Light & Wonder has completed its debt refinancing transaction following the divestiture of its lottery business, more than halving its outstanding debt to $4bn in the process.
Aiming to deleverage its balance sheet and improve its credit profile, L&W embarked on the refinancing of its liabilities and reduced its adjusted net debt leverage ratio to below 3.9x from 6.2x.
The company was largely aided by the sale of its lottery business to Brookfield Business Partners, completed earlier this month, with the sale allowing it to retire its existing $4bn term loan and redeem $3bn of its secured and unsecured notes. Furthermore, it has secured a new $2.2 billion term loan facility which enables a $750 million revolving credit facility.
“With the sale of our Lottery Business, we are making rapid progress executing on our strategy to transform our business,” said the firm’s CEO Barry Cottle.
“We see tremendous opportunity to create value for our shareholders and other stakeholders by building great games and franchises to entertain our players wherever and whenever they want to play. The steps we are taking to strengthen our balance sheet will enhance our ability to create value and the speed at which we can unlock that value and achieve our vision of becoming the leading cross-platform global game company.”
The transaction has been earmarked as a key pillar in achieving three key corporate goals, the first of which is reducing its adjusted net debt leverage ratio to between 2.5x and 3.5x.
Other corporate aims catalysed by the transaction include share buy-backs to maximise shareholder value and returns, and ‘disciplined investment in key growth opportunities’, with a focus on organic growth unless greater long-term value is found in M&As.
Under the terms of the translation, the firm has firstly taken on a loan of $2.2bn maturing in 2029, which has an interest rate of either Adjusted Term SOFR Rate, plus 3% or a base rate plus 2.00% at L&W’s discretion.
Additionally, the $750m revolving credit facility is set to mature in 2027 and will replace the $650m revolving credit facility maturing in 2024.
Connie James, L&W’s CFO, added: “The debt reduction and refinancing is yet another monumental milestone in our efforts to strengthen our financial position and advance our capital allocation strategy. We were very pleased with the market’s response to our debt transaction, which allowed us to achieve favorable pricing and improve our credit ratings.
“This transaction optimises our capital structure and provides the balance sheet integrity and financial flexibility to invest in future growth. We are strongly positioned to drive tremendous shareholder value.”