Fitch Ratings Inc says casino equipment makers International Game Technology Plc (IGT) and Everi Holdings Inc “remain on rating watch positive”.
It follows the Friday announcement that IGT’s gaming and digital businesses and Everi would be acquired simultaneously in an all-cash deal for approximately US$6.3 billion by funds managed by affiliates of private equity firm Apollo Global Management Inc. It is anticipated the deal will be closed by the end of the third quarter of 2025.
“Fitch does not expect any material changes to the capital structure and respective recoveries,” said the institution in a Monday update.
Fitch’s rating on the existing senior secured debt at IGT and associated lottery business IGT Lottery Holdings BV is ‘BBB-’/‘RR2’.
Fitch ‘BBB’ ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, “but adverse business or economic conditions are more likely to impair this capacity,” according to the institution’s website.
Everi’s stockholders will receive US$14.25 per share in cash, representing a 56-percent premium over Everi’s closing share price on Thursday (July 25).
IGT will receive US$4.05 billion of gross cash proceeds, according to the statement. IGT said “significant portions” of the cash proceeds are expected to be used “to repay debt and to be returned to shareholders”.
In late February, IGT and Everi announced they had an agreement whereby IGT would separate its gaming and digital business by way of a taxable spin-off to IGT shareholders and then immediately combine such business with Everi. That deal has now been terminated, said the announcement.
Fitch stated in its Monday update: “Our last rating action was taken on March 1, 2024, when we placed IGT and IGTBV on rating watch positive.
“The rating action reflected the creation of a pure play lottery business which has a leading market position and will retain predictable and resilient cash flows, a simplified capital structure along with EBITDA [earnings before interest, taxation, depreciation and amortisation] leverage driving down to sub-3.0x at closing, and strong liquidity.”
The ratings agency also observed that Everi’s management “anticipates that its existing debt will be refinanced at closing” of the transaction.
Once the deal is completed, IGT gaming and digital businesses and Everi “will be privately owned companies” that are part of one combined enterprise, according to Friday’s announcement.
