Gaming and lottery technology provider International Game Technology Plc (IGT) says it expects to achieve an estimated US$60 million in annualised interest cost savings from a combination of refinancing exercises. The company announced the latest of those exercises before market opening on Wednesday.
Under a new financing arrangement, IGT has a fresh EUR1.5-billion (US$1.76 billion) term loan agreement – with the loan maturing in 2023 – and an amendment to its multi-currency revolving credit facilities which mature in July 2021.
The firm said proceeds from the fresh term loan would be used to repay, respectively, EUR800-million term loans maturing in January 2019, and the EUR500-million, 6.625-percent notes due in February 2018.
A note on Wednesday from analyst David Katz of Telsey Advisory Group LLC said the annualised savings could be worth to investors in New York-listed IGT – on a “tax-adjusted, per share basis” – approximately US$1.50 to US$2.00. The shares had closed at US$20.00 on Wednesday, up 0.6 percent on the day.
In the second of the newly-announced financing exercises, IGT said it had “voluntarily reduced” the aggregate commitments of its multi-currency revolving credit facilities “by about 30 percent” to approximately US$2.0 billion.
The firm said in a press release the adjustment would “more closely match lower anticipated liquidity needs and created more flexibility under certain financial and non-financial covenants”. It added that the commitments under the U.S. dollar and euro revolving credit facilities were now US$1.2-billion and EUR725-million, respectively.
“We are proactively managing our capital structure to drive significant savings in interest expense, extend maturities, and maximise financial flexibility in executing our business plan,” said Alberto Fornaro, IGT’s chief financial officer, in a prepared statement in the press release.
Telsey’s Mr Katz noted: “As we consider the modest benefit to our forecast from the announcement, we are reflecting the reduction in interest costs over the next two years based on the proceeds from the sale of DoubleDown and free cash generated for debt reduction, the change is therefore incrementally positive.”
IGT had announced in April it was to sell its Double Down Interactive LLC unit to South Korean firm DoubleU Games Co Ltd, for US$825-million in cash. The legacy version of the IGT entity purchased the “DoubleDown” brand in early 2012 for US$500 million.
IGT’s net debt stood at approximately US$7.40 billion at the end of the first quarter, down from nearly US$7.57 billion at the end of 2016. The company said in May that its net debt is expected to be between US$6.95 billion to $7.15 billion at the end of 2017.
IGT was created from the US$6.4-billion merger in April 2015 of Nevada-based slot machine maker International Game Technology and Italy-based lottery equipment and management specialist GTech SpA.
In other developments, IGT announced on Wednesday it was entering the international video bingo sector via a deal with Italy-based Zest Gaming Srl. The company said it would start offering Zest’s games to its customers via technology that allows players to choose their favourite titles on a single video bingo machine.
Feb 29, 2024Macau casino operator Galaxy Entertainment Group Ltd is considering “major upgrades” at the firm’s StarWorld Hotel property (pictured) on the city’s peninsula, the first of the company’s...
”We continue to drive every segment of the business with a particular focus on the mass business and continue to allocate resources to their most efficient use”
Lui Che Woo
Chairman of Macau casino operator Galaxy Entertainment Group