Amaya Announces Debt Refinancing, Promises Continued Online-casino Growth
Canada’s Amaya Gaming, owners of prominent online poker brands PokerStars and Full Tilt, has released a summary of its 2015 Q2 results in which it states the company’s operations have continued to meet its financial goals as the company streamlines its new business-to-consumer (B2C) focus. Amaya hopes for increased growth with its relatively new online-casino and sports-betting offerings, the latter of which is just in the process of a full-scale rollout in selected European markets.
On the flip side, Amaya has all but wrapped up its enterprises on the business-to-business (B2B) side of operations. Just this week, Amaya wrapped up the sale of its Chartwell and Cryptologic divisions to another Canadian firm, NYX Gaming. NYX, which works exclusive as a B2B software provider, already has a business relationship in place with Amaya, employing its Open Gaming System (OGS) on the Amaya-owned Full Tilt Gaming site.
Chartwell’s and Cryptologic’s departure from the Amaya platform ranks puts the wraps on a series of moves by Amaya to divest itself of divisions other than its main PokerStars- and Full Tilt-branded offerings. Those have included:
- Cadillac Jack, Inc. (now owned by AGS, LLC; AGS is an affiliate of funds managed by Apollo Global Management, LLC (NYSE: APO), one of the controlling interests behind Caesars Entertainment);
- Diamond Game Enterprises (now a subsidiary of Innova Gaming Group Inc.;
- And, completing the series of moves, Chartwell and Cryptologic (moving on to be part of NYX Gaming’s offerings).
The sale of all these secondary divisions has helped Amaya reduce the massive debt load it incurred in acquiring Oldford Group, parent company of Stars and FTP, in a $4.9 billion blockbuster of a deal last summer. Still, with a maturing market and uncertain national regulatory regimes simply the way of the world for the online-gambling industry, Amaya has also announced a restructuring of some of its outstanding debt associated with last summer’s Stars acquisition.
According to the Q2 statement from Amaya, money from the sale of Chartwell and Cryptologic to NYX will join other liquid assets of Amaya’s allowing the company to refinance — and lower to $400 million — an existing $575 million loan incurred as part of the Stars/Tilt purchase. Amaya still owes over $800 million in direct loans, in addition to other forms of financing included in last year’s David-swallows-Goliath deal for PokerStars, the global market leader in online poker.
“The Corporation intends to fund the Repayment,” reads the statement from Amaya, “as well as fees and related costs, through the combination of an approximately US$400 million incremental first lien term loan and approximately US$195 million in cash, including cash on the balance sheet as well as from the anticipated net proceeds from the previously announced sale of the Chartwell and Cryptologic businesses to NYX Gaming Group Limited (TSXV: NYX) (“NYX”). The Corporation believes that the Refinancing will reduce certain debt service costs, including interest costs, and will thereby strengthen Amaya’s cash flow generation, liquidity and leverage profile.
In other financial specifics, Amaya announced that for the second quarter of 2015, it expects revenues to be in the CAD $314-318 million range (or about US $238-242 million). Already extracted from those numbers are $6 million paid by the company in value added taxes (VAT) paid in select European jurisdictions. As for EBITDA, perhaps the more important figure, Amaya has stated that the company’s numbers will again be in line with advance expectations, coming in at CAD $135-139 million, or USD $102-105 million.
Amaya’s ability to hit its expected targets resulted in a mild uptick in the company’s stock price in recent days.
One other interesting note appeared in the recent Amaya financial presser. The move to take PokerStars and Full Tilt from poker-only sites to those offering other forms of online gambling as well has already had a noticeable bottom-line impact. It’s too soon for the fledgling sports-book operations to have produced revenue, but the Stars- and Tilt-branded casino games first rolled out last year have been modestly but warmly welcomed by consumers. Such casino-game offerings now represent 12% of Amaya’s total revenue, not bad at all given the overall size of PokerStars and Full Tilt and those sites’ previous stance as poker-only offerings.