LAS VEGAS–(BUSINESS WIRE)–Scientific Games Corporation, doing enterprise as Light & Wonder, (NASDAQ: SGMS) (“Mild & Surprise” or the “Firm”) as we speak introduced it achieved a serious milestone in remodeling and deleveraging its steadiness sheet. The Firm retired its current $four.zero billion time period mortgage and redeemed $three.zero billion of its secured and unsecured notes utilizing proceeds from the divestiture of the Lottery Enterprise and a brand new $2.2 billion time period mortgage facility. Along with the brand new time period mortgage, the Firm additionally entered into a brand new $750 million revolving credit score facility.
These actions mirror profitable execution of Mild & Surprise’s balanced and opportunistic strategy to capital allocation which prioritizes:
- Precedence #1: Debt discount to a goal internet debt leverage ratio vary2 of two.5x to three.5x, with as we speak’s introduced actions representing important progress on this precedence, lowering the principal quantity of debt excellent by $four.Eight billion. The Firm estimates an annualized money curiosity financial savings of $225.zero million on account of these actions. As well as, the covenant-light nature of the brand new time period mortgage facility gives Mild & Surprise with the flexibleness to execute on its capital allocation priorities. Taking the refinancing transactions under consideration, mixed with the beforehand introduced sale of our Lottery Enterprise, the Firm’s adjusted internet debt reflecting refinancing transactions and the Lottery Enterprise sale2 and adjusted internet debt leverage ratio reflecting refinancing transactions and the Lottery Enterprise sale2 as of December 31, 2021 would have been roughly $three.2 billion and three.9x, in comparison with $Eight.2 billion and 6.2x reported as of December 31,2021, respectively.
- Precedence #2: Share buy-backs to return substantial capital to shareholders now and sooner or later, with the Firm persevering with to actively repurchase shares below its $750 million share repurchase authorization.
- Precedence #three: Disciplined funding in key progress alternatives, prioritizing utilizing capital for buy-backs, debt discount and natural investments until M&A delivers higher long-term worth.
“With the sale of our Lottery Enterprise we’re making speedy progress executing on our technique to remodel our enterprise,” mentioned Mild & Surprise Chief Govt Officer Barry Cottle. “We see large alternative to create worth for our shareholders and different stakeholders by constructing nice video games and franchises to entertain our gamers wherever and each time they wish to play. The steps we’re taking to strengthen our steadiness sheet will improve our potential to create worth and the velocity at which we will unlock that worth and obtain our imaginative and prescient of changing into the main cross-platform international recreation firm.”
Mild & Surprise Chief Monetary Officer Connie James added, “The debt discount and refinancing is one more monumental milestone in our efforts to strengthen our monetary place and advance our capital allocation technique. We had been more than happy with the market’s response to our debt transaction, which allowed us to realize favorable pricing and enhance our credit score scores. This transaction optimizes our capital construction and gives the steadiness sheet integrity and monetary flexibility to spend money on future progress. We’re strongly positioned to drive large shareholder worth.”
Particulars of the Transaction
The brand new first lien time period mortgage facility has a principal steadiness of $2.2 billion maturing in 2029. Loans below the brand new first lien time period mortgage facility will, on the Firm’s possibility, initially bear curiosity at both (i) Adjusted Time period SOFR Fee (as outlined within the credit score agreements), plus three.00% or (ii) a base fee plus 2.00%.
The Firm additionally efficiently obtained commitments for a $750.zero million asset-based revolving credit score facility maturing in 2027. The brand new revolving credit score facility changed the Firm’s current $650.zero million revolving credit score facility maturing in 2024. Loans below the brand new revolving facility will, on the Firm’s possibility, initially bear curiosity at both (i) Adjusted Time period SOFR Fee (or an alternate benchmark fee for non-US greenback borrowings), plus 2.00% or (ii) ABR plus 1.00%.
With the addition of the brand new time period mortgage facility, the Firm’s weighted common lifetime of debt elevated to roughly 6.four years. The brand new credit score facility is secured by considerably all property of the Firm and any of its current or future materials home subsidiaries, topic to customary exceptions.
The proceeds of the brand new time period mortgage facility, together with a portion of the $5.zero billion of internet after-tax money proceeds of the sale of the Firm’s Lottery Enterprise, had been used to prepay in full and terminate all commitments below the Firm’s current $four.zero billion time period mortgage facility maturing in 2024; to redeem in full its 5.000% Senior Secured Notes due 2025, three.375% Senior Secured Euro Notes due 2026, 5.500% Senior Unsecured Euro Notes due 2026, and eight.250% Senior Unsecured Notes due 2026; and to pay accrued and unpaid curiosity thereon plus any associated premiums, charges and bills. Complete principal quantity of debt retired or refinanced was $7.zero billion.
This press launch doesn’t represent a suggestion to promote or the solicitation of a suggestion to purchase any safety and shall not represent a suggestion, solicitation or sale of any safety in any jurisdiction through which such providing, solicitation or sale can be illegal.
© 2022 Scientific Video games Company. All rights reserved.
About Mild & Surprise
Scientific Video games Company, doing enterprise as Mild & Surprise, is a world chief in cross-platform video games and leisure. The Firm brings collectively over 5,600 staff from six continents to attach content material between land-based and digital channels with unmatched know-how and distribution. Guided by a tradition that values daring teamwork and creativity, the Firm builds new worlds of play, growing recreation experiences cherished by gamers across the globe. Its OpenGaming™ platform powers the most important digital-gaming community within the trade. The Firm is dedicated to the very best requirements of integrity, from selling participant duty to implementing sustainable practices. To be taught extra, go to lnw.com.
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1 Principal quantity of excellent debt as of December 31, 2021 in comparison with such principal quantity adjusted for the influence of the April 14, 2022 refinancing transactions described herein. Check with the principal debt steadiness supplemental info on the finish of this launch.
2 Represents a non-GAAP monetary measure. Further info on non-GAAP monetary measures introduced herein is offered on the finish of this launch.
three Time period mortgage rate of interest calculated primarily based on the present rate of interest, undrawn revolving credit score facility, and a portion of 2025 Secured Notes reflective of an rate of interest of roughly 2.946% on account of sure cross-currency rate of interest swap agreements, extra totally described within the principal debt steadiness supplemental info on the finish of this launch.
Principal Debt Steadiness Supplemental Info
(unaudited, $ in hundreds of thousands) | Last Maturity | Fee(s) | Excellent Principal Worth As of Dec. 31, 2022 |
April 14, 2022 Refinancing Impression(1) |
Excellent
of Dec. 31, 2021- |
|||||||||||
Senior Secured Credit score Services: | ||||||||||||||||
SGI Time period Mortgage B-5 |
2024 |
variable |
$ |
four,018 |
$ |
(four,018 |
) |
$ |
– |
|||||||
New Time period Mortgage |
2029 |
variable |
|
– |
|
2,200 |
|
|
2,200 |
|||||||
SGI Senior Notes: | ||||||||||||||||
2025 Secured Notes(2) |
2025 |
5.000 |
% |
|
1,250 |
|
(1,250 |
) |
|
– |
||||||
2026 Secured Euro Notes |
2026 |
three.375 |
% |
|
367 |
|
(367 |
) |
|
– |
||||||
2025 Unsecured Notes |
2025 |
Eight.625 |
% |
|
550 |
|
– |
|
|
550 |
||||||
2026 Unsecured Euro Notes |
2026 |
5.500 |
% |
|
283 |
|
(283 |
) |
|
– |
||||||
2026 Unsecured Notes |
2026 |
Eight.250 |
% |
|
1,100 |
|
(1,100 |
) |
|
– |
||||||
2028 Unsecured Notes |
2028 |
7.000 |
% |
|
700 |
|
– |
|
|
700 |
||||||
2029 Unsecured Notes |
2029 |
7.250 |
% |
|
500 |
|
– |
|
|
500 |
||||||
Different(three) |
2023 |
four.089 |
% |
|
four |
|
– |
|
|
four |
||||||
Complete long-term debt excellent |
$ |
Eight,772 |
$ |
(four,818 |
) |
$ |
three,954 |
|||||||||
(1) Represents excellent principal worth debt balances as of December 31, 2021 that conforms to the presentation present in Word 15 to the Consolidated Monetary Statements in our 2021 Annual Report on Type 10-Okay adjusted for the influence of April refinancing transactions described on this launch and $98 million principal discount associated to 2022 funds earlier than the refinancing transactions. | ||||||||||||||||
(2) We entered into sure cross-currency rate of interest swap agreements to realize extra enticing rates of interest by successfully changing $460 million of the fixed-rate, U.S. Greenback-denominated 2025 Secured Notes, together with the semi-annual curiosity funds by means of October 2023, to a fixed-rate Euro-denominated debt, with a set annual weighted common rate of interest of roughly 2.946%. | ||||||||||||||||
(three) Primarily comprised of sure income transactions introduced as debt in accordance with ASC 470. |
Non-GAAP Reconciliations |
|||||||||||
Reconciliation of Adjusted Web Debt Reflecting Refinancing Transactions and the Lottery Enterprise Sale and Adjusted Web Debt Leverage Ratio Reflecting Refinancing Transactions and the Lottery Enterprise Sale ($ in billions, aside from ratio, unaudited) |
|||||||||||
December 31, 2021 |
Refinancing Sale Changes |
Adjusted Web Debt |
|||||||||
Mixed AEBITDA(1) |
$ |
1.three |
|
(zero.5 |
) |
(four |
) |
$ |
zero.Eight |
|
|
Complete debt |
$ |
Eight.7 |
|
$ |
Eight.7 |
|
|||||
Add: Unamortized debt low cost/premium and deferred financing prices, internet |
|
zero.1 |
|
|
zero.1 |
|
|||||
Add: Impression of trade fee(2) |
|
zero.1 |
|
|
zero.1 |
|
|||||
Much less: Debt not requiring money reimbursement and different |
|
(zero.zero |
) |
|
(zero.zero |
) |
|||||
Principal face worth of debt excellent |
|
Eight.Eight |
|
(four.9 |
) |
(5 |
) |
|
four.zero |
|
|
Much less: Mixed Money and money equivalents(three) |
|
zero.6 |
|
zero.1 |
|
(6 |
) |
|
zero.7 |
|
|
Web debt |
$ |
Eight.2 |
|
$ |
three.2 |
|
|||||
Web debt leverage ratio |
6.2x |
|
three.9x |
||||||||
(1) Further info on sure non-GAAP monetary measures introduced herein (Mixed AEBITDA, Web debt and Web debt leverage ratio) is offered in within the Firm’s fourth quarter and full yr 2021 earnings launch furnished with our Present Report on Type Eight-Okay dated March 1, 2022. | |||||||||||
(2) Impression of trade fee is the influence of translating our excellent 2026 Secured Euro Notes and 2026 Unsecured Euro Notes, translated at fixed overseas trade fee at issuance of those notes. | |||||||||||
(three) Consists of money and money equivalents of each persevering with operations and discontinued operations, because the mixed quantity is offered for debt funds. | |||||||||||
(four) Adjusted for Lottery Enterprise discontinued operations and fairness investments included in persevering with operations. | |||||||||||
(5) Represents a discount of principal quantity of excellent debt as of December 31, 2021 for the influence of April 14, 2022 refinancing transactions described herein. Check with the principal debt steadiness supplemental info on the finish of this launch. | |||||||||||
(6) Consists of estimated pending Austria Lottery Enterprise proceeds of roughly $104 million, internet of money transferred as part of the sale. | |||||||||||
Notes: The premise of accounting and presentation of economic statements by the Lottery and Sports activities Betting Companies sooner or later in reference to their divestiture and deliberate divestiture, respectively, could differ materially from these of the Firm, together with as introduced herein or in our fourth quarter and full yr 2021 earnings launch furnished with our Present Report on Type Eight-Okay dated March 1, 2022.
Resulting from rounding and presentation in billions, sure subtotals could not foot. |
Reconciliation of Consolidated AEBITDA – Persevering with Operations, Discontinued Operations, Mixed AEBITDA ($ in billions, unaudited)
12 months Ended | |||
December 31, | |||
2021 |
|||
Reconciliation of Web Earnings Attributable to SGC to Consolidated AEBITDA – Persevering with Operations | |||
Web earnings attributable to SGC |
$zero.four |
||
Web earnings attributable to noncontrolling curiosity |
zero.zero |
||
Web earnings from discontinued operations, internet of tax |
(zero.four) |
||
Web earnings from persevering with operations |
$zero.zero |
||
Restructuring and different |
zero.2 |
||
Depreciation, amortization and impairments |
zero.four |
||
Curiosity expense |
zero.5 |
||
Inventory-based compensation |
zero.1 |
||
Earnings tax profit and different, internet(1) |
(zero.four) |
||
Consolidated AEBITDA – persevering with operations(2) |
$zero.Eight |
||
Reconciliation of Web Earnings from Discontinued Operations, Web of Tax to AEBITDA from Discontinued Operations | |||
Web earnings from discontinued operations, internet of tax |
$zero.four |
||
Earnings tax profit |
zero.1 |
||
Depreciation, amortization and impairments |
zero.1 |
||
EBITDA from fairness investments(three) |
zero.1 |
||
Different, internet(four) |
(zero.1) |
||
AEBITDA from discontinued operations and different(5) |
$zero.5 |
||
Mixed AEBITDA(6) |
$1.three |
||
(1) Different consists of acquire on remeasurement of debt and different (earnings) expense, internet. | |||
(2) Check with the Consolidated AEBITDA – persevering with operations and AEBITDA from discontinued operations definitions beneath. | |||
(three) EBITDA from fairness investments is a non-GAAP monetary measure reconciled to probably the most straight comparable GAAP measure within the accompanying supplemental desk beneath. | |||
(four) Consists of Restructuring and different, earnings from fairness investments, stock-based compensation and different (earnings) expense, internet. | |||
(5) AEBITDA from discontinued operations, a non-GAAP measure, is derived primarily based on the historic information and consists of solely these direct prices which are allotted to discontinued operations. | |||
(6) Mixed AEBITDA consists of Consolidated AEBITDA – persevering with operations, AEBITDA from discontinued operations and EBITDA from fairness investments included in persevering with operations of $Eight million. Check with non-GAAP monetary measures definitions beneath for additional particulars. | |||
Word: Resulting from rounding and presentation in billions, sure subtotals could not foot. |
Reconciliation of Earnings from Fairness Investments to EBITDA from Fairness Investments ($ in hundreds of thousands, unaudited) |
||||||||||
12 months Ended | ||||||||||
December 31, | ||||||||||
2021 |
||||||||||
Mixed Earnings (loss) from fairness investments(1) |
$47 |
|||||||||
Add: Earnings tax expense |
10 |
|||||||||
Add: Depreciation, amortization and impairments |
32 |
|||||||||
Add: Curiosity earnings, internet and different |
(1) |
|||||||||
Mixed EBITDA from fairness investments(2) |
$88 |
|||||||||
(1) Consists of $5 million of earnings from fairness funding included in persevering with operations. | ||||||||||
(2) Consists of $Eight million of EBITDA from fairness funding included in persevering with operations. |
Ahead-Trying Statements
On this press launch, the Firm makes “forward-looking statements” throughout the which means of the U.S. Non-public Securities Litigation Reform Act of 1995. Ahead-looking statements may be recognized by phrases resembling “will,” “could,” and “ought to.” These statements are primarily based upon administration’s present expectations, assumptions and estimates and should not ensures of timing, future outcomes or efficiency. Due to this fact, you shouldn’t depend on any of those forward-looking statements as predictions of future occasions. Precise outcomes could differ materially from these contemplated in these statements as a consequence of a wide range of dangers, uncertainties and different elements, together with these elements described in our filings with the Securities and Trade Fee (the “SEC”), together with the Firm’s present experiences on Type Eight-Okay, quarterly experiences on Type 10-Q and its annual report on Type 10-Okay that was filed with the SEC on March 1, 2022 (together with below the headings “Ahead-Trying Statements” and “Danger Components”). Ahead-looking statements converse solely as of the date they’re made and, aside from the Firm’s ongoing obligations below the U.S. federal securities legal guidelines, the Firm undertakes no obligation to publicly replace any forward-looking statements whether or not on account of new info, future occasions or in any other case.
Non-GAAP Monetary Measures
Web Debt Leverage Ratio
Web debt is outlined as whole principal face worth of debt excellent, probably the most straight comparable GAAP measure, much less mixed money and money equivalents. Principal face worth of debt excellent consists of the face worth of debt issued below Senior Secured Credit score Services, Senior Notes and Subordinated Notes, that are all described in Word 15 of the Firm’s Annual Report on Type 10-Okay for the yr ended December 31, 2021, but it surely doesn’t embrace different long-term obligations of $four million primarily comprised of sure income transactions introduced as debt in accordance with ASC 470. As well as, principal face worth of debt excellent with respect to the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes are translated on the fixed overseas trade fee at issuance of those notes as these quantities stay payable on the unique issuance quantities in Euro. Web debt leverage ratio represents Web debt divided by Mixed AEBITDA (as outlined beneath).
The forward-looking non-GAAP monetary measure focused internet debt leverage ratio is introduced on a supplemental foundation and doesn’t mirror Firm steerage. We’re not offering a forward-looking quantitative reconciliation of focused internet debt leverage ratio to probably the most straight comparable GAAP measure as a result of we’re unable to foretell with cheap certainty the last word end result of sure important gadgets with out unreasonable effort. This stuff are unsure, rely upon varied elements, and will have a cloth influence on GAAP reported outcomes for the related interval.
Adjusted Web Debt Reflecting Refinancing Transactions and the Lottery Enterprise Sale and Adjusted Web Debt Leverage Ratio Reflecting Refinancing Transactions and the Lottery Enterprise Sale
Adjusted internet debt reflecting refinancing transactions and the Lottery Enterprise sale, as used herein, is a non-GAAP monetary measure outlined as internet debt as of December 31, 2021, plus pending Austria Lottery Enterprise proceeds of roughly $104 million much less money held at Lottery Enterprise. Adjusted internet debt leverage ratio reflecting refinancing transactions and the Lottery Enterprise sale, as used herein, is a non-GAAP monetary measure outlined as adjusted internet debt reflecting refinancing transactions and the Lottery Enterprise sale divided by Mixed FY 2021 AEBITDA, excluding Lottery Enterprise operations and sure immaterial persevering with operations fairness methodology investments.
Mixed AEBITDA
Mixed AEBITDA, as used herein, is a non-GAAP monetary measure that mixes Consolidated AEBITDA (representing our outcomes of continuous operations), AEBITDA from discontinued operations, and EBITDA from fairness investments included in persevering with operations and is introduced as a supplemental disclosure and extra totally described within the Firm’s fourth quarter and full yr 2021 earnings launch furnished with our Present Report on Type Eight-Okay dated March 1, 2022.
Consolidated AEBITDA (representing AEBITDA from persevering with operations)
Consolidated AEBITDA, as used herein, is a non-GAAP monetary measure that’s introduced as a supplemental disclosure of the Firm’s persevering with operations and is reconciled to internet earnings (loss) from persevering with operations as probably the most straight comparable GAAP measure, as set forth within the schedule above. Consolidated AEBITDA shouldn’t be thought of in isolation of, as an alternative to, or superior to, the consolidated monetary info ready in accordance with GAAP, and needs to be learn together with the Firm’s monetary statements filed with the SEC. Consolidated AEBITDA could differ from equally titled measures introduced by different corporations. Consolidated AEBITDA consists of the next changes: (1) internet earnings attributable to noncontrolling curiosity; (2) internet earnings from discontinued operations, internet of tax; (three) restructuring and different, which incorporates fees or bills attributable to: (i) worker severance; (ii) administration restructuring and associated prices; (iii) restructuring and integration; (iv) price financial savings initiatives; (v) main litigation; and (vi) acquisition prices and different uncommon gadgets; (four) depreciation and amortization expense and impairment fees and goodwill impairments; (5) change in truthful worth of investments and acquire (loss) on remeasurement of debt; (6) curiosity expense; (7) earnings tax profit; (Eight) stock-based compensation; and (9) different (earnings) expense, internet together with overseas foreign money (beneficial properties), and losses and earnings from fairness investments.
AEBITDA from Discontinued Operations
AEBITDA from discontinued operations, as used herein, is a non-GAAP monetary measure that’s introduced as a supplemental disclosure for the Firm’s discontinued operations and is reconciled to internet earnings from discontinued operations, internet of tax as probably the most straight comparable GAAP measure, as set forth within the schedule above. AEBITDA from discontinued operations shouldn’t be thought of in isolation of, as an alternative to, or superior to, the consolidated monetary info ready in accordance with GAAP, and needs to be learn together with the Firm’s monetary statements filed with the SEC. AEBITDA from discontinued operations could differ from equally titled measures introduced by different corporations. AEBITDA from discontinued operations consists of the next changes: (1) restructuring and different, which incorporates fees or bills attributable to: (i) worker severance; (ii) administration restructuring and associated prices; (iii) restructuring and integration; (iv) price financial savings initiatives; (v) main litigation; and (vi) acquisition prices and different uncommon gadgets; (2) depreciation and amortization expense and impairment fees and goodwill impairments; (three) earnings tax profit; and (four) stock-based compensation and different, internet. Along with the previous changes, we exclude (earnings) loss from fairness investments and add (with out duplication) discontinued operations professional rata share of EBITDA from fairness investments, which represents their share of earnings (whether or not or not distributed) earlier than earnings tax expense, depreciation and amortization expense, and curiosity expense, internet of our joint ventures and minority investees, which is included in our calculation of AEBITDA from discontinued operations.
EBITDA from Fairness Investments
EBITDA from fairness investments, as used herein, represents our share of earnings (loss) (whether or not or not distributed to us) plus earnings tax expense, depreciation and amortization expense (inclusive of amortization of funds made to clients for Lotterie Nazionali S.r.l.), curiosity (earnings) expense, internet, and different non-cash and strange gadgets from our joint ventures and minority investments. EBITDA from fairness investments is a non-GAAP monetary measure that’s introduced as supplemental disclosure for illustrative functions solely and is reconciled to earnings (loss) of fairness investments, probably the most straight comparable GAAP measure, in a schedule above.