Gambling.com Group Secures New $50 Million Credit Facility
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Insights
The establishment of a new $50 million credit facility by Gambling.com Group with Wells Fargo is a strategic move that offers the company a more robust financial structure. The facility, split between a revolving credit and a term loan, provides the company with liquidity to support its ongoing operations and growth initiatives. The option to increase the facility by $10 million adds a layer of financial flexibility, potentially beneficial in capitalizing on market opportunities.
From an investor's perspective, the terms of the credit are noteworthy. The interest rates tied to various benchmarks plus a margin reflect the cost of capital for the company. The Base Rate Loans are particularly interesting, as they are pegged to the highest of three rates, potentially increasing the cost of borrowing during periods of rising interest rates. The SOFR (Secured Overnight Financing Rate) is a critical benchmark for dollar-denominated derivatives and loans and its usage here indicates compliance with recent shifts in financial regulations away from LIBOR.
Overall, this move signals management's confidence in their growth trajectory and commitment to shareholder value. However, investors should keep an eye on how this debt impacts the company's leverage ratios and interest coverage, which could affect its financial health and stock performance in the long term.
The online gambling industry is experiencing rapid growth, driven by increasing digitalization and the relaxation of regulatory constraints in various jurisdictions. Gambling.com Group's decision to secure additional funding through a credit facility suggests an aggressive pursuit of market share. The company's focus on both organic and inorganic growth indicates a potential for future acquisitions, which could consolidate its position in the industry.
For stakeholders, the key question is how effectively Gambling.com Group can deploy this capital to drive revenue and EBITDA growth. The company's track record, as highlighted by the CFO, suggests a positive trend, but the competitive landscape of online gambling necessitates continuous innovation and strategic partnerships. The ability to settle deferred consideration also indicates a proactive approach to managing liabilities and optimizing the balance sheet.
Investors should monitor the company's operational performance closely, as the benefits of this credit facility hinge on successful execution of growth strategies and the management of interest expenses.
It's important to consider the legal implications of the new credit facility secured by Gambling.com Group. The terms outlined, including the maturity date and interest rate stipulations, are standard for such agreements. However, the facility's dependency on approval by Wells Fargo for incremental increases suggests a level of oversight and potential for renegotiation based on the company's financial performance.
Moreover, the use of SOFR as a benchmark for Term SOFR Loans is indicative of the industry's transition away from LIBOR, which has been phased out due to regulatory scrutiny over its credibility and accuracy. This transition is a critical compliance aspect for financial contracts and could affect the company's financial strategy.
Investors should be aware of the regulatory environment surrounding online gambling, as changes in legislation can significantly impact the operational scope and profitability of companies like Gambling.com Group. The legal landscape will continue to shape the strategies and risk profiles of companies in this sector.
The new Credit Facility matures on March 19, 2027, and, subject to approval by Wells Fargo, may be incrementally increased by up to
Elias Mark, Chief Financial Officer of Gambling.com Group, commented, “We have established a track record of successful execution on our growth initiatives that are delivering consistently strong revenue, Adjusted EBITDA and cash flow growth. This new credit facility enhances our already strong balance sheet and liquidity thereby providing additional financial flexibility as we pursue both organic and inorganic growth opportunities that can further scale the business and generate incremental value for our shareholders.”
The interest rate on the Credit Facility is as follows:
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Base Rate Loans: (i) the highest of (a) Prime Rate, (b) Federal Funds Rate plus
0.50% , and (c) Adjusted Term SOFR for one-month tenor plus1.00% , (ii) plus an applicable margin of2.50% per annum (the “Applicable Margin”) -
Term SOFR Loans: SOFR Rate plus
0.10% , plus the Applicable Margin - Eurocurrency Rate Loans: Adjusted Eurocurrency Rate, plus the Applicable Margin
- Daily Simple RFR Loans: Adjusted Daily Simple RFR rate, plus the Applicable Margin
About Gambling.com Group Limited
Gambling.com Group Limited (Nasdaq: GAMB) (the "Group") is a multi-award-winning performance marketing company and a leading provider of digital marketing services active in the online gambling industry. Founded in 2006, the Group has offices globally, primarily operating in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240319802402/en/
Investors:
Peter McGough, Gambling.com Group, investors@gdcgroup.com
or
Richard Land, Norberto Aja, JCIR, GAMB@jcir.com
Media:
Eddie Motl, Gambling.com Group, media@gdcgroup.com
Source: Gambling.com Group Limited
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