Light & Wonder completes lottery division sell-off and vows to pay off debt with $5.8bn proceeds
Taking this pay down into account, the company’s net debt at the end of 2021 would have been $3.2bn instead of $8.2bn.
The company anticipates that it will achieve a net debt leverage ratio within its target range of 2.5x to 3.5x when another major sell-off completes, with Endeavor scheduled to purchase its sports betting supply business OpenBet for $1.2bn by Q2 2022.
Both divestures were previously communicated as part of Light & Wonder’s strategic restructuring, which has seen it transform into a streamlined, content-led provider with a sole focus on iGaming.
Light & Wonder CFO Connie James: “We now have the financial flexibility and balance sheet integrity that, combined with our double-digit growth profile and high mix of digital and recurring revenues, give us a tremendous opportunity to continue to drive shareholder value.”
While paying off debt has been earmarked as its number one priority, the business will also initiate share buy-backs to return capital to shareholders, having recently announced the authorisation of a three-year $750m share repurchase programme.Finally, Light & Wonder will prioritise disciplined and organic growth opportunities ahead of acquisitions, unless “convinced” that M&A will deliver greater shareholder value.
Light & Wonder CFO Connie James said: “The proceeds from this transaction and our strong cash profile allow us to accelerate progress on our capital allocation strategy.
“We now have the financial flexibility and balance sheet integrity that, combined with our double-digit growth profile and high mix of digital and recurring revenues, give us a tremendous opportunity to continue to drive shareholder value.”
The lottery business will continue to operate under the Scientific Games brand while under the ownership of Brookfield Business Partners, which is a Bermuda-headquartered private equity group and asset management specialist.
“The convergence of land-based and digital continues to gain momentum and we are strongly positioned to be a leader in the industry.
“With the completion of the lottery business sale and the upcoming sale of our sports betting business, we are moving rapidly as we execute on our vision to be a leading cross-platform global game provider and unlock the full potential of Light & Wonder.
“This also positions the lottery business for success as a stand-alone company completely focused on innovating for its global lottery customers,” he added.