Everi Holdings is took big steps to improve its debt structure and cash flow this week with the announcements of a new $375 million bond issuance and the repricing of a $820 million loan.
On Tuesday, the gaming manufacture and payments systems provider signaled its intent to issue $375 million in new notes that will come due in 2025. These proceeds will be used to fully redeem a set of existing bonds worth $350 million that are set to expire in 2022 and carry a 10 percent interest rate.
On Monday, Everi announced that it had completed a repricing of a $820 million term loan that will shed 100 basis points off of the interest rate – from LIBOR plus 4.50 percent to LIBOR plus 3.50 percent (LIBOR is the benchmark interest rate at which the world’s banks lend to one another).
As a 0.25 percent interest rate reduction amounts to $2 million in yearly savings, the move is expected to save the company $8.2 million in annual interest payments and expands upon similar restructuring deals completed in the spring.
“This repricing provides another important update to our capital structure,” said Randy Taylor, executive vice president and chief financial officer, in a statement.
“We continue to reduce our annual cash interest costs and improve our ability to generate additional free cash flow in future periods, which provides opportunities for incremental deleveraging and the creation of new value for our shareholders,” Taylor continued.
The new notes and restructuring reflect what the company had signaled during its third quarter earnings call on October 30, when it reported its total debt to be $1.7 billion at a weighted interest rate of 7.0 percent.
“We expect the debt markets to receive these potential transactions favorably and could result in meaningful reductions in our weighted average cost of interest,” Taylor said on the call. “Our goal is to continue to reduce annual cash interest expense and in the case of the senior unsecured notes to also extend their maturities past that of the existing term loan.”
E“If we are able to complete either of these or both we believe we will be better positioned to allocate our growing free cash flow to reduce leverage in future periods,” he continued.
