Wed 03/17/2021 07:05 AM
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Relevant Item:
Lockup Agreement

Negotiations between Greek gaming company Intralot and a group of its 2024 bondholders have progressed and an announcement on the company’s debt restructuring deal can come in the next couple of weeks, sources close to the situation told Reorg.

The parties are discussing a series of potential amendments including the strengthening of the 2024 legal documentation, with possible changes to the restricted payment language and debt incurrence. The proposals also include a possible new security package including a first-ranking share pledge on Intralot’s non-U.S. businesses, and the potential conversion of some of the company’ 2024 notes into Intralot’s new U.S. secured debt using the company’s available debt capacity at its U.S. entity level, according to sources.

Holders of Intralot’s 2024 bonds include Morgan Stanley and Sand Grove, sources said. The 2024 bonds are quoted at around 52, sources added.

The company paid the half-yearly interest on its 2021 and 2024 notes due on Monday, March 15. It is in discussions with noteholders and will provide a further update regarding next steps in the near term.

Intralot proposed a debt restructuring deal on Jan. 14, which featured the exchange of €250 million of the 2021 subordinated notes into €205 million of senior secured notes due 2025 and a tender offer for the 2024 noteholders to swap part of their debt into up to 49% equity of the U.S. business of the group. The deal also offered certain 2024 noteholders, who are also part of the 2021 ad hoc group, an 18.7% stake in the U.S. business and cash fees in exchange guaranteeing a minimum tender of €68 million of the 2024 notes they hold.

The 2024 ad hoc bondholder group said on Jan. 15 that it looked forward to engaging with the company in connection with the proposed debt restructuring to determine whether the terms of a consensual restructuring transaction can be agreed.

Intralot’s 2021 notes’ lockup agreement, which was entered into with certain members of an ad hoc committee of 2021 noteholders, has a longstop date of June 30. The longstop date can be extended to Sept. 14 with lender consent, as reported. The parties agreed to enter into the lockup agreement in order to facilitate implementation of a restructuring. Intralot is planning to implement its deal using an out-of-court process or, as a backup option, an English law scheme of arrangement, according to the lockup agreement. With the current level of support from 2021 holders at about 82%, the group has not reached the 90% consent threshold required from the 2021 holders for a consensual debt exchange.

Reorg reported on Jan. 22 that an ad hoc group of Intralot’s 2024 noteholders could sue the Greek gaming group should it proceed with a J.Crew-style plan to transfer the U.S. business Intralot Inc. out of the 2024 notes’ restricted group and release its guarantee to implement its proposed debt restructuring.

The company has not commented in any detail on how it plans to implement the proposed deal but since it does not have more than €100 million of capacity for the restricted group to incur secured debt under the 2021 and 2024 notes, moving Intralot Inc. outside the restricted group could be an option. However, this is problematic as it would make the remaining 2024 notes structurally and contractually subordinated to the 2021 notes, when they are currently ranked pari passu.

The current proposal is illustrated below:

Intralot’s ad hoc group of 2024 noteholders is assisted by PJT and Dechert as financial and legal advisors. Holders of the 2021 notes are working with Houlihan Lokey and Millbank. The company is advised by Evercore and has retained Allen & Overy to assist in a strategic review of its capital structure.
Intralot SA
EBITDA Multiple
(EUR in Millions)
€18M Intralot Global Holdings BV Loan Agreement 1
EURIBOR + 1.650%
Total Bank Borrowings and Facilities
€250M Senior Notes (Facility A)
€473.8M Senior Notes (Facility B)
Total Senior Notes
Other Financial Debt 2
Total Other Debt
Lease Liabilities
Total Leases
Total Debt
Less: Cash and Equivalents
Net Debt
Plus: Market Capitalization
Enterprise Value
Operating Metrics
LTM Revenue
RCF Commitments
Less: Drawn
Plus: Cash and Equivalents
Total Liquidity
Credit Metrics
Gross Leverage
Net Leverage

Capital structure is post IFRS-16. EBITDA is the company's reported EBITDA from continuing operations. Market data as of Jan. 5. Cash includes €2.5M of short-term time deposits. Reorg EBITDA comprises the company's reported proportionate EBITDA of fully consolidated entities including EBITDA from equity investments in Peru, Greece, Taiwan and Bulgaria.
1. In February and March 2020 Intralot Global Holdings BV signed a loan agreement, with relevant securities on financial assets, amounting up to €18 million as a revolving facility. Loan agreement bears a floating reference rate (relevant bank’s cost of funding cost) plus a 1,65% margin.
2. €748.8M of total financial debt, less €11.3M lease liabilities, €713.6M bond debt and €17.2M bank debt.

-- Luca Rossi
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