (as defined in “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations”) exchanging SEAC Class A Shares for NewCo Ordinary Shares generally should not recognize gain or loss for U.S. federal income tax purposes, except as otherwise described in “The Business Combination Proposal – Material Tax Considerations — Material U.S. Federal Income Tax Considerations.” However, the failure of a U.S. Holder to meet certain requirements could result in the exchange of SEAC Class A Shares for NewCo ordinary shares being a taxable event to such U.S. Holder. Furthermore, as discussed in the section entitled “The Business Combination Proposal – Material Tax Considerations — Material U.S. Federal Income Tax Considerations” and subject to the limitations, exceptions, and qualifications therein, the appropriate U.S. federal income tax treatment of SEAC public warrants in connection with the Merger is uncertain because it is unclear whether the Merger, in addition to qualifying as an exchange described in Section 351(a) of the Code, will also qualify as a Reorganization. Although counsel to the Company and counsel to SEAC will deliver an opinion regarding the qualification of the Merger as an exchange described by Section 351 of the Code, given the complex nature of the tax rules applicable to the Merger and the related transactions in the Business Combination and the absence of authorities directly on point or an advance ruling from the IRS, the conclusions to be stated in such tax opinions are not free from doubt, and there is a risk that the IRS could take a contrary position to those described in such tax opinions and that a court will agree with such contrary position in the event of litigation.

 

86

Section 367(a) of the Code and the Treasury Regulations promulgated thereunder, in certain circumstances described below, also impose additional requirements for a U.S. Holder to qualify for tax-deferred treatment under Section 351 of the Code or Section 368 of the Code with respect to the exchange of SEAC Class A Shares and/or SEAC public warrants in the Merger. The requirements for tax-deferred treatment, including Section 367(a) of the U.S. Tax Code, and the U.S. federal income tax consequences to U.S. Holders if such requirements are not met are discussed in more detail under the sections entitled “Material Tax Considerations — Material U.S. Federal Income Tax Considerations — Tax Consequences of the Merger to U.S. Holders — Additional Requirements for Tax Deferral.” If you are a U.S. Holder exchanging SEAC Class A Shares in the Business Combination or holding public warrants at the time of the consummation of the Business Combination, you are urged to consult your tax advisor to determine the tax consequences thereof.

Furthermore, if a U.S. Holder or Non-U.S. Holder exercises its redemption rights to receive cash from the trust account in exchange for a portion or, if such U.S. Holder or Non-U.S. Holder maintains its ownership of public warrants, all of its SEAC Class A Shares, such redemption may be treated as integrated with the Merger rather than as a separate transaction. In such case, cash received by such U.S. Holder or Non-U.S. Holder in the redemption may also be treated as taxable boot received in a “reorganization” which, depending on the circumstances applicable to such U.S. Holder or Non-U.S. Holder, may be treated as capital gain (but not loss) or dividend income. If the Internal Revenue Service (“IRS”) were to assert, and a court were to sustain such a contrary position, such U.S. Holder or Non-U.S. Holder may be required to recognize more gain or income than if the redemption of SEAC Class A Shares was treated as a separate transaction from the exchanges pursuant to the Merger. For further discussion on the tax implications of such treatment, please see the discussion under the headings “Material Tax Considerations — Material U.S. Federal Income Tax Considerations — U.S. Federal Income Taxation of U.S. Holders — Tax Consequences for U.S. Holders Exercising Redemption Rights With Respect to SEAC Class A Shares” and “Material Tax Considerations — Material U.S. Federal Income Tax Considerations — Tax Consequences to Non-U.S. Holders Exercising Redemption Rights With Respect to SEAC Class A Shares.” If you are a U.S. Holder or Non-U.S. Holder exercising your redemption rights with respect to the SEAC Class A Shares, you are urged to consult your tax advisor to determine the tax consequences if the Merger and the redemption of SEAC Class A Shares are to be treated as an integrated transaction.

Exercising Redemption Rights with respect to SEAC Class A Shares may give rise to a taxable event for U.S. and Non-U.S. Holders of Class A Shares and Public Warrants

Whether the redemption is subject to U.S. federal income tax depends on the particular facts and circumstances. It is possible that you may be treated as selling such SEAC Class A Shares and, as a result, recognize capital gain or capital loss. It is also possible that the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of SEAC Class A Shares that you own or are deemed to own (including through the ownership of warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, please see the sections titled “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations — Tax Consequences for U.S. Holders Exercising Redemption Rights With Respect to SEAC Class A Shares” and “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations — Tax Consequences to Non-U.S. Holders Exercising Redemption Rights with respect to SEAC Class A Shares.” All holders considering exercising redemption rights are urged to consult their tax advisor on the tax consequences to them of an exercise of redemption rights, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws.

The IRS may not agree that NewCo should be treated as a non-U.S. corporation for U.S. federal income tax purposes.

Under current U.S. federal income tax law, a corporation generally will be considered to be a U.S. corporation for U.S. federal income tax purposes only if it is created or organized in the United States or under the law of the United States or of any State. Accordingly, under generally applicable U.S. federal income tax rules, NewCo, which is not created or organized in the United States or under the law of the United States or of any State but is instead a Guernsey incorporated entity and a tax resident of Guernsey, would generally be

 

87

classified as a non-U.S. corporation. Section 7874 of the U.S. Tax Code and the Treasury regulations promulgated thereunder (“Section 7874”), however, contain specific rules that may cause a non-U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes. If it were determined that NewCo is treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874, NewCo would be liable for U.S. federal income tax on its income just like any other U.S. corporation and certain distributions made by NewCo to Non-U.S. Holders (as defined in “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations”) of NewCo would be subject to U.S. withholding tax. As more fully described in “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations — Treatment of NewCo as a non-U.S. Corporation for U.S. Federal Income Tax Purposes,” NewCo believes it should not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874. However, whether the requirements for such treatment have been satisfied must be finally determined after the completion of the Business Combination, by which time there could be adverse changes to the relevant facts and circumstances. Furthermore, the interpretation of Treasury Regulations relating to the required ownership of NewCo is subject to uncertainty and there is limited guidance regarding their application. Accordingly, there can be no assurance that the IRS will not take a contrary position to those described above or that a court will not agree with a contrary position of the IRS in the event of litigation. You are urged to consult your tax advisor to determine the tax consequences if the classification of NewCo as a non-U.S. corporation is not respected.

SEAC’s Founders, directors, officers, advisors and their affiliates may elect to purchase Class A Shares or warrants from public stockholders, which may influence a vote on the Business Combination and reduce the public “float” of the Class A Shares.

SEAC’s Founders, directors, officers, advisors or their affiliates may purchase Class A Shares or warrants in privately negotiated transactions or in the open market either before or following the completion of the Business Combination, although they are under no obligation to do so. There is no limit on the number of securities SEAC’s Founders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and the rules of NYSE. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase Class A Shares or warrants in such transactions.

In the event that SEAC’s Founders, directors, executive officers, advisors, or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their public shares. The purpose of any such purchases of Class A Shares could be to vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination or to satisfy a closing condition in the Business Combination Agreement that requires SEAC to have a certain amount of cash at the consummation of the Business Combination, where it appears that such requirement would otherwise not be met. In addition, the purpose of any such purchases of warrants could be to reduce the number of warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with the initial business combination. Any such purchases of SEAC’s securities may result in the completion of the Business Combination that may not otherwise have been possible.

In addition, if such purchases are made, the public “float” of the Class A Shares and the number of beneficial holders of SEAC’s securities may be reduced, possibly making it difficult to maintain the quotation, listing or trading of SEAC’s securities on NYSE.

 

 

88

The Founders have agreed to vote in favor of the Business Combination, regardless of how SEAC’s public stockholders vote.

The Founders have agreed to vote their Founder Shares in favor of the Business Combination. The Founders own 20% of SEAC’s outstanding shares of common stock prior to the Business Combination. Accordingly, it is more likely that the necessary stockholder approval for the Business Combination will be received than would be the case if the Founders agreed to vote their Founder Shares in accordance with the majority of the votes cast by SEAC’s public stockholders.

Even if SEAC consummates the Business Combination, there can be no assurance that the warrants will be in the money at the time they become exercisable, and they may expire worthless.

The exercise price for the outstanding warrants is $11.50 per Class A Share. There can be no assurance that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.

If SEAC is unable to complete the Business Combination with NewCo or another business combination by October 6, 2022 (or such later date as SEAC’s stockholders may approve), SEAC will cease all operations except for the purpose of winding up, dissolving and liquidating, in which case its public stockholders may only receive approximately $10.00 per share and its warrants will expire worthless. Further, third-parties may bring claims against SEAC, and, as a result, the proceeds held in the trust account could be reduced and the per share liquidation price received by stockholders could be less than $10.00 per share.

Under the terms of the Current Charter, SEAC must complete the Business Combination or another business combination by October 6, 2022, or SEAC must: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the trust account deposits (which interest will be net of taxes payable and less up to $100,000 to pay dissolution expenses), divided by the number of then-outstanding public shares, which redemption will completely extinguish its public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and the Board, dissolve and liquidate, subject, in the case of clauses (i) and (ii), to its obligations under Delaware law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. There will be no liquidating distributions with respect to SEAC’s warrants, which will expire worthless. In such event, third-parties may bring claims against SEAC. Although SEAC has obtained waiver agreements from certain vendors and service providers (other than its independent auditors) it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims that could take priority over those of SEAC’s public stockholders.

The Sponsor has agreed that it will be liable to SEAC if and to the extent any claims by a third party for services rendered or products sold to it, or a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims

 

89

under SEAC’s indemnity of the underwriters in the IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. SEAC has not asked the Sponsor to reserve for its indemnification obligations, it has not independently verified whether the Sponsor has sufficient funds to satisfy such obligations, and it believes that the Sponsor’s only assets are securities of SEAC. As a result, if any such claims were successfully made against the trust account, the funds available for SEAC’s initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, SEAC may not be able to complete its initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares.

SEAC’s directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to SEAC’s public stockholders.

In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case, less taxes payable, and SEAC’s Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, SEAC’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations.

While SEAC currently expects that its independent directors would take legal action on its behalf against the Sponsor to enforce its indemnification obligations to SEAC, it is possible that SEAC’s independent directors. in exercising their business judgment and subject to their fiduciary duties, may choose not to do so in any particular instance. If SEAC’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to SEAC’s public stockholders may be reduced below $10.00 per share.

If, before distributing the proceeds in the trust account to SEAC’s public stockholders, SEAC files a bankruptcy petition or an involuntary bankruptcy petition is filed against it that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of SEAC’s stockholders and the per share amount that would otherwise be received by its stockholders in connection with its liquidation may be reduced.

If, before distributing the proceeds in the trust account to its public stockholders, SEAC files a bankruptcy petition or an involuntary bankruptcy petition is filed against it that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in SEAC’s bankruptcy estate and subject to the claims of third-parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the trust account, the per share amount that would otherwise be received by SEAC’s stockholders in connection with SEAC’s liquidation may be reduced.

SEAC’s stockholders may be held liable for claims by third-parties against SEAC to the extent of distributions received by them.

If SEAC is unable to complete the Business Combination with NewCo or another business combination within the required time period, SEAC will cease all operations, except for the purpose of winding up, liquidating and dissolving, subject to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. SEAC cannot assure you that it will properly assess all claims that may be potentially brought against it. As such, SEAC’s stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more), and any liability of SEAC’s stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, SEAC cannot assure you that third parties will not seek to recover from SEAC’s stockholders amounts owed to them by SEAC.

If SEAC is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court

 

90

could seek to recover all amounts received by SEAC’s stockholders. Furthermore, because SEAC intends to distribute the proceeds held in the trust account to its public stockholders promptly after the expiration of the time period to complete an initial business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, the Board may be viewed as having breached their fiduciary duties to SEAC’s creditors and/or may have acted in bad faith, and thereby exposing itself and the company to claims of punitive damages, by paying public stockholders from the trust account before addressing the claims of creditors. SEAC cannot assure you that claims will not be brought against it for these reasons.

During the Pre-Closing period, SEAC and the Target Companies are prohibited from entering into certain transactions that might otherwise be beneficial to SEAC, the Target Companies or their respective shareholders.

Until the earlier of the Closing of the Business Combination or termination of the Business Combination Agreement, SEAC and the Target Companies are subject to certain limitations on the operations of their businesses, each as summarized under the “The Business Combination Agreement — Interim Operations Pending the Closing.” The limitations on SEAC’s and the Target Companies’ conduct of their businesses during this period could have the effect of delaying or preventing other strategic transactions and may, in some cases, make it impossible to pursue business opportunities that are available only for a limited time.

Uncertainties about the Business Combination during the Pre-Closing period may cause third parties to delay or defer decisions concerning the Target Companies or seek to change existing arrangements.

There may be uncertainty regarding whether the Business Combination will occur. This uncertainty may cause third parties to delay or defer decisions concerning the Target Companies, which could negatively affect the Target Companies’ business. Third parties may seek to change existing agreements with the Target Companies as a result of the Business Combination or other reasons.

The exercise of SEAC’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination Agreement may result in a conflict of interest when determining whether such changes to the terms of the Business Combination Agreement or waivers of conditions are appropriate and in SEAC’s stockholders’ best interests.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Business Combination Agreement, would require SEAC to agree to amend the Business Combination Agreement, to consent to certain actions taken by NewCo or to waive rights that SEAC is entitled to under the Business Combination Agreement. Such events could arise because of changes in the course of NewCo’s businesses, a request by NewCo to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on the NewCo’s business and would entitle SEAC to terminate the Business Combination Agreement. In any of such circumstances, it would be at SEAC’s discretion, acting through the Board, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors described in this proxy statement/prospectus may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is best for SEAC and what he, she or they may believe is best for himself, herself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, SEAC does not believe there will be any material changes or waivers that SEAC’s directors and officers would be likely to make after the mailing of this proxy statement/prospectus. SEAC will circulate a new or amended proxy statement/prospectus if changes to the terms of the Business Combination Agreement would have a material impact on its shareholders are required prior to the vote on the Business Combination Proposal.

 

 

91

Risks Related to Ownership of Company Common Stock

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of SEAC’s and/or NewCo’s securities may decline.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of the Class A Shares prior to the consummation of the Business Combination may decline. The market values of the Class A Shares at the time of the Business Combination may vary significantly from their prices on the date the Business Combination Agreement was executed, the date of this proxy statement/prospectus or the date on which SEAC’s stockholders vote on the Business Combination. Because the number of NewCo Ordinary Shares to be issued pursuant to the Business Combination Agreement will not be adjusted to reflect any changes in the market price of the Class A Shares, the market value of NewCo Ordinary Shares issued in the Business Combination may be higher or lower than the values of these shares on earlier dates.

In addition, following the Business Combination, fluctuations in the price of NewCo Ordinary Shares could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for NewCo Ordinary Shares. Accordingly, the valuation ascribed to NewCo in the Business Combination may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for NewCo’s securities develops and continues, the trading price of NewCo Ordinary Shares following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond NewCo’s control. Any of the factors listed below could have a material adverse effect on your investment in NewCo Ordinary Shares, and NewCo Ordinary Shares may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of NewCo Ordinary Shares may not recover and may experience a further decline.

Factors affecting the trading price of NewCo Ordinary Shares may include:

 

•

actual or anticipated fluctuations in NewCo’s quarterly financial results or the quarterly financial results of companies perceived to be similar to NewCo;

 

•

changes in the market’s expectations about NewCo’s operating results;

 

•

success of competitors;

 

•

NewCo’s operating results failing to meet the expectation of securities analysts or investors in a particular period;

 

•

changes in financial estimates and recommendations by securities analysts concerning NewCo or the industries in which NewCo operates in general;

 

•

operating and share price performance of other companies that investors deem comparable to NewCo;

 

•

NewCo’s ability to market new and enhanced products on a timely basis;

 

•

changes in laws and regulations, or their enforcement, affecting NewCo’s business;

 

•

commencement of, or involvement in, litigation involving NewCo;

 

•

changes in NewCo’s capital structure, such as future issuances of securities or the incurrence of additional debt;

 

•

the volume of NewCo Ordinary Shares available for public sale;

 

•

any major change in NewCo’s board or management;

 

•

sales of substantial amounts of NewCo Ordinary Shares by NewCo’s directors, executive officers or significant shareholders or the perception that such sales could occur; and

 

•

general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

 

92

Broad market and industry factors may materially harm the market price of NewCo Ordinary Shares irrespective of NewCo’s operating performance. The stock market in general, and NYSE, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of NewCo Ordinary Shares, may not be predictable. A loss of investor confidence in the market for the stocks of other companies that investors perceive to be similar to NewCo could depress its share price, regardless of its business, prospects, financial conditions or results of operations. A decline in the market price of NewCo Ordinary Shares also could adversely affect NewCo’s ability to issue additional securities and its ability to obtain additional financing in the future.

The coverage of our business or our securities by securities or industry analysts or the absence thereof could adversely affect our securities and trading volume.

The trading market for our securities is influenced in part by the research and other reports that industry or securities analysts publish about us or our business or industry from time to time. We do not control these analysts nor the content and opinions included in their reports. As a former shell company, we may be slow to attract equity research coverage, and the analysts who publish information about our securities will have had relatively little experience with our company, which could affect their ability to accurately forecast our results and make it more likely that we fail to meet their estimates. If no or few analysts commence equity research coverage of us, the trading price and volume of our securities would likely be negatively impacted. If analysts do cover us and one or more of them downgrade our securities, or if they issue other unfavorable commentary about us or our industry or inaccurate research, our stock price would likely decline. Furthermore, if one or more of these analysts cease coverage or fail to regularly publish reports on us, we could lose visibility in the financial markets. Any of the foregoing would likely cause our stock price and trading volume to decline.

There are material risks to unaffiliated investors presented by taking the Company public through a merger rather than through an underwritten offering.

Unaffiliated investors are subject to certain material risks as a result of the Company going public through a merger rather than through an underwritten offering. Because the Company will become a public reporting company by means of consummating the Business Combination rather than by means of a traditional underwritten initial public offering, there is no independent third-party underwriter selling the shares, which presents certain risks. These risks include the absence of operational diligence by an underwriter, the absence of financial diligence by an underwriter, the absence of comfort letters delivered by the Company’s independent auditors and the absence of liability for any material misstatements or omissions in a registration statement. While the Sponsor may have an inherent conflict of interest because its shares and warrants will be worthless if a Business Combination is not completed, management and the board of directors of the acquirer undertook a certain level of due diligence; however, this due diligence is not necessarily the same level of due diligence undertaken by an underwriter in a traditional initial public offering and, therefore, there could be a heightened risk of an incorrect valuation of the target business or material misstatements or omissions in this Prospectus. Accordingly, unaffiliated investors in the Company will not receive the benefit of the protections that would be present in a traditional underwritten offering.

Because NewCo is incorporated under the laws of the Island of Guernsey, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. courts may be limited.

NewCo is a limited company incorporated under the laws of the Island of Guernsey. As a result, it may be difficult for investors to effect service of process within the United States upon NewCo’s directors or officers, or enforce judgments obtained in the United States courts against NewCo’s directors or officers.

We have been advised that there is doubt as to the enforceability in Guernsey of judgments of the United States courts of civil liabilities predicated solely upon the laws of the United States, including the federal securities laws.

 

93

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a corporation incorporated in the United States.

It may be difficult to enforce a U.S. judgment against NewCo or its directors and officers outside the United States, or to assert U.S. securities law claims outside of the United States.

A majority of NewCo directors and executive officers are not residents of the United States, and the majority of NewCo’s assets and the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for investors to effect service of process upon NewCo within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim, because foreign courts may not be the most appropriate forum in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides. See “Description of NewCo’s Securities — Enforceability of Civil Liabilities.”

As a company incorporated in the Island of Guernsey, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from NYSE corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with NYSE corporate governance listing standards.

We are a company incorporated in the Island of Guernsey, and we intend to apply for listing of the NewCo Ordinary Shares and warrants on the NYSE. NYSE market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Island of Guernsey, which is our home country, may differ significantly from NYSE corporate governance listing standards.

Among others, we are not required to:

 

(a)

have a majority of the members of our board of directors who are independent;

 

(b)

hold regular meetings of our non-executive directors without the executive directors;

 

(c)

have a nominating and/or corporate governance committee composed of entirely independent directors;

 

(d)

have a compensation committee composed of entirely independent directors; or

 

(e)

adopt a code of business conduct and ethics, which we intend to do.

Provisions in the NewCo Governance Documents may inhibit a takeover of NewCo, which could limit the price investors might be willing to pay in the future for NewCo Ordinary Shares and could entrench management.

The NewCo Governance Documents will contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. NewCo may issue additional shares without shareholder approval and such additional shares could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The ability for NewCo to issue additional shares could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise that could involve the payment of a premium over prevailing market prices for NewCo Ordinary Shares.

 

94

If a U.S. Holder is treated as owning at least 10% of NewCo Ordinary Shares (by value or voting power), such U.S. Holder may be subject to adverse U.S. federal income tax consequences.

Each “Ten Percent Shareholder” (as defined below) in a non-U.S. corporation that is classified as a controlled foreign corporation for U.S. federal income tax purposes (“CFC”), generally is required to include in income for U.S. federal tax purposes such Ten Percent Shareholder’s pro rata share of the CFC’s “Subpart F income,” “global intangible low-taxed income,” and “investment of earnings in U.S. property,” (in each case, as determined for U.S. federal income tax purposes) even if the CFC has made no distributions to its shareholders. Subpart F income generally includes dividends, interest, rents, royalties, gains from the sale of securities and income from certain transactions with related parties. In addition, a Ten Percent Shareholder that realizes gain from the sale or exchange of shares in a CFC may be required to classify a portion of such gain as dividend income rather than capital gain. An individual that is a Ten Percent Shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a Ten Percent Shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a Ten Percent Shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such Ten Percent Shareholder’s U.S. federal income tax return for the year for which reporting was due from starting.

A non-U.S. corporation generally will be classified as a CFC for U.S. federal income tax purposes if Ten Percent Shareholders own, directly or indirectly, more than 50% of either the total combined voting power of all classes of stock of such corporation entitled to vote or of the total value of the stock of such corporation. A “Ten Percent Shareholder” is a United States person (as defined by the Internal Revenue Code of 1986, as amended (the “Code”)) who owns or is considered to own 10% or more of the total combined voting power of all classes of stock of such corporation entitled to vote or 10% or more of the total value of all classes of stock of such corporation.

The determination of CFC status is complex and includes attribution rules, the application of which is not entirely certain. Because we may form or acquire one or more U.S. subsidiaries (including DGC), the application of those attribution rules may cause our non-U.S. subsidiaries to be treated as CFCs. We cannot provide any assurances that we will assist holders of NewCo Ordinary Shares in determining whether we or any non-U.S. subsidiaries are or will be treated as a CFC or whether any holder of NewCo Ordinary Shares is treated as a Ten Percent Shareholder with respect to any such CFC or furnish to any Ten Percent Shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations.

Each U.S. Holder should consult its own tax advisors with respect to the potential adverse U.S. tax consequences of becoming a Ten Percent Shareholder in a CFC. If we are classified as both a CFC and a PFIC (as defined below), we generally will not be treated as a PFIC with respect to those U.S. Holders that meet the definition of a Ten Percent Shareholder during the period in which we are a CFC.

If a Holder is treated as owning a significant percentage of NewCo equity (typically greater than 5%, but always subject to regulator discretion), the Holder may be required to undergo probity review and approval by one or more gaming regulators.

In order to operate in certain jurisdictions (including U.S. states), SGHC must obtain the appropriate licensure as required under local legislation. Generally, each relevant group company and at times certain directors, officers, employees and material shareholders (typically those beneficially holding 5% or more of equity - but not limited to that threshold of holdings nor limited to solely holding equity), would be required to qualify as suitable for a license to be awarded. For directors, officers, employees, and material shareholders, suitability is generally considered by gaming authorities by weighing (i) financial stability, integrity and responsibility; and (ii) general history and background. Most gambling authorities have the authority to weigh additional factors and require any documentation or information they deem necessary. Directors, officers, employees, and material shareholders may be required to provide extensive disclosure regarding their background, assets, liabilities, employment history, and sources of income. The failure of SGHC’s officers,

 

95

directors and material holders of its ordinary shares to submit to background checks and provide such disclosure could result in the imposition of penalties and could jeopardize the award of a contract to the Company or provide grounds for termination of an existing contract. Generally, any person who fails or refuses to apply for a finding of suitability or a license within the prescribed period after being advised by a competent authority that such person is required to do so may be found unsuitable or denied a license, as applicable. If any director, officer, employee or material shareholder is found unsuitable (including due to the failure to submit required documentation) by a competent regulator or authority, SGHC may deem it necessary, or be required, to sever its relationship with such person.

If NewCo or any of its subsidiaries is characterized as a passive foreign investment company for U.S. federal income tax purposes, U.S. Holders may suffer adverse tax consequences.

If NewCo or any of its subsidiaries is or becomes a “passive foreign investment company” (“PFIC”), within the meaning of Section 1297 of the U.S. Tax Code for any taxable year (or portion thereof) during which a U.S. Holder (as defined in “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations”) holds NewCo Ordinary Shares or public warrants, certain adverse U.S. federal income tax consequences may apply to such U.S. Holder and such U.S. Holder might be subject to additional reporting requirements.

For U.S. federal income tax purposes, NewCo will be a PFIC for any taxable year in which (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the value of its assets (determined on the basis of a weighted quarterly average) consists of assets that produce, or are held for the production of, passive income (including cash). For purposes of these tests, passive income includes dividends, interest, gains from the sale or exchange of investment property and certain rents and royalties. For purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as holding and receiving directly its proportionate share of assets and income of such corporation.

Based on our operating history and the projected composition of our income and valuation of our assets, including goodwill, we do not believe NewCo will be treated as a PFIC for its taxable year ended December 31, 2021. However, no assurances regarding our PFIC status can be provided for any past, current or future taxable years. The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis and the applicable law is subject to varying interpretation. In particular, the characterization of our assets as active or passive may depend in part on our current and intended future business plans, which are subject to change. In addition, for our current and future taxable years, the total value of our assets for PFIC testing purposes may be determined in part by reference to the market price of our ordinary shares from time to time, which may fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which will depend on a variety of factors that are subject to uncertainty, including the characterization of transactions we enter into in the future and our corporate structure. Even if we determine that we are not a PFIC for a taxable year, there can be no assurance that the Internal Revenue Service (“IRS”) will agree with our conclusion and that the IRS would not successfully challenge our position. Accordingly, our U.S. counsel expresses no opinion with respect to our PFIC status for any prior, current or future taxable year.

Please see the section titled “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations — Passive Foreign Investment Company Rules” for a more detailed discussion with respect to NewCo’s potential PFIC status. U.S. Holders (as defined in “The Business Combination Proposal — Material Tax Considerations — Material U.S. Federal Income Tax Considerations”) are urged to consult their tax advisors regarding the possible application of the PFIC rules to holders of the NewCo Ordinary Shares or public warrants.

 

 

96

Future resales of NewCo Ordinary Shares and/or warrants may cause the market price of such securities to drop significantly, even if its business is doing well.

The Founders, SEAC, the Pre-Closing Holders and PJT Holdings will be granted certain rights, pursuant to the A&R Registration Rights Agreement, to require NewCo to register, in certain circumstances, subject to certain exceptions, the resale under the Securities Act of their NewCo Ordinary Shares or NewCo warrants held by them, subject to certain conditions, and to certain demand, piggy-back and shelf registration rights. The sale or possibility of sale of these NewCo Ordinary Shares and/or warrants could have the effect of increasing the volatility in NewCo ordinary share price or putting significant downward pressure on the price of NewCo Ordinary Shares and/or warrants.

Additionally, a significant portion of NewCo’s ordinary shares will be subject to a lock-up and restricted from immediate resale, however, upon expiration of their respective lock-up periods, the sale of shares of NewCo’s ordinary shares or the perception that such sales may occur, could cause the market price of NewCo’s ordinary shares to drop significantly.

NewCo may issue additional NewCo Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of NewCo Ordinary Shares. Additionally, activities taken by existing SEAC stockholders to increase the likelihood of approval of the Business Combination Proposal and other proposals could have a depressive effect on NewCo Ordinary Shares.

SEAC may need to obtain additional financing to complete the Business Combination, either because the transaction requires more cash than is available from the proceeds held in its trust account or because it becomes obligated to redeem a significant number of public shares upon completion of the Business Combination, in which case NewCo may issue additional NewCo Ordinary Shares or other equity securities or incur debt in connection with the Business Combination. NewCo may also issue additional NewCo Ordinary Shares or other equity securities in the future in connection with, among other things, future capital raising and transactions and future acquisitions, without your approval in many circumstances.

NewCo’s issuance of additional NewCo Ordinary Shares or other equity securities would have the following effects:

 

•

NewCo’s existing shareholders’ proportionate ownership interest in NewCo may decrease;

 

•

the amount of cash available per share, including for payment of dividends in the future, may decrease;

 

•

the relative voting strength of each previously outstanding NewCo ordinary share may be diminished; and

 

•

the market price of NewCo Ordinary Shares may decline.

Our stockholders will experience immediate dilution as a consequence of the issuance of NewCo Ordinary Shares as consideration in the Business Combination and may be further diluted following the closing of the Business Combination as a result of the terms thereof. Having a minority share position may reduce the influence that our current stockholders have on the management of NewCo.

Assuming that no public stockholders exercise their redemption rights in connection with the Business Combination, immediately after the consummation of the Business Combination, after taking into account the Repurchase as if it had occurred on June 30, 2021 and excluding the effect of the Earnout Shares, SEAC’s initial stockholders and public stockholders will hold 56,250,000 NewCo Ordinary Shares, or 11.52% of the outstanding NewCo Ordinary Shares. Assuming that our public stockholders holding 15,007,797 public shares exercise their redemption rights in connection with the Business Combination, immediately after the consummation of the Business Combination, after taking into account the Repurchase as if it had occurred on June 30, 2021 and excluding the effect of the Earnout Shares, which will not be determinable until Closing, SEAC’s initial stockholders and public stockholders will hold 41,242,203 NewCo Ordinary Shares, or 8.57% of the outstanding NewCo Ordinary Shares.

 

97

There are currently outstanding an aggregate of 33,500,000 warrants to acquire SEAC common stock, which comprise 11,000,000 private placement warrants held by SEAC’s initial stockholders at the time of SEAC’s initial public offering and 22,500,000 public warrants. Each of SEAC’s outstanding whole warrants is exercisable commencing upon the earlier of 30 days following the Closing or 12 months following the IPO (i.e., October 6, 2021) for one share of SEAC Class A common stock in accordance with its terms (subject, in the case of the private placement warrants, to any restrictions in the Founder Holders Deferral Agreement). Therefore, following the Business Combination and upon the conversion of SEAC warrants into warrants exercisable for NewCo Ordinary Shares pursuant to the Business Combination, if we assume that each outstanding whole warrant is exercised and one NewCo Ordinary Share is issued as a result of such exercise, with payment to NewCo of the exercise price of $11.50 per share, our fully-diluted share capital would increase by a total of 33,500,000 shares, with approximately $385,250,000 paid to NewCo to exercise the warrants.

In addition, the Pre-Closing Holders have the right to receive up to a maximum of 50,171,938 Earnout Shares payable in three tranches up to five years following the closing of the Business Combination. If issued, these shares would further dilute NewCo stockholders. As of June 30, 2021, the maximum number of Earnout Shares issuable would have been 47,997,672 assuming the no redemption scenario (48,889,540 assuming the maximum redemption scenario and 48,055,556 assuming the mid-point redemption scenario).

The following table illustrates varying ownership levels in NewCo, assuming (i) no redemptions by SEAC’s public stockholders, the maximum redemptions by SEAC’s public stockholders, and a mid-point redemption scenario, (ii) the Repurchase of 49,842,684 shares in the no redemption scenario (41,815,878 shares in the maximum redemption scenario and 49,321,732 shares in the mid-point redemption scenario) calculated as of June 30, 2021, and (iii) that SGHC’s cash and cash equivalents balance at Closing is $327.5 million, converted at the historical closing exchange rate, as of June 30, 2021, of €0.8301 to $1.00:

 

		Assuming No Redemptions of Public Shares				Assuming Maximum Redemptions of Public Shares				Assuming the Mid-point Redemption of Public Shares
SEAC’s Public Stockholders			11.85	%			8.09	%			10.06	%
Founders			3.91	%			4.00	%			3.98	%
Sellers			84.25	%			87.91	%			85.96	%
Total Shares Exchangeable For:
NewCo Warrants exchanged for public SEAC warrants			22,500,000				14,996,102				18,748,051
NewCo Warrants exchanged for private placement warrants			11,000,000				11,000,000				11,000,000
Earnout Shares			47,997,672				48,889,540				48,055,556
Total Shares Outstanding			569,726,716				556,133,695				559,049,705
Implied value per share at $4.7 billion valuation		$	8.25			$	8.45			$	8.41

NYSE may not list NewCo’s securities, which could limit investors’ ability to make transactions in NewCo’s securities and subject NewCo to additional trading restrictions.

NewCo intends to apply to have its securities listed on NYSE upon consummation of the Business Combination. NewCo will be required to meet the initial listing requirements to be listed. NewCo may not be able to meet those initial listing requirements. Even if NewCo’s securities are so listed, it may be unable to maintain the listing of its securities in the future.

 

98

If NewCo fails to meet the initial listing requirements and NYSE does not list its securities and the related closing condition is waived by the parties, NewCo could face significant material adverse consequences, including:

 

•

a limited availability of market quotations for its securities;

 

•

a limited amount of news and analyst coverage on it; and

 

•

a decreased ability to issue additional securities or obtain additional financing in the future.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such, we are exempt from certain provisions applicable to U.S. domestic public companies.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the U.S. that are applicable to U.S. domestic issuers, including: (i) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; (ii) the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; (iii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iv) the selective disclosure rules by issuers of material non-public information under Regulation FD.

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.

We are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act; however, under Rule 405, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2022.

In the future, we would lose our foreign private issuer status if a majority of our shareholders are U.S. residents or if a majority of our directors or management are U.S. citizens or residents, and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, in accordance with accounting principles generally accepted in the United States (U.S. GAAP), which are more detailed and extensive than the forms available to a foreign private issuer. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation information on an individual basis with specific disclosure regarding the domestic compensation philosophy, objectives, annual total compensation (base salary, bonus and equity compensation) and potential payments in connection with change in control, retirement, death or disability, while the annual report on Form 20-F permits foreign private issuers to disclose compensation information on an aggregate basis. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. We may also be required to modify certain of our policies to

 

99

comply with good governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on NYSE that are available to foreign private issuers.

NewCo is an “emerging growth company,” and it cannot be certain if the reduced SEC reporting requirements applicable to emerging growth companies will make NewCo’s ordinary shares less attractive to investors, which could have a material and adverse effect on NewCo, including its growth prospects.

NewCo is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). NewCo will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of SEAC’s initial public offering, (b) in which NewCo has total annual gross revenue of at least $1.07 billion or (c) in which NewCo is deemed to be a large accelerated filer, which means the market value of our NewCo Ordinary Shares that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which NewCo has issued more than $1.0 billion in nonconvertible debt during the prior three-year period. NewCo intends to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requiring that NewCo’s independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting and reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

The JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards. However, NewCo has chosen to “opt out” of this extended transition period.

Risks Related to Redemption

The ability of stockholders to exercise redemption rights with respect to a large number of SEAC’s outstanding shares of common stock could increase the probability that the Business Combination would be unsuccessful and that stockholders would have to wait for liquidation to redeem their public shares.

At the time SEAC entered into the agreements for the Business Combination, it did not know how many stockholders will exercise their redemption rights, and therefore, it structured the Business Combination based on its expectations as to the number of public shares that will be submitted for redemption. If a larger number of public shares are submitted for redemption than it initially expected, this could lead to a failure to consummate the Business Combination, a failure to maintain the listing of its securities on NYSE or another national securities exchange or a lack of liquidity, which could impair SEAC’s ability to fund its operations and adversely affect its business, financial condition and results of operations.

If SEAC’s stockholders fail to properly demand redemption rights, they will not be entitled to redeem their public shares for a pro rata portion of the trust account.

Stockholders holding public shares may demand that SEAC redeem their public shares for a pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. Stockholders who seek to exercise this redemption right must deliver their Class A Shares (either physically or electronically) to the Transfer Agent prior to the vote at the special meeting. Any stockholder who fails to properly demand redemption rights will not be entitled to redeem his, her or its public shares for a pro rata portion of the trust account. See the section entitled “Special Meeting of SEAC Stockholders — Redemption Rights” for the procedures to be followed if you wish to redeem your public shares for cash.

 

100

Stockholders, together with any affiliate or any other person with whom he, she or it is acting in concert or as a partnership, syndicate or other group, will be restricted from seeking redemption rights with respect to more than 15% of the issued and outstanding public shares.

A stockholder, together with any affiliate or any other person with whom he, or she is acting in concert or as a partnership, syndicate, or other group, will be restricted from seeking redemption rights with respect to more than 15% of the issued and outstanding public shares. Accordingly, if you hold more than 15% of the public shares and the Business Combination Proposal is approved, you will not be able to seek redemption rights with respect to the full amount of your public shares and may be forced to hold the public shares in excess of 15% or sell them in the open market. SEAC cannot assure you that the value of such excess public shares will appreciate over time following the Business Combination or that the market price of the Class A Shares will exceed the per-share redemption price.

Risks If the Adjournment Proposal Is Not Approved

If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Business Combination, the Board will not have the ability to adjourn the special meeting to a later date in order to solicit further votes, and, therefore, the Business Combination will not be approved.

The Board is seeking approval to adjourn the special meeting to a later date or dates if, at the special meeting, the Business Combination Proposal is not approved. If the Adjournment Proposal is not approved, the Board will not have the ability to adjourn the special meeting to a later date, and, therefore, the Business Combination would not be completed.

General Risk Factors

The requirements of being a public company, including compliance with the reporting requirements of the SEC and the requirements of the Sarbanes-Oxley Act and any applicable stock exchange, may strain our resources, increase our costs and divert management’s attention, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company, we will incur significant legal, accounting, insurance and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We have incurred and will incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC. The expenses incurred by public companies for reporting and corporate governance purposes generally have been increasing. Our management team has limited experience related to managing a public company and SEC and NYSE compliance and will not be immediately familiar with the increased regulations and controls to which public companies are subject. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. In estimating these costs, we took into account expenses related to investor relations, insurance, legal, accounting and compliance activities, as well as other expenses not currently incurred. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to the delisting of our common stock and warrants, fines, sanctions and other regulatory action and potentially civil litigation.

The terms of future indebtedness may contain restrictions on our business and operations. Our inability to comply with the terms of any of our existing or future indebtedness may adversely affect our business.

The terms of our future indebtedness may contain covenants that could, among other things, restrict our business and operations, our ability to incur additional indebtedness, pay dividends or make other distributions or

 

101

repurchase stock, make certain investments, create liens on certain of our corporate assets, enter into affiliate transactions, merge, consolidate or sell all or substantially all of our assets. If we breach any of these covenants, our lenders and holders of other indebtedness may be entitled to accelerate our debt obligations. Any default could require that we repay outstanding indebtedness prior to maturity or that a lender could enforce a lien on our assets, as well as limit our ability to obtain additional financing, which in turn may have a material adverse effect on our cash flow and liquidity.

 

102

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus includes statements that express SEAC’s and NewCo’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this proxy statement/prospectus and include statements regarding SEAC’s and NewCo’s intentions, beliefs or current expectations concerning, among other things, the ability to close the Business Combination, the benefits and synergies of the Business Combination, including anticipated cost savings, results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which SGHC operates. The forward-looking statements contained in this proxy statement/prospectus are based on SEAC’s and NewCo’s current expectations and beliefs concerning future developments and their potential effects on the Business Combination and NewCo. There can be no assurance that future developments affecting SEAC and NewCo will be those that SEAC and NewCo have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond SEAC’s and NewCo’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:

 

•

those described in the section titled “Risk Factors”;

 

•

other factors disclosed in this proxy statement/prospectus; and

 

•

other factors beyond NewCo’s control.

Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. SEAC and NewCo will not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Before a stockholder grants his, her or its proxy or instructs how his, her or its vote should be cast or vote on the Business Combination Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal or the Adjournment Proposal, he, she or it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect SEAC, NewCo, SGHC and the Sellers.

 

103

SPECIAL MEETING OF SEAC STOCKHOLDERS

General

SEAC is furnishing this proxy statement/prospectus to SEAC’s stockholders as part of the solicitation of proxies by the Board for use at the special meeting of SEAC’s stockholders to be held on January 26, 2022, and at any adjournment or postponement thereof. This proxy statement/prospectus provides SEAC’s stockholders with information they need to know to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place

The special meeting of SEAC will be held at 10:00 AM, Eastern Time, on January 26, 2022, at https://www.cstproxy.com/sportsentcorp/2022. The special meeting can be accessed by visiting https://www.cstproxy.com/sportsentcorp/2022, where you will be able to listen to the meeting live and vote during the meeting. Please note that you will not be able to access the special meeting by means of remote communication. Please have your Control Number, which can be found on your proxy card, to join the special meeting. If you do not have a Control Number, please contact the Continental Stock Transfer & Trust Company, the transfer agent.

Registering for the Special Meeting

Pre-registration at https://www.cstproxy.com/sportsentcorp/2022 is recommended but is not required in order to attend.

Any stockholder wishing to attend the virtual meeting should register for the meeting by January 21, 2022. To register for the special meeting, please follow these instructions as applicable to the nature of your ownership of our common stock:

 

•

If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the online-only special meeting, go to https://www.cstproxy.com/sportsentcorp/2022, enter the 12-digit control number included on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the meeting, you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to attend.

 

•

Beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the virtual meeting must obtain a legal proxy by contacting their account representative at the bank broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the special meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact Continental Stock Transfer & Trust Company at least five business days prior to the meeting date in order to ensure access.

Purpose of the Special Meeting

At the special meeting, SEAC is asking holders of shares of common stock to consider and vote upon:

 

(1)

a proposal to approve the Business Combination described in this proxy statement/prospectus, including the Business Combination Agreement;

 

(2)

to consider and vote, on an advisory and non-binding basis, upon a proposal to approve, assuming the Business Combination Proposal is approved and adopted, the Equity Incentive Plan Proposal;

 

(3)

to consider and vote, on an advisory and non-binding basis, upon a proposal to approve, assuming the Business Combination Proposal is approved and adopted, the ESPP Proposal; and

 

104

(4)

a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if SEAC is unable to consummate the Business Combination.

Recommendation of the Board

The Board has unanimously determined that the Business Combination is fair to and in the best interests of SEAC and its stockholders; has unanimously approved the proposals to be submitted for stockholder approval at the special meeting; and unanimously recommends that stockholders vote “FOR” the Business Combination Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal, if the Adjournment Proposal is presented to the special meeting.

The existence of financial and personal interests of SEAC’s directors and officers may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is in the best interests of SEAC and its stockholders and what he, she or they may believe is best for themselves in determining to recommend that stockholders vote for the proposals. See the section titled “The Business Combination Proposal — Interests of SEAC’s Directors and Officers in the Business Combination” for a further discussion.

Record Date; Persons Entitled to Vote

SEAC has fixed the close of business on December 30, 2021, as the “record date” for determining SEAC stockholders entitled to notice of and to attend and vote at the special meeting. As of the close of business on December 30, 2021, there were 56,250,000 shares of SEAC common stock outstanding and entitled to vote. Each share is entitled to one vote per share at the special meeting.

As of January 11, 2022, the Founders held of record and were entitled to vote an aggregate of 11,250,000 Founder Shares. The Founder Shares currently constitute 20% of the outstanding shares of common stock. The Founders have agreed to vote any Founder Shares held by them as of the record date in favor of the Business Combination. As a result, in addition to the shares held by the Founders, SEAC needs (i) 16,875,001 or approximately 37.5% of the 45,000,000 outstanding public shares to be voted in favor of the Business Combination, assuming all outstanding public shares are voted, or (ii) 2,812,501 or approximately 6.25% of the 45,000,000 outstanding public shares to be voted in favor of the Business Combination, assuming only a valid quorum is established, in order to have it approved.

Quorum

The presence, in person or by proxy (which would include presence at the virtual meeting), of the holders of a majority of all the shares of common stock entitled to vote constitutes a quorum at the special meeting.

Abstentions

With respect to each proposal in this proxy statement/prospectus, you may vote “FOR,” “AGAINST” or “ABSTAIN.”

If a stockholder fails to return a proxy card or fails to instruct a broker or other nominee how to vote, and does not attend the special meeting in person, then the stockholder’s shares will not be counted for purposes of determining whether a quorum is present at the special meeting. If a valid quorum is established, any such failure to vote or to provide voting instructions will have no effect on the outcome of any other proposal in this proxy statement.

Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on any of the proposals.

 

105

Required Vote

Approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of the outstanding votes cast by holders of Class A Shares and Class B Shares present in person (which would include presence at the virtual special meeting) or by proxy at the special meeting and entitled to vote thereon, voting as a single class.

Approval of the Equity Incentive Plan Proposal requires the affirmative vote of holders of a majority of the outstanding votes cast by holders of Class A Shares and Class B Shares present in person (which would include presence at the virtual special meeting) or by proxy at the special meeting and entitled to vote thereon, voting as a single class.

Approval of the Employee Stock Purchase Plan Proposal requires the affirmative vote of holders of a majority of the outstanding votes cast by holders of Class A Shares and Class B Shares present in person (which would include presence at the virtual special meeting) or by proxy at the special meeting and entitled to vote thereon, voting as a single class.

Approval of the Adjournment Proposal requires the affirmative vote of the holders of at least a majority of the votes cast by holders of Class A Shares and Class B Shares present in person (which would include presence at the virtual special meeting) or by proxy at the special meeting and entitled to vote thereon, voting as a single class.

Voting Your Shares

Each share of common stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

There are two ways to vote your shares at the special meeting:

 

•

You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Board “FOR” the Business Combination Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal, if presented. Votes received after a matter has been voted upon at the special meeting will not be counted.

 

•

You Can Attend the Special Meeting and Vote in Person (which would include presence at the virtual special meeting).

If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the virtual meeting, go to https://www.cstproxy.com/sportsentcorp/2022, enter the 12-digit control number included on your proxy card or notice of the special meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the special meeting, you will need to log back into the special meeting site using your control number. Pre-registration is recommended but is not required in order to attend.

Beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the virtual meeting. After contacting Continental Stock Transfer & Trust Company, a

 

106

beneficial holder will receive an e-mail prior to the special meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact Continental Stock Transfer & Trust Company at least five business days prior to the special meeting date in order to ensure access.

Revoking Your Proxy

If you are a stockholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

•

you may send another proxy card with a later date;

 

•

you may notify SEAC’s Chief Executive Officer in writing before the special meeting that you have revoked your proxy; or

 

•

you may attend the virtual meeting, revoke your proxy and vote (which would include presence at the virtual special meeting), as indicated above.

Who Can Answer Your Questions About Voting Your Shares

If you are a stockholder and have any questions about how to vote or to direct a vote in respect of your shares, you may call Okapi, SEAC’s proxy solicitor, by calling (877) 869-0171, or banks and brokers can call collect at (212) 297-0720, or by emailing info@okapipartners.com.

Redemption Rights

Any holder of public shares as of the record date may demand that SEAC redeem such public shares for a full pro rata portion of the trust account (which, for illustrative purposes, was $10.00 per public share as of January 11, 2022), calculated as of two business days prior to the consummation of the Business Combination. If a holder properly seeks redemption as described in this section and the Business Combination with NewCo is consummated, SEAC will redeem these public shares for a pro rata portion of funds deposited in the trust account, and the holder will no longer own these public shares following the Business Combination.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate or any other person with whom he, she or it is acting in concert or as a partnership, syndicate or other group, will be restricted from seeking redemption rights with respect to more than 15% of the issued and outstanding public shares. Accordingly, all public shares in excess of 15% held by a stockholder, together with any affiliate or any other person with whom he, she or it is acting in concert or as a partnership, syndicate or other group, will not be redeemed for cash.

The Founders will not have redemption rights with respect to any Founder Shares owned by them, directly or indirectly, in connection with the Business Combination.

Holders of public shares or units who wish to exercise their redemption rights must, (i) if they hold their public shares through units, elect to separate their units into the underlying public shares and warrants and (ii) prior to 10:00 AM, Eastern Time, on January 24, 2022, (a) submit a written request to the Transfer Agent that SEAC redeem their public shares for cash and (b) deliver their public shares to the Transfer Agent physically or electronically using the DTC’s DWAC (Deposit and Withdrawal at Custodian).

If the stockholder holds his, her or its public shares in “street name,” they will have to coordinate with their broker to have their public shares certificated or delivered electronically. Public shares that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the public shares or delivering them through the DWAC system. The Transfer Agent will typically charge the tendering broker $45

 

107

and it would be up to the broker whether or not to pass this cost on to the redeeming stockholder. In the event the proposed Business Combination is not consummated, this may result in an additional cost to stockholders for the return of their public shares.

Any request to redeem such public shares, once made, may be withdrawn at any time up to the deadline for submitting redemption requests and thereafter, with SEAC’s consent, until the Closing. A stockholder that has delivered his, her or its public shares to the Transfer Agent in connection with a redemption request who subsequently decides not to exercise redemption rights may withdraw the redemption request any time prior to the deadline for submitting redemption requests and thereafter, with our consent, until the Closing, by contacting the Transfer Agent and requesting that it return the public shares (physically or electronically) to such stockholder. If the Business Combination is not approved or completed for any reason, then stockholders who elected to exercise their redemption rights will not be entitled to redeem their public shares for a pro rata portion of the trust account. In such case, SEAC will promptly return any public shares delivered by such holders.

The closing price of a Class A Share on January 11, 2022, was $9.96. The cash held in the trust account on such date was approximately $450,133,793.82 ($10.00 per public share). Prior to exercising redemption rights, stockholders should verify the market price of the Class A Shares as they may receive higher proceeds from the sale of their Class A Shares in the public market than from exercising their redemption rights if the market price per Class A Share is higher than the redemption price. SEAC cannot assure its stockholders that they will be able to sell their Class A Shares in the open market, even if the market price per Class A Share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when its stockholders wish to sell their Class A Shares.

If a holder of public shares exercises his, her or its redemption rights, then he, she or it will be exchanging its public shares for cash and will no longer own those public shares. A redeeming stockholder will be entitled to receive cash for these public shares only if, prior to the deadline for submitting redemption requests, he, she or it (i) properly demands redemption and (ii) delivers his, her or its public shares (either physically or electronically) to the Transfer Agent, and the Business Combination is consummated. A holder of public shares that chooses to exercise his, her or its redemption rights has no ability to redeem any warrants he, her or it may then hold. As of January 11, 2022 there were 22,500,000 of SEAC’s warrants outstanding that traded under the ticker “SEAH WS” at a closing price of $2.06, with an aggregate market value of $46,350,000, as well as 11,000,000 private placement warrants, with an aggregate market value of $22,660,000 assuming the private placement warrants (for which there is currently no trading market) would be considered fungible with the public warrants by an investor, and with each representing the right to receive one share upon exercise. There is no assurance that the warrants will have this value or any value at any time in the future. For additional information regarding risks relating to ownership of SEAC warrants or common stock generally, see the section titled “Risk Factors — Risks Related to SEAC and the Business Combination.” In the event all of the outstanding warrants are exercised, they would represent 33,500,000 NewCo Ordinary Shares, assuming no redemptions, and 25,996,102 NewCo Ordinary Shares, assuming maximum redemptions.

If the number of redemptions exceeds the maximum redemption scenario described herein, SEAC may need to obtain additional debt or equity financing to complete the Business Combination.

Appraisal Rights

Neither SEAC stockholders nor SEAC warrant holders have appraisal rights in connection with the Business Combination under the DGCL.

Proxy Solicitation Costs

SEAC is soliciting proxies on behalf of the Board. This solicitation is being made by mail but also may be made by telephone, on the Internet or in person. SEAC and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. SEAC will bear the cost of the solicitation.

 

108

SEAC has hired Okapi Partners LLC to assist in the proxy solicitation process. SEAC has agreed to pay a fee of $22,500, plus out of pocket expenses.

SEAC will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. SEAC will reimburse them for their reasonable expenses.

Founders

As of January 11, 2022, the Founders held of record, and were entitled to vote an aggregate of, 11,250,000 Founder Shares. The Founder Shares currently constitute 20% of the outstanding shares. The Founders have agreed to vote any shares held by them as of the record date in favor of the Business Combination. As a result, in addition to the shares held by the Founders, SEAC needs 16,875,001 or approximately 37.5% of the 45,000,000 outstanding public shares to be voted in favor of the Business Combination (assuming all outstanding public shares are voted) in order to have it approved.

The Founders have agreed to (i) waive their redemption rights with respect to their shares in connection with the completion of SEAC’s initial business combination, (ii) waive their redemption rights with respect to their shares in connection with a stockholder vote to approve an amendment to the Current Charter (A) to modify the substance or timing of SEAC’s obligation to allow redemptions in connection with an initial business combination or to redeem 100% of SEAC’s public shares if SEAC has not consummated an initial business combination by October 6, 2022 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, and (iii) waive their rights to liquidating distributions from the trust account with respect to their Class B Shares if SEAC fails to complete its initial business combination by October 6, 2022, although they will be entitled to liquidating distributions from the trust account with respect to any Class A Shares sold in the IPO they hold if SEAC fails to complete its initial business combination within the prescribed time frame. If SEAC does not complete its initial business combination within such applicable time period, the private placement warrants will expire worthless.

The issued and outstanding Class B Shares will automatically convert into Class A Shares immediately prior to the Closing on a one-for-one basis. Thereafter, in connection with the Business Combination and in consideration for the acquisition of all of the issued and outstanding equity interests of SEAC representing the Founder Shares (via the Business Combination), Newco shall issue an equivalent number of NewCo Ordinary Shares, and such shares will not be transferable, assignable or saleable (subject to certain exceptions contained in the Lock-Up Agreement) until the earlier of (i) the date that is 12 months after the date of Closing, (ii) the date on which the closing share price of the NewCo Ordinary Shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period or (iii) the date NewCo completes (A) the sale of all or substantially all of the assets (in one transaction or a series of related transactions) of NewCo to any person (or group of persons acting in concert) or (B) a liquidation, merger, stock exchange, recapitalization or other similar transaction of NewCo, or other sale (in one transaction or a series of related transactions) of equity interests or voting power of NewCo to a person (or group of persons acting in concert), in each case, that results in any person (or group of persons acting in concert) owning more than 50% of the equity interests or voting power of NewCo (or any resulting entity after such merger or recapitalization). The private placement warrants (including the Class A Shares issuable upon the exercise of the private placement warrants) are not transferable, assignable or saleable until the earlier of, 12 months after the IPO (i.e., October 6, 2021) and 30 days after the Business Combination, subject to certain exceptions and any restrictions in the Founder Holders Deferral Agreement.

 

109

THE BUSINESS COMBINATION PROPOSAL

The discussion in this proxy statement/prospectus of the Business Combination and the principal terms of the Business Combination Agreement is subject to, and is qualified in its entirety by reference to, the Business Combination Agreement. A copy of the Business Combination Agreement is attached as Annex A to this proxy statement/prospectus.

General

Structure of the Business Combination

The Business Combination Agreement was entered into by and among SEAC, SGHC, NewCo, Merger Sub and the Sponsor on April 23, 2021.

Pursuant to the Business Combination Agreement, prior to the Closing, SGHC will undergo the Reorganization wherein all existing shares of SGHC will be exchanged for newly issued NewCo Ordinary Shares and SGHC will become a wholly owned subsidiary of NewCo. Following the Reorganization, the Pre-Closing Holders will hold, in the aggregate, that number of NewCo Ordinary Shares equal to the quotient obtained by dividing (i) the Aggregate Stock Consideration (defined as $4,750,000,000, plus the amount by which the cash and cash equivalent balance of the Target Companies exceeds $300,000,000, less the amount by which the cash and cash equivalent balance of the Target Companies is less than $300,000,000; provided, that in no event shall the Aggregate Stock Consideration exceed $4,850,000,000), by (ii) $10.00 (the “Aggregate Stock Consideration Shares”). See the section titled “The Business Combination Agreement.”

In addition, (i) immediately prior to the Closing, each issued and outstanding Class B Share will automatically convert into one Class A Share; (ii) on the date of Closing, Merger Sub will merge with and into SEAC, with SEAC continuing as the surviving company, as a result of which (A) SEAC will become a wholly-owned subsidiary of NewCo; (B) each issued and outstanding unit of SEAC, consisting of one Class A Share and one-half of one SEAC warrant, will be automatically detached; (C) each issued and outstanding Class A Share (other than treasury shares), will be canceled and converted into the right to receive one NewCo Ordinary Share; and (D) each issued and outstanding SEAC Warrant to purchase a Class A Share will be converted into a warrant exercisable for one NewCo Ordinary Share; and (iii) effective immediately following and conditioned upon the Closing, NewCo will purchase NewCo Ordinary Shares from certain Pre-Closing Holders (the “Repurchased Shares”) in exchange for cash consideration equal to $10.00 per NewCo Ordinary Share (the “Aggregate Cash Consideration”) as set forth in Repurchase Agreements (as described further in the section titled “ — Repurchase Agreements” below) executed by such Pre-Closing Holders (the “Repurchase”).

Immediately following the Closing, after taking into account the Repurchase as if it had occurred on June 30, 2021 and including the dilutive effect of Earnout Shares and NewCo Warrants, the SEAC public shareholders will hold approximately 11.85% of the issued and outstanding NewCo Ordinary Shares, the Founders will hold approximately 3.91% of the issued and outstanding NewCo Ordinary Shares and the Sellers will hold approximately 84.25% of the issued and outstanding NewCo Ordinary Shares (assuming SGHC’s cash and cash equivalents balance at closing is $327.5 million, converted at the historical closing exchange rate, as of June 30, 2021, of €0.8301 to $1.00 and no public shares are redeemed as described in this proxy statement/prospectus). The Business Combination Agreement also contemplates the execution by the parties of various agreements at the Closing, including, among others, the below.

For more information about the Business Combination, please see the section titled “The Business Combination Agreement.” A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A.

 

110

Earnout

The Pre-Closing Holders will be entitled to a right to receive contingent consideration based on the number of NewCo Ordinary Shares held immediately prior to Closing, after taking into account those NewCo Ordinary Shares to be sold pursuant to Repurchase Agreements (as if the Repurchase occurred immediately prior to the Closing), in the form of three potential earn-out payments. The earn-out payments will become payable at or after the Closing as follows, if the following share price trigger events occur any time during the period beginning on the date of the Business Combination Agreement and ending on the five (5) year anniversary of the Closing: (a) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $11.50 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.025; (b) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $12.50 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.025; and (c) if the closing share price of one Class A Share, or following the Closing, one NewCo Ordinary Share, is equal to or exceeds $14.00 for 20 trading days in any 30 consecutive trading day period, a one-time issuance of a number of NewCo Ordinary Shares equal to the product of (1) the quotient obtained by dividing (A)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (B) 0.90, multiplied by (2) 0.05 (collectively, the “Earnout Shares”).

Equity Ownership Upon Closing

It is anticipated that, upon completion of the Business Combination: (i) SEAC’s public stockholders will own approximately 11.85% of NewCo; (ii) the Sponsor and current SEAC directors will own approximately 3.91% of NewCo; and (iii) the Sellers will own approximately 84.25% of NewCo. These levels of ownership interest: (a) includes any Earnout Shares, (b) all outstanding warrants are converted to shares in NewCo and a holder of public shares that chooses to exercise their redemption rights has no ability to redeem any warrants, (c) assume that no SEAC public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in SEAC’s trust account and (d) assumes that SGHC’s cash and cash equivalents balance at closing is $327.5 million, converted at the historical closing exchange rate, as of June 30, 2021, of €0.8301 to $1.00.

The Minimum Cash Condition must be satisfied even in the event holders of SEAC’s public shares (other than the Sponsor and current SEAC directors) exercise their redemption rights in connection with the Business Combination. Assuming the maximum redemption of SEAC’s public shares: (i) SEAC’s public stockholders will own approximately 8.09% of NewCo; (ii) the Sponsor and current SEAC directors will own approximately 4.00% of NewCo; and (iii) the Sellers will own approximately 87.91% of NewCo. These levels of ownership interest: (a) includes any Earnout Shares, and (b) a holder of public shares that chooses to exercise their redemption rights has no ability to redeem any warrants.

 

 

111

The following table illustrates varying ownership levels in NewCo, (i) assuming no redemptions by SEAC’s public stockholders and the maximum redemptions by SEAC’s public stockholders as described above, (ii) including the Repurchase of 49,842,684 shares in the no redemption scenario (41,815,878 shares in the maximum redemption scenario and 49,321,732 shares in the mid-point redemption scenario) calculated as of June 30, 2021 but does include the Class B Shares which at Closing will convert on a one-for-one basis into an aggregate 11,250,000 Class A Shares, and also assumes that SGHC’s cash and cash equivalents balance at Closing is $327.5 million, converted at the historical closing exchange rate, as of June 30, 2021, of €0.8301 to $1.00:

 

		Assuming No Redemptions of Public Shares				Assuming Maximum Redemptions of Public Shares				Assuming the Mid-point Redemption of Public Shares
SEAC’s Public Stockholders			11.85	%			8.09	%			10.06	%
Founders			3.91	%			4.00	%			3.98	%
Sellers			84.25	%			87.91	%			85.96	%
Total Shares Exchangeable For:
NewCo Warrants exchanged for public SEAC warrants			22,500,000				14,996,102				18,748,051
NewCo Warrants exchanged for private placement warrants			11,000,000				11,000,000				11,000,000
Earnout Shares			47,997,672				48,889,540				48,055,556
Total Shares Outstanding			569,726,716				556,133,695				559,049,705
Implied value per share at $4.7 billion valuation		$	8.25			$	8.45			$	8.41

Related Agreements

Exchange Agreement

Concurrently with the execution of the Business Combination Agreement, NewCo, SGHC and each Pre-Closing Holder entered into an Exchange Agreement, pursuant to which, on the Closing Date but prior to the Closing (and conditioned upon the Closing), SGHC will undergo the Reorganization which includes, among other things, the transfer by the Pre-Closing Holders of all issued ordinary shares of SGHC in exchange for newly issued NewCo Ordinary Shares.

Founder Holders Consent Letter

Concurrently with the execution of the Business Combination Agreement, the Founders, SGHC, NewCo and SEAC entered into the Founder Holders Consent Letter, pursuant to which, among other things, the Founders waived any and all anti-dilution rights described in the Current Charter with respect to Class B Shares held by the Founders and acknowledge the conversion of such Class B Shares into Class A Shares, as more fully described in the Founder Holders Consent Letter.

Amended and Restated Registration Rights Agreement

At the Closing, SEAC, SGHC, NewCo, the Founders, certain Pre-Closing Holders and PJT Holdings will enter into the A&R Registration Rights Agreement (i) amending and restating SEAC’s Registration Rights Agreement, dated as of October 6, 2020, in its entirety, and (ii) pursuant to which, among other things, NewCo will provide certain registration rights for the NewCo Ordinary Shares and NewCo warrants held by the parties to the A&R Registration Rights Agreement, subject to certain exceptions and as more fully described in the A&R Registration Rights Agreement.

 

112

Lock-Up Agreement

At the Closing, SEAC, SGHC, NewCo, the Founders, and all Pre-Closing Holders will enter into Lock-Up Agreements pursuant to which, among other things, the Founders and the Pre-Closing Holders will agree not to transfer, sell, assign or otherwise dispose of the NewCo Ordinary Shares held by such person for 12 months following the Closing (with respect to the Founders) and six months following the Closing (with respect to the Pre-Closing Holders), in each case subject to certain exceptions and as more fully described in the Lock-Up Agreement.

In connection with the execution of the Lock-Up Agreements, SEAC, the Sponsor, Eric Grubman, John Collins, the Founders and PJT Holdings will amend their Letter Agreement, dated October 6, 2020 (the “Amendment to Letter Agreement”), to, among other things, terminate certain transfer restrictions with respect to SEAC’s securities, subject to certain exceptions and as more fully described in the Amendment to Letter Agreement.

Restrictive Covenant Agreement

At the Closing, NewCo will enter into the Restrictive Covenant Agreement with each of Eric Grubman and John Collins pursuant to which, among other things, each of Mr. Grubman and Mr. Collins will agree not to, for the period during which they sit on the NewCo board of directors and for 18 months thereafter, directly or indirectly, engage in a competing business with SGHC or NewCo, including forming or participating in a SPAC (as a founder or as a 10% or greater economic or voting investor) which acquires a business that competes with SGHC or NewCo, subject to certain exceptions and as more fully described in the Restrictive Covenant Agreement.

Transaction Support Agreements

Concurrently with the execution of the Business Combination Agreement, NewCo, SGHC, SEAC and each Pre-Closing Holder entered into the TSAs, pursuant to which, among other things, the Pre-Closing Holders agreed to vote their outstanding shares of SGHC at any meeting of SGHC’s shareholders in favor of the transactions contemplated by the Business Combination Agreement and provided a power of attorney to SGHC to take certain actions in connection with the transactions contemplated by the Business Combination Agreement on behalf of such shareholders.

Repurchase Agreements

Concurrently with the execution of the Business Combination Agreement, NewCo, SGHC, and certain Pre-Closing Holders entered into Repurchase Agreements pursuant to which NewCo will repurchase NewCo Ordinary Shares from such shareholders in exchange for cash consideration equal to $10.00 per NewCo Ordinary Share, effective immediately following and conditioned upon the Closing.

Founder Holders Deferral Agreement

Concurrently with the execution of the Business Combination Agreement, NewCo, SEAC, the Sponsor, PJT Holdings, Eric Grubman and John Collins entered into the Founder Holders Deferral Agreement pursuant to which, among other things, (i) NewCo was granted a cash redemption right divided into two tranches with respect to the NewCo Sponsor warrants (including the underlying NewCo Ordinary Shares acquired following a permitted exercise of the NewCo Sponsor warrants) which shall entitle NewCo to redeem, with respect to the first tranche, 5,500,000 of the NewCo Sponsor warrants at a price per warrant equal to $6.50, and with respect to the second tranche, 5,500,000 of the NewCo Sponsor warrants at a price per warrant equal to $12.50, upon the trading price of the NewCo Ordinary Shares hitting certain price targets which, with respect to the first tranche, shall be $18.00 for any 20 trading days out of any consecutive 30-day trading period, and with respect to the second tranche, shall be $24.00 for any 20 trading days out of any consecutive 30-day trading period, as more fully described in the Founder Holders Deferral Agreement, and (ii) any NewCo Sponsor warrants (or NewCo Ordinary Shares acquired upon a permitted exercise of the NewCo Sponsor warrants) directly or indirectly owned by Eric Grubman and John Collins (or their affiliates) are subject to additional restrictions on payment, as more fully described in the Founder Holders Deferral Agreement.

 

113

Headquarters; Share Symbols

After completion of the Business Combination:

 

•

the corporate headquarters and principal executive offices of NewCo will be Bordeaux Court, Les Echelons, St. Peter Port, Guernsey, GY1 1AR; and

 

•

if the parties’ application for listing is approved, NewCo Ordinary Shares and NewCo warrants are expected to be listed for trading on NYSE under the symbols “SGHC” and “SGHC WS,” respectively.

Background of the Business Combination

The Business Combination was the result of extensive negotiations involving SEAC’s officers, the Sponsor, and other representatives of SEAC, in consultation with SEAC’s directors and financial and legal advisors, on the one hand, and representatives of SGHC and SGHC’s sole financial advisor, Oakvale Capital LLP (“Oakvale”), a corporate finance boutique specializing in the gambling and gaming industries, in consultation with SGHC’s legal advisors, on the other hand. The following is a brief description of the background of these negotiations, the Business Combination and related transactions.

SEAC is a blank check company incorporated on July 30, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. SEAC’s intention was to utilize its management team’s and the Board’s extensive network of relationships, deep industry experience and extensive deal sourcing capabilities to access a broad spectrum of opportunities within the sports and entertainment sectors.

Prior to the consummation of SEAC’s initial public offering, neither SEAC nor anyone on its behalf engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with SEAC.

In connection with its IPO, SEAC presented an investment thesis that described three general key attributes that would likely be used in identifying suitable targets. Those attributes included size in the range of $1-5 billion in value, businesses that would benefit from the addition of capital for investment or liquidity, and businesses that might benefit from the experiences and relationships of the Sponsor. SEAC also identified example sectors within which the Sponsor saw characteristics that were likely to provide opportunities. Those sectors included Gaming, Media Streaming, Experiential and Entertainment.

After SEAC’s initial public offering, SEAC’s directors and officers, at the direction of the Board, commenced an active search for prospective businesses or assets to acquire in an initial business combination. In addition, SEAC approached representatives of Goldman Sachs & Co. LLC (“Goldman Sachs”) and PJT Partners LP (“PJT”), an affiliate of PJT Holdings, to provide financial advice on targeting and lead generation generally, and to assist with SEAC’s preparation of financial models in connection with its evaluation of potential targets. SEAC also discussed roles relating to assistance in the negotiation of a business combination with one or more potential counter parties. Goldman Sachs and PJT commenced work on lead generation at such time. During SEAC’s search for a business combination target, representatives of SEAC were contacted by, and representatives of SEAC contacted, numerous individuals, financial advisors and other entities who offered to present ideas for business combination opportunities.

During this search process, SEAC and its advisors:

 

•

generated and reviewed approximately ninety potential business combination targets in the gaming, sports, media and entertainment sectors;

 

•

had virtual, telephonic or email discussions with twenty-seven of those companies in order to explore their businesses at a high level to determine suitability against SEAC’s objectives; and

 

114

•

entered into nondisclosure agreements with five of those companies (including SGHC) in order to pursue more detailed diligence review and evaluation.

As part of the search process, Ropes & Gray LLP (“Ropes & Gray”), counsel to SEAC, prepared a form non-disclosure agreement (“NDA”) for general use by SEAC in approaching companies regarding a potential transaction, which SEAC ultimately executed with SGHC and four other potential target companies – Company A, Company B, Company C and Company D.

SEAC reviewed and met with the management team and advisors of Company A, a global broadband media property with licenses to a variety of sports and entertainment content. SEAC chose not to pursue a business combination with Company A, however, as SEAC executives concluded that the costs of the licenses over time would outpace the growth in revenues. Additionally, the balance sheet of Company A could be subject to pressure.

SEAC reviewed and held conversations with the management team of Company B, a Parent organization with attractive consumer content protected by a variety of intellectual property laws and constraints with an idea centered around the prospect of the creation of a new streaming platform to include activities such as gaming. SEAC chose not to pursue a business combination with Company B, however, as SEAC executives concluded that the Parent would necessarily have to take certain precursor steps before the creation of such a venture could occur, and that the time to complete such steps could be significant.

SEAC reviewed Company C, a wholly owned subsidiary of a large company, which was being offered in a competitive bid process. The target company was a technology intensive platform capable of streaming media globally. SEAC chose not to pursue a business combination with Company C, however, as SEAC executives concluded that the target company was unlikely to be offered with any exclusive content, and would be smaller than the target size.

SEAC reviewed and held numerous conversations with the management team of Company D, a target company in sports entertainment that was focused on a segment of the market that is not oriented towards the large and traditional North American sports. SEAC chose not to pursue a business combination with Company D, however, as SEAH executives concluded that the target company might be better suited to one or more additional rounds of private financing before becoming a public company.

On October 8, 2020, Daniel Burns, Founder and Managing Partner of Oakvale, contacted Mr. Grubman. He inquired about Mr. Grubman’s potential interest in an online global gaming company of substantial size and profitability. Mr. Burns and Mr. Grubman discussed the amount of cash that might be needed for a transaction under various hypothetical scenarios. The primary variable was how much liquidity existing shareholders might seek. Mr. Burns and Mr. Grubman concluded that SEAC’s market capitalization in addition to then-current PIPE market characteristics offered significant flexibility. Following discussion, Mr. Grubman indicated SEAC would have an interest in exploring a transaction, and, later on October 8, 2020, Mr. Grubman sent SEAC’s proposed NDA to Mr. Burns to review and provide comments. On October 9, 2020, Mr. Grubman asked Mr. Burns to disclose the name of the company, so that Mr. Grubman could begin gathering and reviewing publicly available information. Mr. Burns declined to provide the name, but indicated that he would likely share this information imminently. On October 12, 2020, Mr. Burns sent Mr. Grubman comments to SEAC’s NDA, naming Betway Group Limited as the counterparty to the NDA. The NDA was executed on October 13, 2020.

Following the introduction to Mr. Burns, SEAC executives decided to spend more time reviewing SGHC because it met the the key attributes of their investment thesis and was one of the core themes of interest. SGHC also presented a profitable company with attractive global opportunities. As an established company on the verge of entering the US market, it was likely that one or more executives of SEAC could add value to the SGHC efforts going forward.

 

115

On October 16, 2020, Mr. Grubman contacted PJT to ask for assistance in the preparation of introductory materials for use in discussions with SGHC related to the background of SEAC and its public offering, as well as background information on Mr. Grubman and Mr. Collins. Mr. Grubman requested that PJT remain generally available to pursue the SGHC opportunity.

Between October 14, 2020 and October 20, 2020, Mr. Grubman and Mr. Burns corresponded multiple times for the purposes of arranging an introductory meeting between SGHC management and SEAC management, and providing information on SEAC for the benefit of SGHC management. On October 16, 2020, Mr. Burns confirmed a meeting between the respective management teams for October 26, 2020. On October 19, 2020, Mr. Grubman sent Mr. Burns a packet of documents containing publicly available information on SEAC.

On October 26, 2020, Mr. Grubman, Mr. Collins, Neal Menashe (SGHC’s Chief Executive Officer), Richard Hasson (SGHC’s President and Chief Operating Officer) and Mr. Burns held an introductory videoconference and engaged in discussions about SGHC. Following general introductions, which included a brief discussion of each party’s biographical information, Mr. Grubman and Mr. Collins outlined their general goals related to the identification of suitable targets for a potential business combination. Mr. Menashe and Mr. Hasson then provided a history of SGHC, including the formation of SGHC and its key operations since then. In addition, Mr. Menashe and Mr. Hasson provided general descriptions of SGHC’s operations and financial performance. Throughout these discussions, the parties asked various questions of one another. Towards the end of the meeting, the parties discussed a general timeline of a potential transaction, as well as the various steps that would be involved in a subsequent due diligence process in the event that the parties agreed to pursue a potential transaction.

Between October 26, 2020 and October 27, 2020, Mr. Grubman and Mr. Burns discussed the positive reactions to the introductory meeting, and the mutual intent among the parties to further explore a potential transaction. During these discussions, Mr. Burns indicated that SGHC would provide additional information regarding SGHC, including preliminary financial information to be provided in the first half of November. On November 6, 2020, Mr. Burns followed up and shared SGHC’s preliminary financial information with Mr. Grubman.

On November 10, 2020, Mr. Burns and Mr. Grubman discussed additional overview information about SGHC, including shareholder information, organizational charts, financial performance and the assumptions underlying SGHC financial projections (as further described in the section titled “— Certain Forecasted Financial Information for the Company”), and comparable companies. Mr. Burns described one approach to valuation using EBITDA multiples of comparable companies applied to SGHC financial projections, plus additional value for the opportunity to enter the U.S. market. Mr. Burns outlined a broad valuation range of $4.0-6.0 billion as being a reasonable range for a company like SGHC.

On November 13, 2020, SEAC held a regularly scheduled board meeting. During the meeting, the Board reviewed proposed drafts of SEAC’s third quarter Form 10-Q, as well as Board committee assignments and charters. In addition, SEAC management provided an overview of the process for generating and evaluating potential business combination targets. At this meeting, SEAC management also provided general information regarding a global gaming company (SGHC) as a potential business combination target, and advised the Board that a preliminary review of the Company’s financial information had begun with the assistance of PJT and Goldman Sachs.

On November 16, 2020, Mr. Burns presented an overview regarding SGHC to SEAC management as well as members of PJT and Goldman Sachs.

On November 22, 2020, Mr. Grubman and Mr. Burns met by video conference to discuss a potential valuation of SGHC. At this meeting, Mr. Burns informed Mr. Grubman of SGHC’s position that SEAC had not yet indicated a satisfactory valuation range for a potential transaction with SGHC, but that SGHC would continue

 

116

to accommodate SEAC’s due diligence review. Mr. Grubman and Mr. Burns arranged to expand the scope of diligence beginning in early December of 2020. This was followed up by a discussion on December 1, 2020.

On November 30, 2020, representatives of Goldman Sachs shared an initial due diligence request list, representing the combined requests of SEAC, PJT and Goldman Sachs, with Mr. Burns. The nature of the request list centered around information that SEAC and its advisors would require in the following weeks in order to determine a preliminary valuation of SGHC, and SEAC’s interest level.

On December 3, 2020, SGHC’s management team and representatives of Oakvale gave an informational presentation regarding SGHC and its business to Mr. Grubman and Mr. Collins and representatives of the Sponsor and PJT.

On December 8, 2020, SEAC received a confidential information memorandum compiled by representatives of SGHC and Oakvale. SEAC then began working with PJT and Goldman Sachs to assess Mr. Burns prior valuation range of $4.0-6.0 billion for SGHC, and to discuss SEAC’s initial proposed valuation of approximately $4.0 billion. Mr. Burns reiterated to Mr. Grubman that SGHC expected a valuation in excess of $4.0 billion. At this time, SEAC and its management and advisors remained in active discussions with other potential targets for a business combination.

On December 14, 2020, Mr. Burns and Mr. Grubman had a conversation to discuss progress on the potential business combination transaction. On December 15, 2020, Mr. Burns, Mr. Grubman, Mr. Collins, representatives of the Sponsor, Mr. Menashe, Mr. Hasson, Alinda Van Wyk (SGHC’s Chief Financial Officer), and representatives of PJT held a virtual meeting to discuss the proposed broad scope of due diligence by SEAC and its advisors. Following the meeting, the parties expressed their ongoing interest in continuing to pursue a potential transaction.

On December 16, 2020, Mr. Grubman and Mr. Burns spoke by telephone. Mr. Burns conveyed on behalf of SGHC that it was highly interested in pressing forward but that the management team and major shareholders required a minimum valuation of at least $4.0 billion to continue to think such discussions were worthwhile, and that Mr. Burns believed that, in light of SGHC’s strong performance, the valuation might have to be much higher to successfully conclude a business combination. Mr. Burns directed Mr. Grubman to valuations of comparable companies that suggested that SGHC was worth between $5.0-6.0 billion.

On December 17, 2020, following a discussion with the Board, SEAC management sent an initial draft exclusivity letter (the “Exclusivity Letter”) to Mr. Menashe proposing a 60-day period of mutual exclusivity between SGHC and SEAC to negotiate a transaction that would value SGHC at $4.0-4.25 billion on a cash-free, debt-free basis. The Exclusivity Letter contemplated that it would be superseded by a letter of intent, to be executed at a later date. Although the parties continued to have discussions and hold meetings following the delivery of the Exclusivity Letter, the parties did not further negotiate or execute the Exclusivity Letter. SEAC and its management and advisors remained in active discussions with other potential targets for a business combination as a result.

On December 29, 2020, Mr. Grubman sent Mr. Burns a schedule outlining the key steps and milestones relating to the due diligence process and the proposed negotiation of a business combination agreement. In this respect, Mr. Grubman informed Mr. Burns that he had been preparing with PJT, Goldman Sachs and Ropes & Gray to commence a broader and more intensive due diligence review in January. In addition, Mr. Burns had informed Mr. Grubman that his briefings with major SGHC shareholders regarding a potential business combination with SEAC had gone well.

On December 31, 2020, at Mr. Burns’s request, Mr. Grubman sent a general outline of a term sheet broadly describing key terms that any proposed term sheet between SEAC and SGHC would include, in order to provide assurance to SGHC that certain key provisions, such as price, would continue to be discussed between the parties.

 

117

On January 2, 2021, the Board and SEAC management held a videoconference to discuss the proposed terms of a business combination with SGHC, taking into account the term sheet outline shared with SGHC management and Oakvale.

On January 4, 2021, Mr. Grubman and Mr. Burns facilitated the introduction between representatives of Ropes & Gray and representatives of Cooley LLP (“Cooley”), counsel to SGHC, for the purpose of furthering the parties’ engagement on due diligence matters and potential negotiations of a business combination agreement.

On January 6, 2021, following Mr. Grubman’s circulation of general information related to typical board considerations for U.S. public companies, as well as specific thoughts related to a combined SEAC and SGHC board, Mr. Grubman, Mr. Collins, Mr. Menashe and Mr. Hasson discussed hypothetical board compositions of the surviving entity following the potential business combination, and concluded that it would be advisable to nominate Mr. Grubman and Mr. Collins to serve on the board of the surviving entity following the potential business combination.

On January 7, 2021, following discussion with the Board, SEAC management sent an initial draft non-binding term sheet for the proposed business combination (the “Term Sheet”) to SGHC. The Term Sheet included proposed initial terms such as a $4.125 billion enterprise value for SGHC, a proposed $200 million PIPE financing, a seven member board of directors for the post-combination entity, of which two seats would be appointed by SEAC, and an initial mutual exclusivity period of 60 days.

On January 8, 2021, Cooley prepared and sent Ropes & Gray a non-disclosure agreement regarding the potential transaction, which would supersede the October 13 NDA between SEAC and Betway Group Limited. Ropes & Gray and Cooley negotiated the terms of the NDA over the following days.

Between January 11, 2021 and January 12, 2021, SEAC and SGHC, together with their respective advisors and Oakvale, held introductory diligence calls and videoconferences with the management team of SGHC. On these calls, the parties discussed SGHC’s (i) organizational structure, workforce and human relations functions, (ii) use of data, analytics and behavioral science and how such disciplines inform SGHC’s operations and products, and (iii) rationale, strategy and plans with respect to its entry into the U.S. market.

Following the introductory diligence calls, on January 12, 2021, SEAC and SGHC entered into the revised NDA.

On January 15, 2021, SGHC sent a revised draft of the Term Sheet to SEAC. SGHC’s revised draft included a proposed transaction structure (which, at a high level, was consistent with the ultimate agreed structure), replaced SEAC’s proposed valuation with a placeholder while the parties continued to have discussions around valuation, added an upward purchase price adjustment mechanic to account for any cash that SGHC held at closing in excess of a threshold to be agreed upon, introduced the concepts of an earnout, as well as share repurchases at closing, for Pre-Closing Holders, and rejected the length of SEAC’s proposed mutual exclusivity period without including a counterproposal on duration. On January 15, 2021, Mr. Menashe, Mr. Hasson, Mr. Grubman, Mr. Collins, and Mr. Burns discussed various ideas regarding board composition and progress on the drafting of the Term Sheet.

Between January 15, 2021 and January 20, 2021, Mr. Grubman and Mr. Burns had numerous conversations around the key terms of a potential transaction, including, among other things, the equity value ascribed to SGHC, the terms of an earn-out in favor of SGHC stockholders, the quantum of a proposed PIPE financing, if additional cash would be needed to satisfy liquidity goals of existing shareholders, and the terms of an amendment to the SEAC warrants held by the Founders. Both parties consulted with their respective financial advisors as these conversations progressed. Mr. Burns communicated the intent of major shareholders to retain 100% of their holdings in connection with the business combination, and an estimate of $470 million of liquidity necessary for sales by various minority shareholders. Mr. Burns also communicated the position of SGHC executives that SEAC would have to increase its valuation beyond the $4.0-4.25 billion range previously

 

118

indicated. He also reiterated his view that some data suggested a valuation range of $5.0-6.0 billion. Mr. Burns pointed out that SGHC was generating significant cash flow, and that it might be appropriate for SGHC to have some cash on the balance sheet at the closing of the transaction. On January 20, 2021, Mr. Grubman and Mr. Collins provided the Board with an update on the negotiations. Mr. Grubman informed the Board that he was contemplating a valuation range of $4.4-4.6 billion for SGHC and explained the basis for that valuation. Thereafter, Mr. Grubman informed Mr. Burns that SEAC was likely to present a proposed valuation of $4.5 billion, with SGHC having $200 million of cash on its balance sheet from operations at closing. SEAC sent a transaction proposal letter (the “Proposal Letter”) to SGHC, substantially reflecting the outcome of conversations with Mr. Burns in high-level terms, which included a $4.5 billion purchase price, assuming $200 million cash on SGHC’s balance sheet at closing, a $100 million PIPE financing, an earnout of 44.772 million shares in favor of Pre-Closing Holders, comprised of three separate tranches vesting at various per share prices, a proposed amendment to the terms of the founder warrants which would split them into two tranches with optional redemption mechanics for the post-combination entity at various thresholds, and a repurchase option for Pre-Closing Holders to sell their shares in the post-combination entity for up to an aggregate amount of approximately $470 million at closing. The Proposal Letter also proposed that the parties enter into exclusivity.

On January 21, 2021, Mr. Burns contacted Mr. Grubman to discuss the proposed terms. Mr. Burns indicated that after discussions with SGHC management and major shareholders, Mr. Burns felt that a revised valuation of $4.7 billion, with SGHC having $250 million cash on its balance sheet at closing would be appropriate.

On January 21, 2021, SEAC management briefed the Board with PJT, Goldman Sachs and Ropes & Gray participating in the briefing. Mr. Grubman recounted the back and forth nature of the negotiations and the Directors asked questions of SEAC management and of the other parties. Mr. Grubman advised the Board that SEAC management would attempt to negotiate a Term Sheet with exclusivity based on the valuation discussed. Thereafter, Mr. Grubman, Mr. Collins, Mr. Menashe and Mr. Hasson spoke by teleconference about the proposed terms, including valuation, modifications to the Sponsor warrants, board service of Mr. Grubman and Mr. Collins, as well as timing related to negotiation of a Term Sheet followed by due diligence.

On January 26, 2021, Cooley sent a revised draft of the Term Sheet to Ropes & Gray, reflecting updated terms from SGHC’s previous iteration of the Term Sheet, and based in part on the Proposal Letter and recent discussions between the parties. The revised draft included a $4.7 billion valuation for SGHC, assuming $250 million in cash on SGHC’s balance sheet at closing, earnout consideration of 46.556 million shares in favor of Pre-Closing Holders, payable in three tranches with price-per-share thresholds of $11.50, $12.50 and $14.00, a repurchase option for Pre-Closing Holders to sell their shares in the post-combination entity for up to an aggregate amount of approximately $510 million at closing (and subject to a floor of $100 million left on the balance sheet at closing), a $100 million PIPE financing and a 45-day mutual exclusivity period. Between January 26, 2021 and January 28, 2021, Ropes & Gray and Cooley negotiated and exchanged multiple revised drafts of the Term Sheet. Such drafts largely sought to further refine the key business terms described in the Proposal Letter, as reflected in Cooley’s revised draft of the Term Sheet, with a primary focus on whether the $4.7 billion valuation would be adjusted for debt and working capital and refining the terms of the proposed amendment to the founder warrants. On January 28, 2021, the parties reached an agreement on the Term Sheet, including the 45-day period of mutual exclusivity. The parties and their respective advisors and Oakvale then met to discuss the contemplated timeline for the proposed transaction.

On January 29, 2021, the Board held a meeting to discuss the Term Sheet and entering into exclusivity with SGHC with respect to a possible business combination. Also present were the SEAC management team, representatives of the Sponsor and representatives of Goldman Sachs, PJT and Ropes & Gray. Following a general update provided by Mr. Grubman on discussions with the SGHC management team, Mr. Grubman and Mr. Collins expressed their favorable opinion of the SGHC management team and support for the combination. Representatives of Ropes & Gray then explained the key provisions in the Term Sheet and reviewed with the Board its fiduciary duties under Delaware law, including its fiduciary duties in the business combination context. Also at this meeting, representatives of Goldman Sachs and PJT provided financial information regarding public

 

119

companies comparable to SGHC based on information received to date. A detailed discussion of the transaction terms and SGHC’s business ensued, including public companies comparable to SGHC and the expected market reaction to the transaction, as well as the various risks and timing issues associated with a transaction of this nature. Following the discussion, the Board unanimously determined to proceed with pursuing a business combination transaction with SGHC on an exclusive basis on the terms set forth in the Term Sheet.

On January 29, 2021, SEAC and SGHC executed the Term Sheet, which provided for, among other things, an agreed equity value of $4.7 billion for SGHC, assuming $250 million of cash from SGHC’s operations on the balance sheet as of closing, as well as and a binding exclusivity period through March 15, 2021.

On January 31, 2021, SGHC provided SEAC and its advisors with access to an online data room (the “Data Room”) for purposes of conducting further business, financial, legal, tax, intellectual property, regulatory and other due diligence with respect to SGHC. Between January 31, 2021 and April 21, 2021, SEAC’s financial, legal, tax, regulatory and other advisors conducted due diligence with respect to SGHC, in each case, based on information available in the Data Room, written responses from the management team of SGHC, and due diligence calls and meetings with the SGHC management team, Oakvale and pertinent representatives and advisors of SGHC. Over the course of the due diligence process, SEAC and its advisors particularly spent time analyzing an ongoing reorganization of SGHC, and the anticipated future transactions and steps necessary to complete the reorganization prior to the closing of a business combination transaction. In addition, there was a significant focus on gaming regulatory due diligence, which involved a thorough review of licenses, regulatory correspondences, SGHC policies and other materials to assess SGHC’s past and present compliance with applicable gaming regulatory laws (including past and present reviews of SGHC gaming licenses by relevant governmental authorities), expansion into new markets, and SGHC’s compliance processes and posture generally. By the conclusion of the due diligence process, the parties had coordinated on over 400 formal diligence questions and requests, including many with multiple parts. SEAC used the findings in its due diligence process primarily to (i) confirm its valuation assumptions that were reflected in the Term Sheet, (ii) evaluate the ability of the parties to consummate a business combination transaction, (iii) revise the representations and warranties in the Business Combination Agreement to provide adequate disclosure around existing operations of SGHC, and (iv) assess the go-forward business prospects of SGHC.

Between February 4, 2021 and March 18, 2021, numerous videoconference diligence sessions were held between representatives of SEAC and SEAC’s advisors (including PJT, Goldman Sachs, Ropes & Gray, CMS, Blank Rome, Aird & Berlis and other accounting and tax advisors, as applicable), on the one hand, and representatives of SGHC and its principal shareholders, Oakvale and SGHC’s advisors (including Cooley and Herzog Law, as applicable), on the other hand. These diligence sessions covered various topics, including, among others: (i) SGHC’s group structure; (ii) SGHC’s technology, including cybersecurity and privacy policies; (iii) SGHC’s U.S. operations and associated relationship with Digital Gaming Corporation; (iv) SGHC’s global regulatory and compliance practices; (v) SGHC’s global licenses; (vi) accounting and financial aspects of SGHC’s business, including tax aspects; and (vii) SGHC’s relationship with Microgaming.

On February 5, 2021, following preliminary review of SGHC’s financial statements provided in the Data Room, SEAC and its financial and accounting advisors held a videoconference with SGHC’s management team to discuss SGHC’s accounting and financial models. During this meeting, Ms. Van Wyk, clarified that SGHC had not historically reported its financial results as a consolidated group given SGHC’s complex structure, acquisition history and various accounting methods used across its group companies.

On February 8, 2021, Mr. Grubman, Mr. Collins, Goldman Sachs, PJT and Ropes & Gray held a videoconference with the SGHC management team, Mr. Burns and Cooley, in order to align on the diligence process and the timing of the transaction. In particular, the parties discussed the prioritization of various diligence work streams and identifying those which needed to be completed prior to initiating a potential PIPE process.

On February 15, 2021, Cooley sent the initial draft of the Business Combination Agreement to Ropes & Gray.

 

120

Between February 15, 2021 and April 23, 2021, Cooley, on the one hand, and Ropes & Gray, on the other hand, exchanged numerous revised drafts of the Business Combination Agreement and the related ancillary documents, and participated in a number of videoconferences to negotiate such documents and agreements, as well as the structuring of the transaction. The negotiations included, among other things, interim operating covenants, closing conditionality and deal certainty provisions, certain reorganization steps to be undertaken by SGHC and its stockholders prior to the closing of the Business Combination, the timing of SGHC’s acquisition of Digital Gaming Corporation, the terms and structure of amendments to the SEAC warrants held by the Founders, covenants relating to the accounting treatment of the SEAC warrants, the potential tax impact on the companies and their respective shareholders, and the timing and execution of various ancillary agreements by SGHC shareholders. Cooley and Ropes & Gray also had regular contact with their respective clients during this period to keep them apprised of the status of the Business Combination Agreement and related agreements.

Over the same period of time, the representatives and advisors for SEAC, SGHC and Oakvale also held numerous videoconferences and came to agreement on various outstanding business issues, including, among others: (i) certain reorganization steps to be undertaken by SGHC and its stockholders prior to the closing of the Business Combination; (ii) closing conditionality and deal certainty provisions; (iii) the overall suite of representations, warranties and covenants to be provided by each party under the Business Combination Agreement and the related ancillary documents (including the timing of delivery of the audited financials of SGHC); (iv) the amendments to the SEAC warrants held by the Founders; (v) the principles for measuring and adjusting the equity consideration payable to SGHC shareholders based on cash, debt and similar assets and liabilities of the Target Companies; (vi) the terms and substance of the Equity Incentive Plan and Employee Stock Purchase Plan to be submitted for stockholder approval; and (vii) the terms of the Restrictive Covenant Agreements that NewCo would enter into with each of Mr. Grubman and Mr. Collins at closing. During this period, Mr. Grubman and Mr. Collins provided regular updates to the Board.

Specific points that were negotiated in the Business Combination Agreement included, among others:

 

•

Whether SGHC’s pre-closing reorganization would need to be completed prior to the signing of the Business Combination Agreement, or whether certain steps could be completed after the signing of the Business Combination Agreement. Ultimately, the parties agreed that, at the time of the signing of the Business Combination Agreement, all SGHC subsidiaries would be owned indirectly by SGHC; however, SGHC would be permitted to transfer entities within the SGHC holding company structure following signing so long as such changes were (i) consistent with a transaction step plan agreed by the parties or (ii) did not materially and adversely impact SEAC or the treatment of SEAC in connection with the Business Combination.

 

•

Whether there should be a debt and working capital purchase price adjustment, in addition to the cash balance adjustment agreed in the Term Sheet, or whether the purchase price adjustment would be limited to the cash balance only. Ultimately, upon completion of SEAC’s financial due diligence, SEAC and SGHC agreed to deduct from SGHC’s cash balance indebtedness for borrowed money or the deferred purchase price of property, and also agreed to heightened interim operating covenants with respect to the Company’s cash management practices and the management of its working capital in lieu of a full working capital adjustment.

 

•

Whether the receipt of governmental approvals related to gaming licenses in the United Kingdom, Malta and certain other jurisdictions would be conditions to closing, or sought, but not required as conditions to closing. Ultimately, based on advice from their respective regulatory counsel, the parties agreed to certain regulatory approvals as conditions to closing, while other approvals would be sought, but not required as conditions to closing (as further described in the section titled “ — The Business Combination Agreement”).

 

•

Whether SEAC’s obligation to consummate the closing would be conditioned on whether SGHC’s 2020 EBITDA as finally determined in its audited financial statements exceeded a to-be-agreed-upon percent reduction in EBITDA from the 2020 unaudited financials reviewed by SEAC prior to signing

 

121

the Business Combination Agreement. SEAC ultimately determined, based on its financial due diligence, that SGHC’s audited financials would be more relevant to whether the Business Combination was sufficiently beneficial for SEAC stockholders based on the timing of the expected closing, and that it had adequate protection elsewhere in the Business Combination Agreement in the event of a material and adverse change to SGHC’s 2020 EBITDA projections. As a result, SEAC agreed to forego this requested closing condition.

 

•

How to address the recent SEC guidance with respect to the accounting of SEAC warrants. Ultimately, the parties agreed to certain pre-closing covenants to address the guidance including, but not limited to, SEAC using its reasonable best efforts to address the guidance (and any subsequent guidance released during the pre-closing period), consulting with SGHC prior to taking any position or action with respect thereto, and, at the request of SGHC, seeking an amendment of its outstanding warrants to cause each such warrant, prior to closing, to not be treated as liabilities on the balance sheet of SEAC.

During the course of such negotiations, SEAC and SGHC agreed to final terms that included certain deviations from the Term Sheet. While the earnout consideration terms, SEAC’s director nomination rights and the terms of an amendment to the founder warrants were materially unchanged from those agreed in the Term Sheet, certain terms in the Term Sheet were revised, including the base valuation for SGHC (and the assumed cash on its balance sheet at closing), the exclusion of PIPE financing, and the addition of two members to the post-closing board of directors in order to accommodate requests of SGHC’s largest Pre-Closing Holders.

Between February 20, 2021 and March 6, 2021, there were frequent conversations between Mr. Grubman and Mr. Burns related to the overall schedule and due diligence findings, as well as the continued strong performance of SGHC against its earlier projections. On March 6, 2021, Mr. Grubman advised Mr. Burns that SGHC as a public company would likely face increased costs associated with compliance and financial reporting, and that a business combination should reflect such a landscape. Mr. Grubman and Mr. Burns discussed revising the terms of the proposed transaction to $4.75 billion with SGHC having $300 million cash from operations at closing.

Between March 6, 2021 and March 7, 2021, Mr. Grubman held multiple calls and videoconferences with Mr. Burns and representatives from Goldman Sachs, PJT and Ropes & Gray to discuss the PIPE financing process, and whether PIPE financing should still be pursued in light of the lack of need for additional cash, the ongoing accounting, financial and regulatory diligence that remained to be completed, as well as the updated timing for the preparation of audited financials.

On March 7, 2021, Mr. Grubman, Mr. Collins, Mr. Menashe, Mr. Hasson and Mr. Burns met by video conference to discuss revised terms, the lack of a need for PIPE financing and the overall anticipated schedule. They agreed to present the revised terms to the Board and the SGHC major shareholders respectively, including the revised financial terms and the removal of a PIPE financing from the Business Combination Agreement.

On or around March 11, 2021, Mr. Grubman advised Ropes & Gray to discuss extending exclusivity with Cooley given the ongoing efforts being made to complete diligence and reach final terms of a potential business combination, acknowledging the progress made to date together with the additional work that was still required by the parties to reach final terms of a potential business combination. Ropes & Gray signaled to Cooley via videoconference that SEAC would be requesting the parties extend exclusivity. Later that day, Ropes & Gray sent a draft exclusivity extension agreement to Cooley. On March 12, 2021, SEAC and SGHC executed the agreement, extending exclusivity through April 12, 2021.

Between March 22, 2021 and March 23, 2021, Mr. Grubman, Mr. Burns and representatives of Goldman Sachs and PJT discussed the possibility of Goldman Sachs and PJT marketing the proposed business combination to certain existing SEAC investors in the days leading up to the public announcement of the transaction. Following these discussions, Mr. Grubman instructed Goldman Sachs and PJT to coordinate with SGHC’s

 

122

management team in preparing an investor presentation that could be shared with such investors. Between March 23, 2021 and April 22, 2021, representatives of SEAC, SGHC, Oakvale, Goldman Sachs, PJT, Ropes & Gray and Cooley had multiple calls and videoconferences to review the contents of the investor presentation, and exchanged multiple drafts of the investor presentation and related documentation.

On March 30, 2021, the Board met for the purpose of further discussing and considering the proposed business combination with, and the status of SEAC’s diligence review of, SGHC. Also present were the SEAC management team, representatives of the Sponsor and representatives of Goldman Sachs, PJT, Ropes & Gray, Blank Rome LLP (as lead gaming regulatory outside counsel), accounting and tax advisors and Withum Smith+Brown, PC, SEAC’s independent auditors (“Withum”). At this meeting, an overview of the regulatory, accounting, tax and information technology diligence process and findings was provided. Also at this meeting, Mr. Collins provided an overview of the financial state of SGHC and the reasons it was an attractive target, including the strength of the management team, the data-driven nature of SGHC’s business philosophy and the unique character of a worldwide sports gaming brand. Representatives of Goldman Sachs and PJT also provided an overview of the SPAC merger market, valuation considerations, the timeline of the potential business combination and the proposed pre-announcement marketing to certain existing SEAC investors. Towards the end of the meeting, representatives of Ropes & Gray provided an overview of the proposed transaction structure, the definitive documents to be entered into in connection with the proposed transaction and the status of Ropes & Gray’s negotiations with Cooley with respect to such documents, and the Board’s fiduciary duties under Delaware law, including its fiduciary duties in the business combination context. Throughout the meeting, members of the Board raised various questions, and discussion ensued among the Board, the management of SEAC, and the various advisors in attendance.

On April 10, 2021, SEAC and SGHC executed an exclusivity extension agreement, further extending exclusivity through April 26, 2021.

On April 12, 2021, BDO LLP, as proposed independent registered public accounting firm to SGHC subject to approval by the SGHC audit committee and independent auditor of Betway Limited, held a call with the SGHC management team, Ropes & Gray and Cooley to discuss the financial statements that SGHC would need to include in the registration statement, given the number of significant acquisitions that had recently been completed, as well as SGHC management team’s expected timing for the delivery of these financial statements.

On April 20, 2021, the Board met to discuss the final proposed terms of the Business Combination Agreement and related documents. Also present at the meeting were the SEAC management team, representatives of the Sponsor and representatives of Goldman Sachs, PJT and Ropes & Gray. At this meeting, representatives of Goldman Sachs and PJT provided an overview of financial market conditions and updates on the SPAC merger market since the Board’s prior meeting, as well as timing and marketing considerations related to the proposed business combination. Also at this meeting, representatives of Ropes & Gray reviewed with the Board its fiduciary duties under Delaware law, including its fiduciary duties in the business combination context, and explained the updates made to the terms of the proposed Business Combination Agreement since the Board’s prior meeting, including certain updates to account for new SEC guidance related to the accounting of warrants. The Board was then provided with an overview of the proposed Business Combination (including the potential benefits and the risks related thereto), the key terms of the related agreements. Throughout the meeting, members of the Board raised various questions, and discussion ensued among the Board, the management of SEAC, and the various advisors in attendance (including in respect of confirmatory due diligence matters that SEAC management and its advisors conducted since the March 30 board meeting). Based on the factors cited in “ — The Board’s Reasons for the Approval of the Business Combination” and in light of the fact that the implied fair market value of the vested equity of SGHC to be acquired in the Business Combination was significantly in excess of 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account), the Board then unanimously adopted and approved, among others, resolutions: (a) determining that the Business Combination Agreement and the transactions contemplated thereby (including the Business Combination) are fair to and in the best interests of SEAC and its stockholders;

 

123

(b) approving and declaring advisable the Business Combination Agreement (including, but not limited to, all exhibits and annexes to the Business Combination Agreement and all ancillary agreements) and the transactions contemplated thereby, including the Business Combination; (c) recommending that the stockholders of SEAC approve the Business Combination Agreement; (d) resolving that the Business Combination Agreement and the transactions contemplated thereby, including the Business Combination, be effected; and (e) authorizing, empowering and directing each member of the Board, in the name and on behalf of SEAC, to execute and deliver the Business Combination Agreement substantially in the form presented at the meeting, with such further changes as the Board or a member thereof executing and delivering the same may deem necessary and appropriate. The Board did not obtain a third-party valuation or fairness opinion in connection with its resolution to approve the Business Combination but determined that SEAC’s directors and officers, and the other representatives and advisors of SEAC, had substantial experience in evaluating the operating and financial merits of companies similar to SGHC and reviewed certain financial information of SGHC and compared it to certain publicly traded companies, selected based on the experience and the professional judgment of SEAC’s directors, officers and other representatives and advisors, and concluded that the experience and background of SEAC’s directors and officers, and the other representatives and advisors of SEAC, provided assistance to the Board to make the necessary analyses and determinations regarding the Business Combination.

Beginning April 20, 2021, Goldman Sachs and PJT contacted several existing SEAC investors approved by SEAC and SGHC in connection with marketing the Business Combination, subject to such investors agreeing to confidentiality and trading restrictions prior to announcement of the Business Combination. Between April 21, 2021 and April 30, 2021, representatives of SEAC, SGHC, Goldman Sachs and PJT held virtual meetings with a subset of these investors and presented the investor presentation.

Between April 21, 2021 and April 23, 2021, Ropes & Gray and Cooley finalized the Business Combination Agreement and the related ancillary agreements, and distributed the final versions to SEAC, SGHC and the other parties thereto.

On the afternoon of April 23, 2021, the parties executed and delivered the Business Combination Agreement and the related ancillary documents, and each stockholder of SGHC executed and delivered Transaction Support Agreements (see “ — Related Agreements — Transaction Support Agreement”). At the same time, the parties coordinated with Finsbury Glover Hering and ICR Inc. to issue a press release and announce the Business Combination. The Business Combination was announced on the morning of April 26, 2021.

On April 26, 2021, SEAC filed on Current Reports on Form 8-K with the SEC the Business Combination Agreement, the form of Transaction Support Agreement, other related transaction agreements, the press release and the investor presentation. The parties have continued and expect to continue regular discussions in connection with, and to facilitate, the consummation of the Business Combination.

The Board’s Reasons for the Approval of the Business Combination

The Board considered a wide variety of factors in connection with its evaluation of the Business Combination. In light of the complexity of those factors, the Board, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Individual members of the Board may have given different weight to different factors. This explanation of the reasons for the Board’s approval of the Business Combination, and all other information presented in this section, is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Note Regarding Forward-Looking Statements.”

Before reaching its decision, the Board reviewed the results of the due diligence conducted by our management and third-party advisors, which included:

 

•

extensive meetings with Oakvale and SGHC’s management team to understand and analyze SGHC’s business and prospects;

 

124

•

legal due diligence conducted by Ropes & Gray;

 

•

financial, tax and accounting due diligence;

 

•

regulatory and gaming commission due diligence conducted by Blank Rome, CMS and Aird & Berlis (as well as various other local counsel in relevant jurisdictions);

 

•

review of SGHC’s financial statements and certain projections provided by SGHC;

 

•

the financial advice provided by Goldman Sachs and PJT, and SEAC management’s consideration of such advice; and

 

•

research on comparable public companies and precedent transactions.

In particular, the Board considered the following positive factors, in deciding to approve the Business Combination Proposal:

 

•

Historical Financial Performance. SGHC presented historical information that reflected strong financial performance and results of operations.

 

•

Business Model and Economic Prospects. Current information and forecast projections from SEAC’s and SGHC’s management regarding (i) SGHC’s business, prospects, financial condition, operations, technology, products, services, management, competitive position, and strategic business goals and objectives, (ii) general economic, industry, and financial market conditions and (iii) opportunities and competitive factors within SGHC’s industry reflected an attractive business model and economic prospects.

 

•

Large Total Addressable Market (TAM) with Significant Growth Opportunity. SGHC was in an advantageous position as compared to its peers to capture significant TAM in both the United States and internationally, including in Brazil and Australia, as a result of industry patterns, such as a worldwide trend towards legalization of betting and gaming, deeper mobile penetration and growth in variety of content, as well as SGHC-specific advantages, such as SGHC’s proven success in entering new markets, high brand awareness and partnerships, and flexible technology and data driven approach to analytics.

 

•

Pro Forma Implied Enterprise Value. The implied enterprise value in connection with the Business Combination of approximately $4.64 billion provided, SEAC’s stockholders with the opportunity to go forward with ownership in a public company with a larger market capitalization.

 

•

Established Global Footprint. The operations of SGHC were fully scaled, involving over 3,500 employees across 17 in-country teams, licenses in 24 jurisdictions and product offerings in 26 languages.

 

•

Results of Market Check Process. SEAC considered pursuing a variety of targets in the sports and entertainment sectors and considered a total of 90 potential acquisition targets, 27 of which SEAC had active engagement with, eventually leading to non-disclosure agreements with five potential acquisition targets in furtherance of due diligence efforts to support a potential business combination.

 

•

Experienced Management Team and Post-Closing Board. The SGHC management team had deep experience and a strong track record of success in the global sports and online casino gaming sectors. In addition, under the Business Combination Agreement, Mr. Grubman and Mr. Collins would serve as directors of the surving entity following the Business Combination, bringing their extensive executive experience working with professional sports leagues to the SGHC business.

 

•

Committed Major Shareholders. SGHC’s major shareholders, holding over 70% of SGHC’s equity interests, would be retaining 100% of their respective pre-transaction stakes in the surviving entity.

 

•

SGHC Benchmarking. SGHC’s performance across numerous metrics compared favorably to those of peer companies, including those described in the section titled “Comparable Public Companies.”

 

125

•

No Termination Fee. The Business Combination Agreement does not include a provision contemplating the payment by SEAC of a termination fee in the event of termination of the Business Combination Agreement.

The Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:

 

•

Benefits May Not Be Achieved. The risk that the potential benefits of the Business Combination may not be achieved in full or in part, or within the expected timeframe;

 

•

Closing of the Business Combination May Not Occur. The risks and costs to the Company if the Business Combination is not completed;

 

•

Exercise of Redemption Rights of Current Public Stockholders. The risk that some of the current public stockholders would decide to exercise their redemption rights, thereby depleting the amount of cash available in the Trust Account;

 

•

Conditions to Closing of the Business Combination. That the completion of the Business Combination is conditioned on the satisfaction of certain closing conditions, many of which are not within SEAC’s or SGHC’s control;

 

•

Exclusivity. The fact that the Business Combination Agreement includes a provision that generally restricts SEAC from soliciting other business combination proposals, which limits SEAC’s ability, so long as the Business Combination Agreement is in effect, to consider other potential business combinations. In addition, under the Business Combination Agreement, unless required by applicable law, the Board may not change or withdraw its recommendation to SEAC stockholders to vote in favor of the Business Combination Voting Matter and any other matters required to consummate the transactions contemplated by the Business Combination Agreement that are submitted to, and require the vote of, SEAC stockholders;

 

•

Litigation Related to the Business Combination. The risk of potential litigation challenging the Business Combination;

 

•

Transaction Expenses Incurred by SEAC. The substantial transaction expenses to be incurred in connection with the Business Combination and the negative impact of such expenses on SEAC’s cash reserves and operating results should the Business Combination not be completed;

 

•

Negative Impact Resulting from the Announcement of the Business Combination. The possible negative effect of the Business Combination and public announcement of the Business Combination on SEAC’s financial performance, operating results and stock price; and

 

•

Other Risks. Various other risks associated with the Business Combination, the business of SEAC and the business of SGHC described under the section titled “Risk Factors.”

In addition to considering the factors described above, the Board also considered that certain of the officers and directors of SEAC may have interests in the Business Combination as individuals that are in addition to, and that may be different from, the interests of SEAC stockholders, including as a result of the corporate opportunities waiver included in SEAC’s charter. The executive officers and directors of SEAC have established reputations in the sports industries and might have had many opportunities available to them, which would not have needed to be disclosed to the Board in connection with its consideration of the potential Business Combination. These potential conflicts are more thoroughly described in more detail under the section titled “Certain Relationships and Related Person Transactions,” SEAC’s independent directors reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and approving, as members of the Board, the Business Combination Agreement and the transactions contemplated therein, including the Business Combination. Although the Board did not seek a third party valuation, and did not receive a valuation opinion from any third party in connection with the Business Combination, the Board relied on

 

126

SEAC’s management team’s collective experience in public market transactions in constructing and evaluating financial models and projections and conducting valuations of businesses as assisted by its financial advisors. Notably, while entry into the U.S. market and significant growth opportunity internationally were considered by the Board as positive qualitative factors, the Board did not rely on projections of SGHC’s U.S. or global expansion in considering valuations. The financial projections provided by SGHC’s management team and advisors were consistently presented excluding any effects of a U.S. market expansion, and the pending DGC acquisition was instead described as an opportunity that offered market access in a small but growing number of states, the potential financial effect of which was described as highly sensitive to a number of variables, including but not limited to the number of states in which market access was gained, the amount of capital dedicated to marketing and the timing of regulatory approval. Accordingly, regarding U.S. expansion, the Board considered the expanded total addressable market that the U.S. entry could eventually offer, Mr. Grubman’s and Mr. Collins’ abilities to bring potential value to the company in a U.S. market through their industry contacts and experience, the potential importance of U.S. market access as the regulatory landscape matured, the ability of SGHC to absorb DGC, and also the inherent uncertainty of the expansion case in that it was dependent on anticipated regulatory changes on a state-by-state level as well as the completion of the DGC acquisition (as further described in the section titled “Business of Super Group”). SEAC’s management also considered a comparable company analysis to assess the potential value that the public markets would likely ascribe to SGHC, and this analysis was provided to the Board. The comparable companies were considered, in certain respects, to be similar to SGHC’s business due to one or more similar operating and financial characteristics, including the use of online gambling technology. Although none of the selected companies reviewed in the analysis were directly comparable to SGHC, the companies had one or more similar operating and financial characteristics as SGHC. The Board considered this analysis and viewed SGHC to favorably compare to such other companies. Based on these various factors, the Board concluded that an equity value of approximately $4.75 billion is a fair and reasonable valuation given (a) SGHC’s highly diversified geographic customer base, pipeline, financial plan and data, projections, its capital structure, and valuations of precedent combination transactions and targets in the online gaming sector, and (b) SGHC’s growth prospects, business strategy, market-leading position and deep relationships with leagues and sportsbooks, reliable revenue, good earnings visibility and committed major shareholders, among other compelling aspects.

After considering the foregoing potentially negative and potentially positive reasons, the Board concluded, in its business judgment, that the potentially positive reasons relating to the Business Combination and the other related transactions outweighed the potentially negative reasons. Accordingly, the Board unanimously determined that the Business Combination Agreement and the Business Combination were advisable, fair to, and in the best interests of, SEAC and its stockholders.

Certain Forecasted Financial Information for the Company

SGHC does not as a matter of course make public projections as to earnings or other results. However, in connection with its consideration of the potential combination, the Board was provided with prospective financial information prepared by management of SGHC (collectively, the “Projections”).

The Projections are included in this proxy statement/prospectus solely to provide our stockholders access to information made available in connection with the Board’s consideration of the Business Combination. The Projections should not be viewed as public guidance. Furthermore, the Projections do not take into account any circumstances or events occurring after the date on which the Projections were presented to the Board, which was April 6, 2021.

The Projections were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information. The Projections have not been audited. None of the independent registered public accounting firms of SGHC or SEAC, or any other independent accountants, have compiled, examined or performed any procedures with respect to the Projections contained herein, nor have they expressed any opinion

 

127

or any other form of assurance on such information or their achievability, and the independent accounting firms of SGHC or SEAC assume no responsibility for, and disclaim any association with, the Projections.

In the view of SGHC’s management team, the Projections, as presented on April 6, 2021, were prepared on a reasonable basis, reflected the best currently available estimates and judgments of SGHC and presented, to the best of their knowledge and belief, the expected course of action and the expected future financial performance of SGHC and its subsidiaries at that date. In particular, SGHC’s management team made assumptions relating to general business, economic, market, regulatory and financial conditions and various other factors at that date. The Projections do not reflect any changes occurring after that date to general business, economic, market, regulatory and financial conditions, as well as additional capital expected to be received by NewCo, nor the impact of any subsequent investment in connection with the Business Combination.

The Projections are subjective in many respects. As a result, there can be no assurance that the Projections will be realized or that actual results will not be significantly higher or lower than estimated. Since the Projections cover multiple years, that information by its nature becomes less predictive with each successive year.

While presented with numerical specificity, the Projections are forward-looking and reflect numerous estimates and assumptions with respect to future industry performance under various industry scenarios, as well as assumptions for competition, general business, economic, market and financial conditions and matters specific to the businesses of SGHC, all of which are difficult to predict and many of which are beyond the preparing parties’ control, including, among other things, the matters described in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”

Key assumptions incorporated into the Company’s revenue projection model include the following:

 

1.

Number of existing depositing customers as at the start of the projection period, derived from the Company’s actual customer database and specified separately by customer duration in months since date of customer acquisition for each brand group (i.e., Betway or Spin) in each major jurisdiction or market (e.g., United Kingdom, Spain, Belgium, South Africa, etc.), totaling 40 separate brand-market combinations and resulting in a data set of thousands of data points that would be impractical to quantify in this document. The values used for these assumptions are actual numbers that were not varied in any way in the calculation of the projections. By definition no allowance was made in respect of these assumptions for markets in which the Company was not yet already trading as at the start date of the projection period.

 

2.

Number of new depositing customers projected to be acquired per calendar month during the projection period, separately for each of the 40 brand-market combinations for each calendar month over the projection period. The values used in these assumptions were derived by reference to brand and market trends experienced by the Company over the past 36 to 48 months, taking into account the Company’s management’s expectations for future prospects in each market for each brand group. It follows that the implied rates of year-on-year growth are different for each of the 40 separate brand-market combinations for new customers acquired in existing markets in 2021 and 2022 as compared with 2020 and 2021 respectively. Taken in aggregate over all of the 40 brand-market combinations, the overall rate of growth for new customers projected to be acquired in existing markets in 2021 as compared with 2020 and for 2022 as compared with 2021 amounted to approximately 39% and 7% respectively. No allowance was made in the projections of new depositing customers for markets in which the Company was not yet already trading as at the start date of the projection period. In total, the assumptions for these various scenarios incorporate in excess of thousands of data points.

 

3.

Persistency of depositing customers, specified separately by customer duration in months since date of customer acquisition for each of the 40 brand-market combinations. These assumptions were derived by reference to the Company’s historical experience over the past 60 months, with extra weight given to more recent experience, adjusted where necessary by the Company’s management’s expectations for future prospects in each market for each brand group. It follows that the assumed rates of persistency will be

 

128

different for each of the separate brand-market combinations. No improvements in persistency were assumed in any of the brand-market combinations. In total these various scenarios incorporate in excess of thousands of data points.

 

4.

Deposits per customer per calendar month, specified separately by customer duration in months since date of customer acquisition for each of the 40 brand-market combinations. These assumptions were derived similarly to the persistency of depositing customers assumptions. It follows that the assumed values of deposits per customer per calendar month will be different for each of the separate brand-market combinations. For sake of conservatism, the Company’s management assumed uniform reductions in these values for all brand-market combinations equivalent to 10% across the board in 2021 with further incremental reductions over the course of 2022 reaching an additional 10% by the end of that year.

 

5.

Revenue as a percentage of deposits per customer per calendar month, specified separately by customer duration in months since date of customer acquisition for each of the 40 brand-market combinations. These assumptions were derived similarly to the persistency of depositing customers assumptions and are again similarly different for each of the separate brand-market combinations. No improvements in these values were assumed in any of the brand-market combinations.

 

6.

Bonus as percentage of revenue per calendar month, specified separately by customer duration in months since date of customer acquisition for each of the 40 brand-market combinations. These assumptions were derived similarly to the persistency of depositing customers assumptions and are again similarly different for each of the separate brand-market combinations. No improvements in these values were assumed in any of the brand-market combinations.

 

7.	It follows from the above that no allowance was made in the revenue projections for markets in which the Company was not yet already trading as at the start date of the projection period.

 

8.	The Company’s management believes that the projections are in line with historical operating trends and growth rates, with a reasonable degree of conservatism incorporated as detailed above.

Projected EBITDA is driven by revenue growth per above, offset by operating, marketing, general and administrative expenses. In excess of 20 major expense categories were all projected separately, including amongst others gaming taxes and licenses, cost of fraud, payment processing costs, casino product cost, sports product cost, brand marketing, affiliates marketing and operating overheads. For all of these items, assumptions were derived per brand group and major operating division within the Company by reference to historical trends over the last 60 months, again with extra weight given to more recent experience and again adjusted where appropriate by reference to the Company’s management’s expectations for future prospects. A range of scenarios were considered by the Company in the process of deriving the final assumptions used for expense projections, resulting in many thousands of data points in the final set of assumptions, making it practically difficult to quantify the details.

The Company believes that the assumptions used to derive its forecasts are both reasonable and supportable, although, as explained above, they are practically difficult to quantify as the Projections were based upon a complicated actuarial model that incorporates a large number of data points and captures 40 separate income statements and variations on each of these 40 income statements. Furthermore, in preparing its assumptions and its projection model, the Company’s management relied on a number of factors, including the executive team’s significant experience in the market and the actual proprietary data and historical performance of the Company.

The Projections were prepared solely for internal use to assist us in our evaluation of SGHC and the Business Combination. NewCo has not warranted the accuracy, reliability, appropriateness or completeness of the projections to anyone, including SEAC. Neither NewCo’s or SGHC’s management nor their respective representatives have made or make any representations to any person regarding the ultimate performance of NewCo or SGHC relative to the Projections.

 

129

The Projections are not fact. The Projections are not a guarantee of actual future performance. The future financial results of NewCo and SGHC may differ materially from those expressed in the Projections due to factors beyond NewCo’s and SGHC’s ability to control or predict.

The Projections are not included in this proxy statement/prospectus in order to induce any stockholders to vote in favor of any of the proposals at the special meeting and should not be looked upon as “guidance” of any sort.

Net Gaming Revenue, which is included in the Projections reflected below, represents Online Casino and Sports Betting Gross Gaming Revenues minus bonuses or incentives or comps, minus payments to casino game suppliers in order to fund progressive jackpot network games, and minus indirect taxes such as VAT and GST. Such information has not been presented in accordance with IFRS as issued by the IASB or audited, reviewed, compiled or examined, in accordance with either PCAOB standards or generally accepted auditing standards in the U.S. IFRS differs in certain significant respects from U.S. GAAP.

Other Revenue, which is included in the Projections reflected below, comprises revenue from brand licensing fees received from third parties. Such information has not been presented in accordance with IFRS as issued by the IASB or audited, reviewed, compiled or examined, in accordance with either PCAOB standards or generally accepted auditing standards in the U.S. IFRS differs in certain significant respects from U.S. GAAP.

Adjusted EBITDA and Adjusted EBITDA Margin is a non-IFRS financial measure and therefore is not presented in accordance with IFRS as issued by the IASB or U.S. GAAP and may exclude items that are significant in understanding and assessing the Company’s financial results. Non-IFRS financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with IFRS, and non-IFRS financial measures as used by SGHC are not reported by all of its competitors and may not be comparable to similarly titled amounts used by other companies.

The non-IFRS financial measures reflected below are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-IFRS financial measures. Due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from these projected measures, together with some of the excluded information not being ascertainable or accessible, SGHC is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measures without unreasonable effort. Consequently, no disclosure of estimated comparable GAAP measures is included and no reconciliation of the forward-looking non-GAAP financial measures is included.

We encourage you to review the financial statements of SGHC included in this proxy statement/prospectus, as well as the financial information in the sections entitled “Selected Historical Financial Information” and “Unaudited Pro Forma Condensed Combined Financial Information” in this proxy statement/prospectus, and not rely on any single financial measure.

None of SGHC, NewCo or any of their respective affiliates intends to, and, each of them expressly disclaims any obligation to, update, revise or correct the Projections to reflect circumstances existing or arising after the date such Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Projections are shown to be in error or any of the Projections otherwise would not be realized.

 

130

The key elements of the Projections provided to SEAC are summarized below, which were prepared in reliance upon SGHC’s historical financial statements prepared in accordance with IFRS as issued by the IASB (assuming an exchange rate of €0.8225 per U.S. dollar, which was based on the average exchange rate during January and February 2021):

 

U.S. dollars in millions		For the year ended December 31, 2021				For the year ended December 31, 2022
Net Gaming Revenue			$1,500				$1,700
Other Revenue			$80				$83
Revenue		$	1,580			$	1,783
Adjusted EBITDA			$350				$420
Adjusted EBITDA Margin			22.2	%			23.6	%

Comparable Public Companies

During the course of valuing SGHC, SEAC, SGHC, and their respective advisors also identified several comparable public companies in the online gaming sector. Specifically, SEAC, SGHC, and their respective advisors identified Flutter Entertainment plc, Entain plc, 888 Holdings plc, DraftKings Inc. and Rush Street Interactive, Inc. as relevant online gaming companies for comparison purposes. These companies were selected by SEAC, SGHC, and their respective advisors as publicly-traded companies having businesses with similar B2C end markets and business models with global or U.S. operations. While these companies may share certain characteristics that are similar to those of SGHC, the Board recognized that no company was identical in nature to SGHC.

The following is the financial information of these companies and SGHC:

 

Comparable Company		TEV / 2022E Revenue				TEV / 2022E EBITDA				TEV / 2021E Growth- Adjusted EBITDA(2)				2020E- 2022E Revenue CAGR				2020E- 2022E EBITDA CAGR				2022E EBITDA Margin
SGHC(1)			2.6x				11.1x				0.66x				23.1	%			27.3	%			23.6	%
Global B2C Peers
Flutter Entertainment plc			4.8x				22.6x				1.27x				20.2	%			5.0	%			21.3	%
Entain plc			2.7x				11.2x				0.63x				7.3	%			9.0	%			24.0	%
888 Holdings plc			2.2x				12.7x				2.03x				4.0	%			1.1	%			17.3	%
U.S. B2C Peers
DraftKings Inc.			14.9x				NM				NM				50.9	%			NM				(23.1	)%
Rush Street Interactive, Inc.			4.8x				NM				NM				39.9	%			NM				(4.0	)%

 

Source: SGHC Projections, Wall Street Research (IBES Consensus Estimates); market data as of April 19, 2021.

Note: Market capitalization is based on fully diluted shares outstanding and option dilution is calculated using the treasury stock method.

 

(1)	SGHC valuation based on fully diluted post-money pro forma TEV of $4,643 million with 2021E EBITDA of $350 million and 2022E Adjusted EBITDA of $420 million.

(2)	TEV/2021E Adjusted EBITDA multiples are growth adjusted by 2021E-2022E YoY growth.

Satisfaction of 80% Test

It is a requirement under NYSE rules that we complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the

 

131

deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.

As of the date of the execution of the Business Combination Agreement, the balance of funds in the trust account was approximately $450,000,000, and SEAC had $15,750,000 of deferred underwriting commissions, plus taxes payable on the income earned on the trust account. In reaching its conclusion that the Business Combination meets the 80% test, the Board looked at the aggregate purchase price to be paid in the Business Combination of approximately $4,750,000,000. In determining whether the purchase price represents the fair market value of the businesses acquired, the Board considered all of the factors described in the section entitled “The Business Combination Proposal—The Board’s Reasons for the Approval of the Business Combination,” and the Board concluded that the fair market value of the businesses acquired was significantly in excess of 80% of the assets held in the trust account. In light of the financial background and experience of the members of SEAC’s management team and the Board, the Board believes that the members of SEAC’s management team and the Board are qualified to determine whether the Business Combination meets the 80% test. The Board did not seek or obtain an opinion of an outside fairness or valuation advisor as to whether the 80% test has been met.

Sources and Uses of Proceeds for the Business Combination

The following table summarizes the sources and uses of proceeds from the Business Combination. Any amounts converted from Euros to U.S. Dollars are translated into U.S. Dollars at the rate on June 30, 2021 of €0.8301 to $1.00. Where actual amounts are not known or knowable, the figures below represent good faith estimates of such amounts.

No Redemption

 

Sources of Funds (in thousands)						Uses of Funds (in thousands)
Cash in Trust account(1)		$	450,117			SGHC equity rollover(2)		$	4,319,790
SGHC Equity Roll-Over(2)		$	4,319,790			Cash proceeds to SGHC shareholders(3)		$	380,368
						Estimated transaction expenses(4)		$	69,749
Total Sources		$	4,769,907			Total Uses		$	4,769,907

 

(1)	Assumes no Public Stockholder has exercised their redemption rights to receive cash from the Trust Account. This amount will be reduced by the amount of cash used to satisfy any redemption.

(2)	Based on a per share price of $10.00.

(3)	Represents the repurchase of NewCo shares from SGHC shareholders at $10 per share. This represents the portion of those repurchases funded by the Trust account. In the No Redemption scenario a further $118.1 million was funded by cash on SGHC’s balance sheet.

(4)	Represents the settlement in cash of the non-recurring, transaction-related costs incurred in conjunction with the Business Combination.

Maximum Redemption

 

Sources of Funds (in thousands)						Uses of Funds (in thousands)
Cash in Trust account(1)		$	300,001			SGHC equity rollover(2)		$	4,400,059
SGHC Equity Roll-Over(2)		$	4,400,059			Cash proceeds to SGHC shareholders(3)		$	230,252
						Estimated transaction expenses(4)		$	69,749
Total Sources		$	4,700,060			Total Uses		$	4,700,060

 

(1)	Assumes 33.4% of outstanding SEAC Class A Shares have exercised their redemption rights to receive the Trust Account.

 

132