Light & Wonder Announces Successful Completion of Debt Refinancing Transactions, Delivering on Promise to Transform the Balance Sheet
Light & Wonder (NASDAQ: SGMS) achieved a significant milestone by reducing its outstanding debt from $8.8 billion to $4.0 billion, lowering the adjusted net debt leverage ratio from 6.2x to 3.9x. This restructuring is expected to save approximately $225 million annually in cash interest. The company's strategic shift includes retiring a $4.0 billion term loan and redeeming $3.0 billion in notes, bolstered by proceeds from the sale of its Lottery Business and a new $2.2 billion term loan. These actions enhance financial flexibility for future growth and shareholder returns.
- Outstanding debt reduced from $8.8 billion to $4.0 billion.
- Annualized cash interest savings of $225 million.
- Adjusted net debt leverage ratio decreased from 6.2x to 3.9x.
- New $2.2 billion term loan increases financial flexibility.
- Active share repurchase program with $750 million authorization.
- None.
Reduces principal amount of outstanding debt from
Further enhances cash flow profile with an estimated annualized cash interest savings of
These actions reflect successful execution of Light & Wonder’s balanced and opportunistic approach to capital allocation which prioritizes:
-
Priority #1: Debt reduction to a target net debt leverage ratio range2 of 2.5x to 3.5x, with today’s announced actions representing significant progress on this priority, reducing the principal amount of debt outstanding by
$4.8 billion $225.0 million December 31, 2021 would have been approximately$3.2 billion $8.2 billion December 31,2021 , respectively. -
Priority #2: Share buy-backs to return substantial capital to shareholders now and in the future, with the Company continuing to actively repurchase shares under its
$750 million - Priority #3: Disciplined investment in key growth opportunities, prioritizing using capital for buy-backs, debt reduction and organic investments unless M&A delivers greater long-term value.
“With the sale of our Lottery Business we are making rapid progress executing on our strategy to transform our business,” said Light & Wonder Chief Executive Officer
Light & Wonder Chief Financial Officer
Details of the Transaction
The new first lien term loan facility has a principal balance of
The Company also successfully obtained commitments for a
With the addition of the new term loan facility, the Company’s weighted average life of debt increased to approximately 6.4 years. The new credit facility is secured by substantially all assets of the Company and any of its existing or future material domestic subsidiaries, subject to customary exceptions.
The proceeds of the new term loan facility, along with a portion of the
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offering, solicitation or sale would be unlawful.
© 2022
About Light & Wonder
____________________________________________________
1 Principal amount of outstanding debt as of
2 Represents a non-GAAP financial measure. Additional information on non-GAAP financial measures presented herein is available at the end of this release.
3 Term loan interest rate calculated based on the current interest rate, undrawn revolving credit facility, and a portion of 2025 Secured Notes reflective of an interest rate of approximately
Principal Debt Balance Supplemental Information
| (unaudited, $ in millions) | Final Maturity | Rate(s) | Outstanding Principal Value As of 2022 |
Refinancing Impact(1) |
Outstanding
of |
|||||||||||
| Senior Secured Credit Facilities: | ||||||||||||||||
| SGI Term Loan B-5 | 2024 |
variable | $ |
4,018 |
$ |
(4,018 |
) |
$ |
- |
|||||||
| New Term Loan | 2029 |
variable |
|
- |
|
2,200 |
|
|
2,200 |
|||||||
| SGI Senior Notes: | ||||||||||||||||
| 2025 Secured Notes(2) | 2025 |
5.000 |
% |
|
1,250 |
|
(1,250 |
) |
|
- |
||||||
| 2026 Secured Euro Notes | 2026 |
3.375 |
% |
|
367 |
|
(367 |
) |
|
- |
||||||
| 2025 Unsecured Notes | 2025 |
8.625 |
% |
|
550 |
|
- |
|
|
550 |
||||||
| 2026 Unsecured Euro Notes | 2026 |
5.500 |
% |
|
283 |
|
(283 |
) |
|
- |
||||||
| 2026 Unsecured Notes | 2026 |
8.250 |
% |
|
1,100 |
|
(1,100 |
) |
|
- |
||||||
| 2028 Unsecured Notes | 2028 |
7.000 |
% |
|
700 |
|
- |
|
|
700 |
||||||
| 2029 Unsecured Notes | 2029 |
7.250 |
% |
|
500 |
|
- |
|
|
500 |
||||||
| Other(3) | 2023 |
4.089 |
% |
|
4 |
|
- |
|
|
4 |
||||||
| Total long-term debt outstanding | $ |
8,772 |
$ |
(4,818 |
) |
$ |
3,954 |
|||||||||
| (1) Represents outstanding principal value debt balances as of |
||||||||||||||||
| (2) We entered into certain cross-currency interest rate swap agreements to achieve more attractive interest rates by effectively converting |
||||||||||||||||
| (3) Primarily comprised of certain revenue transactions presented as debt in accordance with ASC 470. | ||||||||||||||||
Non-GAAP Reconciliations |
|||||||||||
Reconciliation of Adjusted Net Debt Reflecting Refinancing Transactions and the Lottery Business Sale and Adjusted Net Debt Leverage Ratio Reflecting Refinancing Transactions and the Lottery Business Sale ($ in billions, except for ratio, unaudited) |
|||||||||||
Refinancing
Sale Adjustments |
Adjusted Net Debt
|
||||||||||
| Combined AEBITDA(1) | $ |
1.3 |
|
(0.5 |
) |
(4 |
) |
$ |
0.8 |
|
|
| Total debt | $ |
8.7 |
|
$ |
8.7 |
|
|||||
| Add: Unamortized debt discount/premium and deferred financing costs, net |
|
0.1 |
|
|
0.1 |
|
|||||
| Add: Impact of exchange rate(2) |
|
0.1 |
|
|
0.1 |
|
|||||
| Less: Debt not requiring cash repayment and other |
|
(0.0 |
) |
|
(0.0 |
) |
|||||
| Principal face value of debt outstanding |
|
8.8 |
|
(4.9 |
) |
(5 |
) |
|
4.0 |
|
|
| Less: Combined Cash and cash equivalents(3) |
|
0.6 |
|
0.1 |
|
(6 |
) |
|
0.7 |
|
|
| Net debt | $ |
8.2 |
|
$ |
3.2 |
|
|||||
| Net debt leverage ratio | 6.2x |
|
3.9x |
||||||||
| (1) Additional information on certain non-GAAP financial measures presented herein (Combined AEBITDA, Net debt and Net debt leverage ratio) is available in in the Company’s fourth quarter and full year 2021 earnings release furnished with our Current Report on Form 8-K dated |
|||||||||||
| (2) Impact of exchange rate is the impact of translating our outstanding 2026 Secured Euro Notes and 2026 Unsecured Euro Notes, translated at constant foreign exchange rate at issuance of these notes. | |||||||||||
| (3) Includes cash and cash equivalents of both continuing operations and discontinued operations, as the combined amount is available for debt payments. | |||||||||||
| (4) Adjusted for Lottery Business discontinued operations and equity investments included in continuing operations. | |||||||||||
| (5) Represents a reduction of principal amount of outstanding debt as of |
|||||||||||
| (6) Includes estimated pending Austria Lottery Business proceeds of approximately |
|||||||||||
| Notes: The basis of accounting and presentation of financial statements by the Lottery and Sports Betting Businesses in the future in connection with their divestiture and planned divestiture, respectively, may differ materially from those of the Company, including as presented herein or in our fourth quarter and full year 2021 earnings release furnished with our Current Report on Form 8-K dated Due to rounding and presentation in billions, certain subtotals may not foot. |
|||||||||||
Reconciliation of Consolidated AEBITDA – Continuing Operations, Discontinued Operations, Combined AEBITDA ($ in billions, unaudited)
| Year Ended | |||
2021 |
|||
| Reconciliation of Net Income Attributable to SGC to Consolidated AEBITDA - Continuing Operations | |||
| Net income attributable to SGC |
|
||
| Net income attributable to noncontrolling interest | 0.0 |
||
| Net income from discontinued operations, net of tax | (0.4) |
||
| Net income from continuing operations |
|
||
| Restructuring and other | 0.2 |
||
| Depreciation, amortization and impairments | 0.4 |
||
| Interest expense | 0.5 |
||
| Stock-based compensation | 0.1 |
||
| Income tax benefit and other, net(1) | (0.4) |
||
| Consolidated AEBITDA - continuing operations(2) |
|
||
| Reconciliation of Net Income from Discontinued Operations, Net of Tax to AEBITDA from Discontinued Operations | |||
| Net income from discontinued operations, net of tax |
|
||
| Income tax benefit | 0.1 |
||
| Depreciation, amortization and impairments | 0.1 |
||
| EBITDA from equity investments(3) | 0.1 |
||
| Other, net(4) | (0.1) |
||
| AEBITDA from discontinued operations and other(5) |
|
||
| Combined AEBITDA(6) |
|
||
| (1) Other includes gain on remeasurement of debt and other (income) expense, net. | |||
| (2) Refer to the Consolidated AEBITDA - continuing operations and AEBITDA from discontinued operations definitions below. | |||
| (3) EBITDA from equity investments is a non-GAAP financial measure reconciled to the most directly comparable GAAP measure in the accompanying supplemental table below. | |||
| (4) Includes Restructuring and other, earnings from equity investments, stock-based compensation and other (income) expense, net. | |||
| (5) AEBITDA from discontinued operations, a non-GAAP measure, is derived based on the historical records and includes only those direct costs that are allocated to discontinued operations. | |||
| (6) Combined AEBITDA consists of Consolidated AEBITDA - continuing operations, AEBITDA from discontinued operations and EBITDA from equity investments included in continuing operations of |
|||
| Note: Due to rounding and presentation in billions, certain subtotals may not foot. | |||
Reconciliation of Earnings from Equity Investments to EBITDA from Equity Investments ($ in millions, unaudited) |
||||||||||
| Year Ended | ||||||||||
2021 |
||||||||||
| Combined Earnings (loss) from equity investments(1) |
|
|||||||||
| Add: Income tax expense | 10 |
|||||||||
| Add: Depreciation, amortization and impairments | 32 |
|||||||||
| Add: Interest income, net and other | (1) |
|||||||||
| Combined EBITDA from equity investments(2) |
|
|||||||||
| (1) Includes |
||||||||||
| (2) Includes |
||||||||||
Forward-Looking Statements
In this press release, the Company makes "forward-looking statements" within the meaning of the
Non-GAAP Financial Measures
Net Debt Leverage Ratio
Net debt is defined as total principal face value of debt outstanding, the most directly comparable GAAP measure, less combined cash and cash equivalents. Principal face value of debt outstanding includes the face value of debt issued under Senior Secured Credit Facilities, Senior Notes and Subordinated Notes, which are all described in Note 15 of the Company's Annual Report on Form 10-K for the year ended
The forward-looking non-GAAP financial measure targeted net debt leverage ratio is presented on a supplemental basis and does not reflect Company guidance. We are not providing a forward-looking quantitative reconciliation of targeted net debt leverage ratio to the most directly comparable GAAP measure because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the relevant period.
Adjusted Net Debt Reflecting Refinancing Transactions and the Lottery Business Sale and Adjusted Net Debt Leverage Ratio Reflecting Refinancing Transactions and the Lottery Business Sale
Adjusted net debt reflecting refinancing transactions and the Lottery Business sale, as used herein, is a non-GAAP financial measure defined as net debt as of
Combined AEBITDA
Combined AEBITDA, as used herein, is a non-GAAP financial measure that combines Consolidated AEBITDA (representing our results of continuing operations), AEBITDA from discontinued operations, and EBITDA from equity investments included in continuing operations and is presented as a supplemental disclosure and more fully described in the Company’s fourth quarter and full year 2021 earnings release furnished with our Current Report on Form 8-K dated
Consolidated AEBITDA (representing AEBITDA from continuing operations)
Consolidated AEBITDA, as used herein, is a non-GAAP financial measure that is presented as a supplemental disclosure of the Company’s continuing operations and is reconciled to net income (loss) from continuing operations as the most directly comparable GAAP measure, as set forth in the schedule above. Consolidated AEBITDA should not be considered in isolation of, as a substitute for, or superior to, the consolidated financial information prepared in accordance with GAAP, and should be read in conjunction with the Company's financial statements filed with the
AEBITDA from Discontinued Operations
AEBITDA from discontinued operations, as used herein, is a non-GAAP financial measure that is presented as a supplemental disclosure for the Company’s discontinued operations and is reconciled to net income from discontinued operations, net of tax as the most directly comparable GAAP measure, as set forth in the schedule above. AEBITDA from discontinued operations should not be considered in isolation of, as a substitute for, or superior to, the consolidated financial information prepared in accordance with GAAP, and should be read in conjunction with the Company's financial statements filed with the
EBITDA from Equity Investments
EBITDA from equity investments, as used herein, represents our share of earnings (loss) (whether or not distributed to us) plus income tax expense, depreciation and amortization expense (inclusive of amortization of payments made to customers for Lotterie Nazionali S.r.l.), interest (income) expense, net, and other non-cash and unusual items from our joint ventures and minority investments. EBITDA from equity investments is a non-GAAP financial measure that is presented as supplemental disclosure for illustrative purposes only and is reconciled to earnings (loss) of equity investments, the most directly comparable GAAP measure, in a schedule above.
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Source: Light & Wonder
FAQ
What recent debt reduction actions has Light & Wonder (SGMS) taken?
How much annual cash interest savings will SGMS achieve after its refinancing?
What is the current adjusted net debt leverage ratio for Light & Wonder (SGMS)?
What financial flexibility measures has SGMS implemented?
How does the sale of the Lottery Business impact SGMS's financial position?
