Casino equipment and lottery services provider Scientific Games Corp says the firm “has a strong liquidity position”, boosted by additional borrowing and the introduction of cost-saving measures that will help it as the gaming sector “begins to recover”. The statement comes amid the challenging business environment resulting from the global Covid-19 crisis that has hit many service industries including the casino sector.
The firm said in a press release that it already had drawn approximately US$480 million under its revolving credit facilities to give it “maximum flexibility during these difficult times”. The company said that the proceeds from these borrowings, when combined with cash on hand – which was approximately US$200 million as of March 31, 2020 – would allow it “to take advantage of opportunities to strengthen the business as the industry begins to recover.”
The group’s net debt for the 12 months to December 31 was US$8.6 billion, consisting of US$8.9 billion in face value regarding debt outstanding, less US$313 million of cash and cash equivalents, it said in its fourth-quarter and full-year results issued in February.
In its latest statement, Scientific Games added that its social gaming arm, SciPlay Corp, also had a “strong liquidity position” with cash on hand of approximately US$130 million as of March 31 and no outstanding debt. Scientific Games has an 82-percent stake in the firm.
Scientific Games said in its Tuesday release it estimated that “operational and capital cost-saving measures it has already implemented, together with additional measures now being implemented, will reduce its quarterly costs in the second quarter by over US$100 million”.
The firm stated that the workforce cost reductions implemented by the company – including “hour and pay reductions, furloughs, and reductions in force” – were expected to result in more than US$50 million in cost savings in the second quarter. Capital expenditures in the second quarter were now “expected to be approximately US$50 million lower than previously planned”, it added.
Scientific Games said the firm now anticipated full-2020 capital expenditures to be in the range of US$210 million to US$240 million, as compared to the previously-forecast US$300 million to US$330 million.
“The company plans additional cost saving initiatives, including reductions in other operating expenses, that will lead to further potential savings,” said the firm.
The press release quoted the chief executive of Scientific Games, Barry Cottle, as saying: “We continue to reduce our costs so that we can position our company to be an even stronger competitor as the industry begins to recover.”
He added: “The diversity of our business, serving customers across the industry and around the globe, gives us unique strength in these challenging times.”
Scientific Games said in late March that Mr Cottle had “volunteered a 100-percent reduction” in base salary while the executive leadership team had committed itself to a “voluntary 50 percent salary reduction,” amid the global Covid-19 crisis.
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Partner and director overseeing government affairs at casino industry consultancy Global Market Advisors