FaZe Clan Owners Prepare to Jump Ship
The following article was originally published by Tobias Seck on The Esports Advocate
Update: In response to this article, FaZe Clan CEO Lee Trink shared on Twitter, that he has no plans to sell his stake in the company. FaZe Clan co-founder Richard “FaZe Banks” Bengtson II made a similar comment, saying that he and his co-founders have not listed their shares. The reporting in this article is based on an update to FaZe Clan’s original S-1 registration, which outlines an offering of existing shares as of May 4, 2023. While the prospectus demonstrates ownership distribution after a complete resale of shares included in the offering, such a sale has not been initiated through the filing and potential sales are at their shareholder’s discretion. In the context of FaZe Clan’s current operational and financial situation, finding a new majority owner could be one of many options to remedy its situation.
Original Story: Hollywood-based esports and lifestyle organization FaZe Clan has produced a Titanic-esque storyline, and now its owners are preparing to abandon the sinking ship. According to FaZe Clan’s latest filing with the U.S. Securities and Exchange Commission (SEC), the company’s founders, leadership team, and largest investors put their stake in the company up for sale. With up to 62.54% of FaZe Clan’s current outstanding shares up for sale, the organization could be taken over by a new majority owner.
FaZe Clan was founded in 2010, revolutionized personality-focused content creation, quickly became popular in the gaming and esports community, and celebrated several esports championships over the years. The organization’s leadership aspired to create the first billion-dollar esports company and went public on the Nasdaq in July 2022 with an approximately $725M USD valuation. Despite uncertainty about the company’s financial health, FaZe Clan’s market capitalization broke through the $1B barrier and peaked at $1.86B on Aug. 30, 2022. However, once investors found out about FaZe Clan’s financial struggles including its $168.5M net loss for 2022, the stock collapsed and is currently trading below $0.50 or at a market capitalization of approximately $35.5M (roughly the price of a League of Legends European Championship [LEC] franchise slot).
In its prospectus, FaZe Clan outlines the potential issuance of up to 5.92M new shares and resale of up to 46.98M existing shares currently held by B. Riley, FaZe Clan founders and leadership, and other investors. While FaZe Clan would be able to receive up to $68M in proceeds for the issuance of new shares, the issuance event is highly unlikely as it is related to the exercise of outstanding warrants at $11.50 per share—a premium of more than $11 per share compared to the current market price. The unpromising situation of warrant exercises is reflected in FaZe Clan’s warrants currently trading below $0.03 apiece and a statement in the prospectus warning that its warrants may expire worthless.
FaZe Clan will not receive any proceeds from the potential resale of existing shares, which have been offered for sale by all significant FaZe Clan owners, including its largest shareholder B. Riley, its CEO Lee Trink, and some of its founders including Yousef “FaZe Apex” Abdelfattah, Richard “FaZe Banks” Bengtson II, Thomas “FaZe Temperrr” Alves De Oliveira, and Nordan “FaZe Rain” Shat.
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| Name of Selling Holder | Number of Shares Offered | Number of Shares after the Offering |
|---|---|---|
B. Riley Principal Investments | 11,184,152 | - |
Lee Trink and Affiliates | 5,299,760 | - |
TF US 2 AS | 4,998,580 | - |
Yousef Abdelfattah | 4,354,686 | - |
AEV Esports, LLC | 3,842,359 | - |
Richard Bengston II | 3,337,642 | - |
Thomas Alves De Oliveira | 3,337,642 | - |
Noordin Shat | 3,253,219 | - |
Nick Lewin | 1,392,817 | 317,197 |
Amit Bajaj | 954,537 | - |
Tamara Brandt | 954,272 | 415,000 |
Kainoa Henry | 882,784 | - |
Zach Katz | 877,677 | - |
Daniel Shribman | 564,803 | 20,000 |
Ross Levinsohn | 304,333 | 20,000 |
Calvin "Snoop Dogg" Cordozar Broadus Jr. | 299,264 | - |
Bryant R, Riley | 200,000 | - |
Ed Wilson | 118,519 | - |
McBride Capital LLC | 101,558 | - |
Nicholas Hammeerschlag | 101,558 | - |
CAZ Barbell Aggregator, L.P. | 100,000 | - |
CAZ Private Equity Access Fund II, L.P. - Onshore Series | 85,635 | - |
STOCKS LLC | 50,000 | - |
John B. Berding | 40,000 | - |
SNI LLC | 30,000 | - |
CAZ Private Equity Access Fund II, L.P. - Onshore Series | 26,536 | - |
CAZ PEA2 Blocker Company | 23,834 | - |
Martin Bernstein | 22,459 | - |
Mandy Lindly | 22,459 | - |
Barry Lee Engle III | 22,459 | - |
Alexkper Safarov | 22,459 | - |
Bond E. Oman | 21,608 | - |
MC Opportunities Fund GP LLC | 20,000 | - |
Steven T. and Lisa J. Almrud | 20,000 | - |
Dean Family Grandchildren Trust | 15,000 | - |
John B. Berding Irrevocable Children's Trust | 11,952 | - |
Dillon, Itz & Williams, L.P. | 10,000 | - |
Walter R. Corson | 10,000 | - |
CAZ Private Equity Access Fund II, L.P. - Non-Conduit Series | 9,641 | - |
Alan N. Forman | 7,500 | - |
William H. and Rhoda J. Wheeler | 5,000 | - |
Michael Scanlin | 5,000 | - |
James J. Nawrocki | 5,000 | - |
CAZ PEA 2 Nonconduit Blocker Company | 4,354 | - |
Ashley D. Killpack 2011 Exempt Trust | 4,000 | - |
John A Hellwig Jr. Annual Gift Trust | 4,000 | - |
Jennifer D. Brummett 2011 Exempt Trust | 4,000 | - |
Lynn Sperandeo and Gary Michel | 3,000 | - |
Lisa Giacobetti | 2,500 | - |
Jared T. Stack | 2,500 | - |
Myles Scott | 2,500 | - |
Ron Kaplan | 2,500 | - |
Henry and Tina Kaplan | 2,500 | - |
Charles Riley | 2,093 | - |
