Entertainment Rewards Restructures $22.5M Convertible Loan, Saving $2.81M Annually

Key Highlights

• Interest rate reduced to 0%, saving $2.81M annually.
• Conversion terms now favor the company for balance sheet flexibility.
• Repayment and interest dates extended to December 2026.

Entertainment Rewards Ltd (ASX: EAT), Australia and New Zealand’s leading entertainment, lifestyle, and rewards platform, has announced a pivotal restructuring of its $22.5 million convertible loan agreement with Suzerain Investment Holdings Ltd. This move marks a significant step toward financial flexibility and cost savings, further supporting the company’s strategic growth initiatives.

Loan Restructuring: Key Amendments

The amended agreement introduces several major changes to the terms of the loan:

Conversion Option

• Existing Term: Convertible at Suzerain’s discretion.
• New Term: Conversion now at Entertainment Rewards’ (ASX: EAT) discretion.
• Impact: Enables the company to classify the debt as equity and control the timing of conversion, improving its balance sheet health.

Interest Rate

• Existing Term: 12.5% p.a.
• New Term: 0% p.a.
• Impact: Eliminates annual interest expenses, resulting in substantial savings of $2.81 million.

Conversion Price

• Existing Term: Higher of 2.2 cents or a 30-day VWAP plus a 20% premium.
• New Term: Fixed at 2.2 cents.
• Impact: Ensures predictability in future equity conversion, maintaining valuation stability.

Interest Payment Date

• Existing Term: 31 December 2025.
• New Term: 31 December 2026.
• Impact: Provides an additional year to achieve breakeven before interest payments are due.

Principal Repayment Date

• Existing Term: 31 December 2025.
• New Term: 31 December 2026 (subject to shareholder approval).
• Impact: Grants the company more time and flexibility to convert the loan into equity or repay the principal.

CEO’s Perspective

Heidi Halson, CEO of Entertainment Rewards (ASX: EAT), praised the agreement as a critical step in the company’s financial journey, “This restructuring demonstrates Suzerain’s unwavering support as our largest shareholder and debtholder. The savings and extended terms enable us to restore balance sheet strength while focusing on the execution of our revenue pivot strategy.”

The elimination of interest expenses and the extended repayment timeline are expected to provide the breathing room necessary for Entertainment Rewards (ASX: EAT) to focus on achieving operational break-even.

Strategic Implications

The restructured loan terms align with Entertainment Rewards’ (ASX: EAT) broader strategy to transition toward a revenue-driven business model. The reduction in fixed costs, combined with greater financial flexibility, positions the company to allocate resources more effectively toward growth initiatives in the entertainment and lifestyle sectors.

A Vote of Confidence from Suzerain

Suzerain Investment Holdings’ willingness to renegotiate terms reflects its confidence in Entertainment Rewards’ (ASX: EAT) long-term potential. The decision to defer payments and eliminate interest underscores the partnership’s shared commitment to driving sustainable shareholder value.

What’s Next?

As part of its revenue pivot strategy, Entertainment Rewards (ASX: EAT) will focus on:

• Expanding its digital rewards platform.
• Strengthening partnerships across Australia and New Zealand.
• Accelerating user acquisition to enhance revenue streams.

Pending shareholder approval of the amended repayment terms, the company is well-positioned to navigate its path toward profitability. The amendment of the $22.5 million convertible loan agreement is a game-changing development for Entertainment Rewards (ASX: EAT).

By reducing financial burdens and enhancing flexibility, the company has created a solid foundation for growth as it continues to redefine the entertainment and lifestyle rewards industry.