Scientific Games Divesting Lottery, Sports Betting Units, Eyes IPO or SPAC Deal
Scientific Games (NASDAQ:SGMS) inventory is rallying Tues after the gaming equipment maker said it testament disinvest its drawing direction and sports wagering units as voice of an ongoing effort to deleverage its equilibrate sheet.
The transactions, which are also aimed at unlocking shareholder value, could amount inwards the organize of an initial public offering (IPO), a merger with a special intent acquisition company (SPAC), an outright sales agreement or a combination with another entity. Las Vegas-based Scientific Games did not cater a timeline for when the divestures testament occur.
Today’s declaration reflects paint steps to optimise our portfolio and beef up our equipoise piece of paper past significantly de-levering while also targeting investments inward our largest growth opportunities,” said CEO Barry Cottle in a statement. “These steps testament speed up our track to get a content-led maturation troupe focused on leading in both land-based and digital markets.”
The word has Scientific Games caudex higher by almost sextuplet percent inward midday trading. The shares are upwards 83 percent year-to-date and 5.21 percent over the past times month.
In improver to manufacturing slot machines, Scientific Games also provides lottery services to states and wagering platforms to sportsbooks.
Scientific Games Stock Soaring Despite Debt Burden
During the 2020 coronavirus securities industry swoon, companies with week equilibrise sheets and luxuriously debt loads were uncovered and saw their shares tumble.
Scientific Games was no more exception. Its stock up resided around $30 prior to the pandemic forcing temporary shutdowns of domestic casinos. At its Mar 2020 nadir, the figure slumped as low-toned as $3.13, making it one of the genuinely singular redemption stories among gaming equities as it currently resides higher up $80.
Still, the one-armed bandit machine maker carries a massive $9.43 1000000000 in liabilities, which is nearly $2 one thousand million inward surplusage of its marketplace capitalization of $7.48 billion. As such, Scientific Games is exploring options to lose weight that debt load. For example, reports surfaced last-place month the companion is mulling an IPO inwards Australia to invoke cash.
What New Scientific Games Could Look Like
In the aforementioned statement, Scientific Games cautions investors that “there canful follow no more assurances” transactions for the drawing and sports betting businesses will be realized.
Assuming those moves perform come in to fruition, the “new” Scientific Games will comprise of traditional gaming and iGaming operations as wellspring as the company’s still real bet in online and social casino developer SciPlay (NASDAQ:SCPL). SciPlay equity is an increasingly valuable chip for the former parent company as that buy in is upward nearly 36 percent this year.
“Given this significant opportunity, we are targeting our digital businesses to follow like inwards size of it to the land-based gaming business organisation within leash years,” said Cottle.
Scientific Games did not guess the value of proposed IPO or SPAC merger for its drawing and sports betting units, but it is known that the lottery surgical operation is ace of the company’s paint revenue contributors.