888 chips away at debt via marketing of €200m secured notes

888 Holdings has announced a new tactic in its debt redt reduction strategy by using its 888 Acquisitions Limited subsidiary.

The international gambling group intends to market €200m in senior secured notes, consisting of Senior Secured Fixed Rate Notes due 2027 and euro-denominated Senior Secured Floating Rate Notes due 2028.

Functioning as an offering exempt from the registration requirements of the US Securities Act, the notes are being offered as additional notes under the indenture date of 19 July 2022.

For this date, 888 Acquisitions issued €400m Senior Secured Fixed Rate Notes due 2027 and €300m Senior Secured Floating Rate Notes due 2028.

888’s statement detailed: “The company will use the gross proceeds of the Offering to repay and permanently cancel the same amount of its existing indebtedness under the sterling-denominated term loan A facility made available to the Issuer pursuant to a senior facilities agreement dated 29 June 2022 (as amended and restated on 19 July 2022). 

“The company will transact appropriate hedging arrangements, and the overall exercise is not expected to materially impact the Company’s overall cost of debt, cash interest costs or leverage ratio.”

Reducing net debt was highlighted as a key corporate target by 888 in an update to its LSE investors last week, as the firm seeks to leverage its enlarged status following the acquisition of William Hill earlier this year.

Specifically, 888 has set out to reach a net debt of less than 3.5x existing EBITDA targets, whilst targeting equity growth drivers to secure earnings per share (EPS) of 35 pence.

Although the takeover of William Hill has further broadened 888’s brand portfolio and enhanced its standing in the sportsbook markets, the transaction has come at a heavy cost, driving up the firm’s debt to over £1.8bn.

To address this, 888 outlined that ‘in the coming weeks and months’ it may look to access debt capital markets to repay loans of up to £347m which were taken out to redeem William Hill 2026 Notes.

Itai Pazner, 888 CEO, explained: “While our financial leverage is currently higher than our mid-term target, our streamlined operations and capital discipline will give us a clear path to deleverage to less than 3.5x by the end of 2025.

“Our long-term potential remains exciting. Building our unified tech platform will present us with real future growth opportunities as we take advantage of our world class brands, product and content leadership, and customer excellence to set our business for the next decade of growth.”