Intralot SA
Ad Hoc Group of Intralot 2024 Holders Unhappy With Restructuring Proposal, Expected to Seek Further Negotiations With Company
Thu 01/14/2021 13:51 PM
Intralot’s 2024 bondholders are expected to seek negotiations with the Greek gaming company after it made a debt proposal this morning, sources told Reorg. The proposed debt restructuring features an offer to exchange some of the €473.8 million notes due 2024 into up to a 49% stake of Intralot's U.S. business with following forward projections. Continue reading for the EMEA Core Credit by Reorg team's update on Intralot's debt restructuring, and request a trial for access to more coverage of stressed, distressed and high-yield credits in the region.
This morning, Intralot announced it entered into a lockup agreement with an ad hoc group of noteholders holding more than 75% of its €250 million senior unsecured notes due 2021. Under the terms of the transaction, the 2021 notes are to be exchanged into €205 million of senior secured notes due 2025.
It remains unclear how the company intends to raise €205 million of new secured debt when only €100 million is permitted under its debt documentation, or whether some interpretation of the existing covenants can lead to raising a higher amount, some sources said. The offering memorandum and EMEA Covenants preliminary analysis of the 2024 notes can be found HERE.
The ad hoc group of 2024 noteholders are advised by PJT and Dechert as financial and legal advisors, respectively. 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.
Given that Intralot bought back €26.2 million of the 2024 notes, and €68 million of the 2024 bondholders have agreed to exchange their notes into 18.7% of the share capital of a vehicle holding the U.S. business, if no further 2024 notes were to be exchanged, there would be €406 million of notes outstanding.
Sources suggested that at minimum about €300 million of the 2024 bonds and a maximum of about €406 million of the 2024 notes would remain on the balance sheet with a maturity extension until 2025 under the plan based on the amount of noteholders choosing to participate in the exchange.
The original €500 million of the 2024 notes was reduced by a bond buyback of €26 million and, as per the restructuring proposal, €68 million by value of the bondholders have already guaranteed to exchange the notes into 18.7% of the share capital of the TopCo, Intralot’s U.S. business. Under this backstop commitment, the holders will receive a cash fee of between 4% and 7.5% of the backstopped amount, depending on the amount of notes validly tendered by other holders in the 2024 note exchange.
Members of the 2021 ad hoc group also hold in excess of 13% of the €500 million senior unsecured notes due 2024.
-- Connor Lovell, Luca Rossi, Aurelia Seidlhofer
This morning, Intralot announced it entered into a lockup agreement with an ad hoc group of noteholders holding more than 75% of its €250 million senior unsecured notes due 2021. Under the terms of the transaction, the 2021 notes are to be exchanged into €205 million of senior secured notes due 2025.
It remains unclear how the company intends to raise €205 million of new secured debt when only €100 million is permitted under its debt documentation, or whether some interpretation of the existing covenants can lead to raising a higher amount, some sources said. The offering memorandum and EMEA Covenants preliminary analysis of the 2024 notes can be found HERE.
The ad hoc group of 2024 noteholders are advised by PJT and Dechert as financial and legal advisors, respectively. 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.
Given that Intralot bought back €26.2 million of the 2024 notes, and €68 million of the 2024 bondholders have agreed to exchange their notes into 18.7% of the share capital of a vehicle holding the U.S. business, if no further 2024 notes were to be exchanged, there would be €406 million of notes outstanding.
Sources suggested that at minimum about €300 million of the 2024 bonds and a maximum of about €406 million of the 2024 notes would remain on the balance sheet with a maturity extension until 2025 under the plan based on the amount of noteholders choosing to participate in the exchange.
The original €500 million of the 2024 notes was reduced by a bond buyback of €26 million and, as per the restructuring proposal, €68 million by value of the bondholders have already guaranteed to exchange the notes into 18.7% of the share capital of the TopCo, Intralot’s U.S. business. Under this backstop commitment, the holders will receive a cash fee of between 4% and 7.5% of the backstopped amount, depending on the amount of notes validly tendered by other holders in the 2024 note exchange.
Members of the 2021 ad hoc group also hold in excess of 13% of the €500 million senior unsecured notes due 2024.
|
09/30/2020 |
EBITDA Multiple |
|||
|---|---|---|---|---|
|
(EUR in Millions) |
Amount |
Maturity |
Rate |
Book |
|
|
||||
|
€18M Intralot Global Holdings BV Loan Agreement 1 |
17.2 |
|
EURIBOR + 1.650% |
|
|
Total Bank Borrowings and Facilities |
17.2 |
0.3x |
||
|
€250M Senior Notes (Facility A) |
250.0 |
Sep-15-2021 |
6.750% |
|
|
€473.8M Senior Notes (Facility B) |
473.8 |
Sep-15-2024 |
5.250% |
|
|
Total Senior Notes |
723.8 |
13.7x |
||
|
Other Financial Debt 2 |
6.7 |
|
|
|
|
Total Other Debt |
6.7 |
13.8x |
||
|
Lease Liabilities |
11.3 |
|
|
|
|
Total Leases |
11.3 |
14.0x |
||
|
Total Debt |
758.9 |
14.0x |
||
|
Less: Cash and Equivalents |
(107.2) |
|||
|
Net Debt |
651.7 |
12.0x |
||
|
Plus: Market Capitalization |
24.2 |
|||
|
Enterprise Value |
675.9 |
12.5x |
||
|
Operating Metrics |
||||
|
LTM Revenue |
431.1 |
|||
|
LTM Reported EBITDA |
54.2 |
|||
|
LTM Reorg EBITDA |
53.3 |
|||
|
|
||||
|
Liquidity |
||||
|
RCF Commitments |
18.0 |
|||
|
Less: Drawn |
(17.2) |
|||
|
Plus: Cash and Equivalents |
107.2 |
|||
|
Total Liquidity |
108.0 |
|||
|
Credit Metrics |
||||
|
Gross Leverage |
14.0x |
|||
|
Net Leverage |
12.0x |
|||
|
Notes:
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. |
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-- Connor Lovell, Luca Rossi, Aurelia Seidlhofer
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