GGRAsia – Scientific Games change of control, Odell in as exec chair

Scientific Games change of control, Odell in as exec chair

Sep 15, 2020 Newsdesk Industry Talk, Latest News, Top of the deck, World

Control of casino equipment maker and lottery services provider Scientific Games Corp is changing hands, with the sale of a 34.9-percent stake – that had been held by financier Ronald Perelman – to other parties including Caledonia, a global investment firm that had also at some stage been an investor in the Australian slot machine brand Aristocrat.

Under the deal, Jamie Odell, a former chief executive of Aristocrat Leisure Ltd, is being brought in to Scientific Games as executive chair. Toni Korsanos, a former chief financial officer and company secretary of Aristocrat Leisure, and more recently a non-executive director of Australian casino operator Crown Resorts Ltd, is also to be brought in to Scientific Games, as executive vice chair.

According to a Monday announcement by Scientific Games, the deal between Caledonia and associated parties, and Mr Perelman’s vehicle, MacAndrews & Forbes Inc, values Scientific Games at US$28.00 per share.

The stock closed at US$26.43, up 39.33 percent on the day, at the end of Monday trading on Nasdaq.

A press release said that under the new ownership, business strategies would include “accelerating debt-reduction efforts and increasing focus on digital gaming and sports betting growth opportunities”.

Caledonia currently has an investment in fantasy sports provider DraftKings, according to the announcement.

Scientific Games’ net debt as of June 30 was nearly US$8.53 billion, from US$8.65 billion a year earlier, according to its s econd-quarter results filing.

“We are pleased to have the support of our refreshed board and new investor base as we continue to execute on our strategy to drive meaningful long-term growth and shareholder value creation,” said Barry Cottle, president and CEO of Scientific Games, in prepared remarks in a press release.

Mr Perelman, who had been executive chairman of Scientific Games as well as being MacAndrews & Forbes chairman and CEO, is stepping down from Scientific Games. Also departing from the Scientific Games board are Barry Schwartz and Frances Townsend, MacAndrews & Forbes representatives.

Incoming executive chairman Mr Odell said in remarks quoted in the announcement: “We will be highly focused on rapidly deleveraging the balance sheet and creating a flexible, agile company that is poised to capitalise on evolving industry and macroeconomic trends to deliver outsized returns to investors.”

The announcement didn’t mention whether there might be further cost saving initiatives. A number of senior managers at Scientific Games had already volunteered for pay cuts during the downturn associated with the Covid-19 pandemic.

Monday’s notice said the transaction between the investing parties and MacAndrews & Forbes was due to be executed in “multiple tranches” after which “no investor is expected to beneficially own more than 9.9 percent of the outstanding shares of Scientific Games”. The first tranche sale was due to be completed on Monday (September 14), with the remaining ones likely to be completed “over the next several weeks”.

In late August, Scientific Games filed notice of a “change-in-control protection plan” offering some financial guarantees to current c-level executives, including chief executive Mr Cottle and Matt Wilson, executive vice president and group chief executive for gaming. The plan was in case of there being – in effect – a takeover of the group.