Is Entain moving forward or backwards with its new finance deal? The firm that reported a €3,5 billion 2020 revenue refinanced huge debt! (Photo by Shane on Unsplash)
Entain PLC, which was formerly GVC Holdings until it changed its name last year, has announced that they have secured a loan to cover the company’s corporate debt. The board at Entain successfully negotiated a $1.12 billion loan, with the agreement of it being under first-lien conditions.
Entain has ties across the globe, including the UK, Europe, and the USA. Its services stretch through online betting and iGaming services. Recently the UK listed company reported a 42% rise in revenue for Q2 of 2021, and its 2020 revenue came in at £3 billion (€ 3.5 billion) thanks to its key sports and games labels, which include well-known brands such as Party Poker, Party Casino, Casino Club, Foxy Bingo, BetMGM, Bwin, Ladbrokes & Coral, Neds, Gamebookers, and more..
Moreover, the British gambling group are currently registered on the FTSE100 with a share price, of 1822 gbx, at the time of writing. The news of the loan will no doubt have a positive effect on the share price and even more so with the upcoming trading result report coming in August.
Entain intends to use the loan for the purpose of refinancing their long-term corporate debt, currently standing at $774 million, with that scheduled to mature at the end of March 2024 while the new loan injects more capital into what is already a thriving business, hence financiers clearly see no issue in giving Entain further funds via dept. The firm clearly has sound liquidity with acid test ratios scoring low meaning this is a low geared business. Add the fact that the iGaming and sports betting industries are growing globally in both developed and developing regions, and any finance deal is low risk and good business for the financial institutions involved.
Securing the loan means that the company has extended its current loan maturity rates by 3 years. The borrowed money is due to mature on 29 March 2027 and is subject to the rate at the London Interbank, plus additional basis points of 250, which translates to 2.5%. The surplus $350 million of the loan will be used to accelerate Entain’s corporate development, with a particular focus on mergers and certain acquisition activities. There will also be enough room in the budget for developing investments and staff, who will assist with the upcoming games studio that is set to be finished at some point in late 2021. Entain expects both investments and staff to double.
Better than expected H1 results have led to Entain increasing its forecast for the entire year’s earnings. The forecast is expected to be in the £850-£900 million range, and Entain can put a lot of this down to the significant increase of the company’s sports betting vertical market.
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