Improved Terms and Enhanced Liquidity to Support Future Growth
London, UK- On Monday, international sports betting and gambling company Entain has successfully repriced its existing Term Loan B facilities and secured additional funding through fungible add-ons, enhancing its financial flexibility and extending debt maturities.
Details of the Repricing and Add-Ons
- USD Term Loan B: The company has effectively reduced the margin on its existing $1,740 million loan by 75 basis points, bringing it down to 275 basis points. Additionally, a previously applied credit adjustment spread of 10 basis points has been removed. Entain has also placed an additional $500 million at the same revised margin, allocated at an original issue discount of 99.875.
- EUR Term Loan B: Entain also announced the successful repricing of its €1,030 million loan, reducing the margin by 50 basis points to 325 basis points. A further €235 million has been added under the same terms, with an allocation at an original issue discount of 99.75.
Use of Proceeds and Financial Strategy
The funds from these add-ons, which are expected to settle in mid-May 2024, will be converted to GBP and used to enhance the company’s liquidity profile. Specifically, £300 million of the net proceeds will be utilized to repay a bank loan incurred in Q1 2024. The remaining approximately £295 million in net proceeds, after accounting for fees, will serve as incremental liquidity.
This strategic financial maneuver is designed to be net debt neutral while bolstering the group’s liquidity by approximately £295 million. It also extends the maturity profiles of the group’s debt by replacing a bank loan due in 2026 with term loans set to mature in 2028 and 2029.
Financial Outlook
Despite these changes, Entain maintains its cash interest costs guidance for the current financial year. However, due to slower than anticipated reductions in interest rates across the economic landscape, the company has adopted a more conservative stance on its interest cost projections for the remainder of the year. As a result, the revised guidance for cash interest for FY24 is approximately £265 million. The Profit & Loss (P&L) interest charge, which adjusts for IFRS16 interest and fee amortization, is projected to be around £285 million.
Implications for Stakeholders
These refinancing actions reinforce Entain’s attempt at maintaining a robust balance sheet while strategically positioning itself for sustained growth and profitability. By securing more favorable terms and enhancing liquidity, Entain positions itself to navigate the dynamic economic environment and continue its trajectory of strategic investments and expansion.