Scout Gaming took out a loan to keep the business afloat and announced plans to cut half of its workforce – including employees in Ukraine – and dilute its shares by 90% after identifying a SEK 1.7m ‘black hole’ in its finances. .
In a statement released to Nasdaq Stockholm, the fantasy game provider said it had identified previously unknown financial commitments that pertain to the 2021 financial year.
The commitment of SEK 1.7m will impact cash flow for the current quarter and will have a negative effect on profit and loss for the quarter of around SEK 5.5m.
To secure the company’s working capital, Scout said it had received guarantees from three of the company’s main shareholders and Niklas Braathen, the newly appointed chairman, for a bridge financing worth SEK 20m.
It is the second bridge loan of its kind obtained in a month, with money also sought at the end of May, and it arrives just weeks after the departure of chief executive and chairman Andreas Ternström.
Scout Gaming also plans to undertake a fully guaranteed rights issue of SEK 100m in the coming months and has published restructuring plans in which it will reduce headcount in order to achieve cost savings of around SEK 32m per year.
Niklas Jönsson, the company’s interim chief executive, said: “It has been very strenuous to find another historic deficiency in the company’s accounting and internal control, which is totally unacceptable.”
“We have taken decisive steps over the last few months to ensure quality within the company’s management. We feel confident that the shortcomings identified are the latest in the internal due diligence process that has been conducted,” added Niklas.
It is said that a new management group will be formed which, in addition to the chief executive, will contain managerial positions for finance, sales and products. Changes are being made to create a more agile and executive organization that will adapt to the operational levels of the group over the next year.
Niklas Braathen, President of Scout, said: “It is a particularly difficult decision, especially with regard to our employees in Lviv relating to the prevailing situation in Ukraine.”
“It is with great sadness that this happens, but unfortunately it is necessary to ensure the company’s continued existence. The company’s workforce has been allowed to grow, seemingly uncontrollably, for several years.”
