Blue Star Regulatory News (BLU)

THIS ANNOUNCEMENT AND THE INFORMATION IN IT, IS RESTRICTED, AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT HAS BEEN ISSUED BY AND IS THE SOLE RESPONSIBILITY OF THE COMPANY.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

14 October 2019

Blue Star Capital plc

("Blue Star" or the "Company")

Placing and Investments in Esports Opportunities

Blue Star Capital plc (AIM: BLU), the investing company with a focus on technology and its applications within media and gaming, is pleased to announce that it has conditionally placed (the "Placing") 900,000,000 new ordinary shares of 0.1p each in the Company ("Ordinary Shares") (the "Placing Shares") at a placing price of 0.1p per Placing Share (the "Placing Price) to raise in aggregate £900,000. The net proceeds of the Placing will be invested in certain esports opportunities described below.

The Placing, which has been carried out by Smaller Company Capital Limited, the Company's broker, on behalf of the Company comprises two elements:

1 a firm Placing of 450,000,000 Placing Shares (the "First Placing") at the Placing Price to raise in aggregate £450,000 conditional only upon the completion of the first part of the Investment Agreement (detailed below) and the admission to trading of those Placing Shares on AIM (the "First Admission"); and

2 a conditional Placing of 450,000,000 Placing Shares (the "Second Placing") at the Placing Price to raise in aggregate £450,000 conditional on: (i) the First Placing having completed; (ii) resolutions (the "Resolutions") having been passed at a general meeting of the Company (the "General Meeting") granting the directors of the Company authority to issue and allot the relevant Placing Shares and certain warrants to subscribe for Ordinary Shares (as outlined below); (iii) the completion of the second part of the Investment Agreement (detailed below); and (iv) the admission to trading of those Placing Shares on AIM ("Second Admission").

The Company has entered into an investment agreement (the "Investment Agreement") under the terms of which it will make investments of approximately £150,000 each in six esport companies. The first part of the Investment Agreement (which will complete upon First Admission) relates to an investment of approximately £450,000 in three esport companies. The second part of the Investment Agreement (which will complete upon Second Admission) relates to an investment of approximately £450,000 in three further esport companies.

It is anticipated that First Admission will occur on or around 18 October 2019 and that application will be made for Second Admission shortly after the General Meeting. The Placing Shares will rank pari passu in all respects with the existing Ordinary Shares in issue including the right to receive all dividends and other distributions declared, made or paid after their date of issue.

A circular, containing a notice of the General Meeting at which the Resolutions will be proposed, will be posted to Shareholders in the Company in due course.

Tony Fabrizi, Chief Executive Officer, has invested £20,000 as part of the First Placing. Following his investment, Tony Fabrizi's holding in the Company will comprise 62,000,000 ordinary shares, representing 2.3 per cent. of Blue Star's enlarged share capital. Derek Lew, who the Company is proposing to appoint as Chairman, subject to normal regulatory due diligence, has invested £100,000 in the First Placing. Further details on Mr Lew are set out below.

Background to the Transactions and use of proceeds

The Company believes that a significant opportunity exists within esports which, according to estimates by games and esports analytics provider Newzoo, may see total global esports market revenue increase to US$1.1 billion for 2019. The largest component of this estimate relates to sponsorship, media rights and advertising and the Company will take advantage of this growth opportunity by investing in franchises and infrastructure investments targeting different regions globally.

An opportunity has been presented by Jonathan Bixby (through his company Toro Consulting Ltd, the "Introducer"), who founded and listed Argo Blockchain plc by way of a Standard Listing on the London Stock Exchange's main market on 3 August 2018, to invest in six esports businesses which are being developed. These investment opportunities are in line with the Company's investing strategy of investing in gaming. Esports encompasses competitive, organised gaming and has seen a significant growth in recent years in terms of the number of events, the number of competitors and audience viewing and, importantly, revenues generated through activities including ticket sales, merchandising, media rights and partnerships.

It is the intention of each of the companies in which Blue Star will invest to create or acquire a competitive esports franchise to generate revenue from tournament winnings, digital marketing opportunities, sponsorship, membership, merchandise and promotional tours and events. Each of the companies is targeting a different region globally for financing and team building but all will attempt to become global brands. Blue Star is investing at an early stage in each of these companies and as part of its investment Blue Star has secured the right to invest in future rounds of each company to allow it to maintain its position, if it so chooses.

Further details of the companies in which Blue Star will invest are as follows:

Update on Blue Star

The Company's main investment is SatoshiPay, where it currently owns 27.9 per cent. of the issued share capital. Based on SatoshiPay's most recent fund raise in March 2019, Blue Star's investment is valued at approximately £4.6million.

SatoshiPay has spent much of 2019 refining its product offering and developing a number of technical features of its business, most notable the Solar wallet, international VAT compliance tools for its publishers and a login-based cross-device wallet backup.

In addition to its offering for the publishing industry, SatoshiPay is broadening its reach into other verticals and intends to expand its services within the cross-border B2B payments vertical which is currently estimated to be a £160bn market. Although in its infancy, SatoshiPay is already engaged in a number of customer conversations and while this sector remains highly competitive the opportunity to exploit SatoshiPay's existing technology appears to be strong. SatoshiPay will continue to develop its publishing vertical as it has a number of key relationships within this sector and anticipates announcing transactions later this year.

In addition to its investment in SatoshiPay, Blue Star has a 1 per cent. shareholding in Sthaler, a biometric payments business. Sthaler has recently announced a major initiative in Manchester and is continuing to attract interest both commercially and from investors. The Company's board remains confident in Sthaler's long term potential.

Finally, the Company's investment in Disruptive Tech Limited has continued to disappoint and it seems likely that the position will be further written down with the publication of the Company's accounts.

Grant of Warrants

In consideration of the Introducer introducing the investments to the Company and to provide the Company with potential future funding and in respect of incentivisation of directors, the Company has agreed to grant warrants to subscribe for Ordinary Shares ("Warrants") to the Introducer and to Tony Fabrizi, Chief Executive Officer and Derek Lew.

On completion of the First Placing, the Company will grant, (subject, in the case of Derek Lew, to him being appointed as a Director) Warrants as follows:

The Company will (subject, in the case of Derek Lew, to him being appointed as a Director and the passing of the resolutions granting the directors of the Company authority to allot shares) grant further Warrants as follows:

Derek Lew has advised, started and invested in technology companies for over 20 years. An active member of the technology community in Vancouver, he is President & CEO of venture capital fund manager GrowthWorks Capital Ltd. Derek is a Partner with Initio Group, a Vancouver, BC-based early-stage angel investment firm. Derek started his technology career as a lawyer, advising both technology companies and investors in all areas, including life sciences, ITC and e-commerce.

As Past-Chair of Innovate BC (formerly the British Columbia Innovation Council), the Crown Agency of the Province of British Columbia mandated to accelerate technology commercialization, Derek supports entrepreneurs and technology start-ups.

Derek holds a Bachelor of Arts from the University of British Columbia and a Bachelor of Laws from the University of Alberta.

The grant of warrants to Tony Fabrizi, Chief Executive Officer, and to Derek Lew, upon his appointment as a director, and Tony Fabrizi's participation in the First Placing are deemed to be a related party transactions for the purposes of Rule 13 of the AIM Rules for Companies (the "AIM Rules"). The Directors, with the exception of Tony Fabrizi, consider, having consulted with the Company's nominated adviser, Cairn Financial Advisers LLP, that the terms of the transactions are fair and reasonable insofar as the Company's shareholders are concerned.

Total Voting Rights

Following the issue of the Placing Shares pursuant to the First Placing, the Company will have 2,692,582,852 Ordinary Shares issue. There are no Ordinary Shares held in treasury. The figure of 2,692,582,852 may be used by the Company's shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

Tony Fabrizi, Chief Executive Officer, said, "We have been watching the development of the esports sector of gaming closely and the rate of growth in popularity and, importantly, associated revenue being generated presents a significant investment opportunity. We are investing at an early stage and not restricting our focus to a particular region or jurisdiction as we consider this to be the best opportunity to capture value for all shareholders."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

IMPORTANT NOTICE

The information contained in this announcement is for information purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.

This announcement does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, Placing Shares in any jurisdiction. The offer and sale of Placing Shares has not been and will not be registered under the applicable securities laws of Canada, Australia, Japan, New Zealand or the Republic of South Africa. Subject to certain exemptions, the Placing Shares may not be offered to or sold within Canada, Australia, Japan, New Zealand or the Republic of South Africa or to any national, resident or citizen of Canada, Australia, Japan, New Zealand or the Republic of South Africa.

The Placing Shares have not been, and will not be, registered under the Securities Act, or the securities laws of any other jurisdiction of the United States. The Placing Shares may not be offered or sold, directly or indirectly, in or into the United States (except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act). No public offering of the Placing Shares is being made in the United States. The Placing Shares are being offered and sold only outside the United States in "offshore transactions" within the meaning of, and in reliance on, Regulation S under the Securities Act.

The distribution of this announcement outside the UK may be restricted by law. No action has been taken by the Company, Cairn or SCC that would permit (i) a public offer of Placing Shares in any jurisdiction or (ii) possession of this announcement in any jurisdiction outside the UK, where action for that purpose is required. Persons outside the UK who come into possession of this announcement should inform themselves about the distribution of this announcement in their particular jurisdiction. Failure to comply with those restrictions may constitute a violation of the securities laws of such jurisdiction.

This announcement is directed only at persons who are: (a) if in a member state of the European Economic Area ("EEA"), persons who are qualified investors, being persons falling within the meaning of article 2(e) of the Prospectus Regulation ("Qualified Investors"), or (b) if in the United Kingdom, Qualified Investors who (i) have professional experience in matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (ii) fall within article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Order; or (c) are persons to whom they may otherwise be lawfully communicated (all such persons together being referred to as "Relevant Persons").

This announcement must not be acted on or relied on by persons who are not Relevant Persons. Persons distributing this announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. This announcement does not itself constitute an offer for sale or subscription of any securities in the Company.

Cairn Financial Advisers LLP ("Cairn") is acting as nominated adviser to the Company for the purposes of the AIM Rules. Cairn is not acting for, and will not be responsible to, any person other than the Company for providing the protections afforded to its customers or for advising any other person on the contents of this announcement or on any transaction or arrangement referred to in this announcement. Cairn's responsibilities as the Company's nominated adviser under the AIM Rules are owed solely to the London Stock Exchange and are not owed to the Company, any Director or to any other person. No representation or warranty, express or implied, is made by Cairn as to, and no liability is accepted by Cairn in respect of, any of the contents of this announcement

Smaller Company Capital Limited ("SCC") is authorised and regulated in the UK by the FCA and is acting as broker to the Company in connection with the Placing. SCC is not acting for, and will not be responsible to, any person other than the Company for providing the protections afforded to its customers or for advising any other person on the contents of this announcement or on any transaction or arrangement referred to in this announcement. No representation or warranty, express or implied, is made by SCC as to, and no liability is accepted by SCC in respect of, any of the contents of this announcement.

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. The Company cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "predict" or other words of similar meaning. Examples of forward-looking statements include, amongst others, statements regarding or which make assumptions in respect of the planned use of the proceeds of the Placing, the Company's liquidity position, the future performance of the Company, plans and objectives for future operations and any other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in interest rates and foreign exchanges rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under IFRS applicable to past, current and future periods, the outcome of pending and future litigation or regulatory investigations, the success of future acquisitions and other strategic transactions and the impact of competition. A number of these factors are beyond the Company's control. As a result, the Company's actual future results may differ materially from the plans, goals, and expectations set forth in the Company's forward-looking statements. Any forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made. These forward looking statements reflect the Company's judgement at the date of this announcement and are not intended to give any assurance as to future results. Except as required by the FCA, the London Stock Exchange, the AIM Rules or applicable law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.