Playtech has entered into an amended €277m revolving credit facility and will redeem €330m in senior secured notes as part of a refinancing of its existing debt facilities.
A five-year senior secured note worth €530m was first raised in 2018 and is due to mature in October 2023.
Playtech will now redeem €330m of the total note on 16 November this year, to be funded using its current cash balances.
Its amended €277m revolving credit facility – originally worth €317m and due to mature in Q4 2023 but now amended to last until 2025 – will remain undrawn following the early redemption of the secured notes.
The refinancing will result in cash interest savings of around €12m in 2023, Playtech said, and will leave the firm with more than €200m of available cash on its balance sheet.
The balance of the outstanding bond will be repaid at maturity or sooner, resulting in total annualised savings of €20m.
Playtech CFO Andrew Smith: “The combination of Playtech’s strong balance sheet and the high cash generation from its operations have enabled the company to carry out this efficient refinancing, in spite of challenging debt market conditions.”
After repaying the bond, the only other material debt obligation Playtech will hold beyond its revolving credit facility will be another senior secured note worth €350m, first raised in March 2019 and due to mature in 2026.
“The combination of Playtech’s strong balance sheet and the high cash generation from its operations have enabled the company to carry out this efficient refinancing, in spite of challenging debt market conditions,” said Andrew Smith, CFO of Playtech.
“We are pleased to have achieved this result, and to have made the significant interest savings that otherwise could have been incurred.”
Playtech is the latest gambling industry firm to reconsider its financing structure in the current macroeconomic climate.
Last week, US casino giant Caesars Entertainment closed a new $3bn credit facility designed to reduce its interest expenses on loaned cash.
Higher borrowing costs continue to have an impact on the iGaming sector as Russia’s war in Ukraine has led to a global increase in the cost of energy, among several other factors.
Banks backing 888’s acquisition of William Hill’s non-US assets are preparing for losses on a £1bn bond and loan deal provided to help fund the purchase.
The acquisition, which closed on Friday (1 July), was funded with debt underwritten by banks led by JPMorgan and Morgan Stanley, which were scheduled to complete a sale of the debt to investors this week.
However, according to the Financial Times, the banks are now struggling to offload the debt due to volatile market conditions.
JPMorgan announced on Friday that completion of the sale would be delayed until the middle of this week, citing a delay in finalising the documentation around the US dollar loan portion of the deal.
According to the FT however, bond and loan fund managers who were approached to buy the debt demonstrated only “tepid” demand, despite being offered double-digit yields.
The banks began marketing the deal at a yield of around 10%, according to the broadsheet, but will now need to price the debt even higher.
When banks cannot sell underwritten deals to investors, they are forced to offer the debt at a discount and therefore suffer losses.
In order to minimise the impact, the banks underwriting the deal have already agreed to hold £760m of 888’s debt on balance sheet rather than trying to sell it. 888 declined to comment on the situation.
On top of macroeconomic factors including a sharp rise in inflation, some suggest investor appetite for the deal has been curtailed by the UK government’s highly anticipated review of the Gambling Act, which is expected to be announced this week.
The contents of the review could weigh heavy on 888’s business, with proposed maximum stake limits for online casino of between £2 and £5, as well as curbs on promotional offers and free bets, threatening to have an impact on firm’s bottom line.
Shares in the newly combined 888 business were readmitted to the London Stock Exchange this morning following the completion of the William Hill deal on Friday.