Brokerage Deutsche Bank Securities Inc said it expects United States-based casino equipment manufacturer Scientific Games Corp to save circa US$9 million in annual interest expense, following that group’s most recent note offering.
Scientific Games said on Tuesday that one of its units will offer US$1.1-billion worth of senior unsecured notes – due to mature in 2026 – and use the proceeds to pay down US$1-billion in unsecured notes maturing in 2022.
The company set an issue price of 100 percent for the new, 8.25-percent, notes. The firm said it expected the offering to close on March 19.
“We believe the rough costs associated with the repayment of the 10-percent senior unsecured notes will be [about] US$100 million, with US$50 million related to the call premium and an additional US$50 million related to transaction expenses and accrued interest,” said Deutsche Bank analysts Carlo Santarelli and Steven Pizzella in a note issued on Wednesday.
“While the call premium and other associated transaction expenses will outweigh the interest expense savings of the refinancing in 2019, we expect the transaction will save [circa] US$9 million in annual interest expense, or US$0.10 in free cash flow per share on an annual basis,” said the Deutsche Bank team.
The analysts added: “This would represent [about] 2 percent accretion to our current 2020 free cash flow per share forecast.”
In February, Scientific Games announced its annual net loss grew to US$352.4 million in 2018 from US$242.3 million the year before, on annual revenue that increased by 9.1 percent to US$3.36 billion.
Scientific Games’ net debt stood at about US$9.05 billion at December 31, compared to nearly US$8.08 billion one year earlier.
In Wednesday’s note, the Deutsche Bank analysts said they expected Scientific Games’ deleveraging process to be “largely driven by debt reduction in the year”.
“While the extraction of the 10-percent notes is a longer term free cash flow positive, we do not expect the transaction, given the call premium / other associated transaction costs, to help the deleverage process in 2019,” wrote Mr Santarelli and Mr Pizzella.
Jul 16, 2019Macau VIP baccarat gross gaming revenue (GGR) fell 15.6 percent year-on-year in the second quarter, according to government data released on Tuesday. The rate of VIP decline was offset by the...
Jul 16, 2019
”I would expect that there might be some clearly-defined criteria … and I’m supportive of a more clearly-defined roadmap for the [gaming] industry”
Co-chairperson and executive director of Macau casino operator MGM China