Jun 23: 888 raises debt to fund WHI deal

888 trading update, Jefferies conference day 2, Fanatics owner sell NBA and NHL stakes to focus on OSB

Wagers.com Earnings+More

Jun 23

Good morning. On today’s agenda:

888 agrees £1.76bn debt to fund William Hill buyout.
MGM, Caesars and Penn give positive noises at Jefferies conference.
Fanatics’ Michael Rubin sells team stakes to avoid OSB conflicts.

I need a dollar. Sign up now

888 trading statement

888 announces £1.76bn debt offering to fund William Hill buyout.
888 will report half-year revenues of between £330m-£335m.
William Hill revenues for the 6m will be between £620m-£630m.

In debt: 888 will be part-funding its William Hill acquisition through a dollar-denominated term loan and euro-denominated senior secured fixed rate notes with a combined value of £1.02bn. The company will also enter another two euro and sterling denominated term loan facilities worth a combined £759m and will take out a £150m revolving credit facility.

Top up: This is on top of the ~£159m of cash raised via the previous sale of new shares in April.

Drawing to a close: The William Hill transaction will conclude on July 1.

In line: The company said current trading for 888 was “broadly in line” with expectations with growth in certain European markets offset by the impact of additional safer gambling measures and the continued absence of 888 in the Netherlands.

William Hill’s figures reflected the re-opening of the UK retail estate, compared to H121 “offset” by the increased safer gambling measures in the UK as well as a similar story in the Netherlands.

Capex: The company said capex for 2022 will be “slightly higher” for both 888 and William Hill.

Jefferies conference day 2

On guard: Jefferies said management outlook remained positive overall about industry prospects, but with investors “guarded against an expected recession, the dichotomy in views of companies vs. investors is likely unsettled in the near term”.

The analysts said they expect Q2 results to be strong, “with outlooks perhaps more guarded through the remainder of the year, which is largely priced, in our view”.

Reserve build: MGM, Caesars and Penn National Gaming all said Strip and locals business remained very strong, with hotel bookings, convention and entertainment calendar “remaining favorable” for 2023.

Regionals were stable, but with the market “increasingly concerned about an imminent recession”, Jefferies said it is worth noting that each company has materially improved balance sheets.
Caesars confirmed digital “peak losses” with revenue “heading in the right direction” and the group’s Liberty sports-betting platform was running in every state bar Nevada and Pennsylvania.

Bally Corporation said it has been actively reducing costs across its land-based and digital units. Its flagship $1.7bn downtown Chicago project should open in Jun23 and will be funded with $400m of cash, a $1bn construction loan, $200m in ground-sale leaseback and the rest with cash flow from its planned temporary facility.

Digital: Bally expects to launch OSB in NY “imminently” and Ontario “shortly after”.
Fingers crossed: In the UK, management expects the government's white paper to be “benign and an overhang clearance”.

Supply side: IGT, Light & Wonder and Everi said near-term prospects were stable. For IGT, this is because it generates ~75% of its earnings from the lottery business, while LNW and Everi rely on balance sheet strength at <4X and <3X leverage respectively and are “building product momentum that should outperform baseline economic trends”.

Fanatics

Baller no more: Michael Rubin is selling his 10% in Harris Blitzer Sports & Entertainment, the parent company of the Philadelphia 76ers and New Jersey Devils, in order to avoid conflicts of interest over NFTs and the upcoming BetFanatics.

Conflict resolution: In a statement, Rubin said that as the Fanatics business had grown, “so too have the obstacles I have to navigate to ensure our new business don’t conflict with my responsibilities as part-owner of the Sixers”.

“With the launch of our trading cards and collectibles business earlier this year… and a soon-to-launch sports-betting operation, these new businesses will directly conflict with the ownership rules of sports leagues.”

Macau Covid-19 update

Macau will close most of its leisure facilities, but not casinos, from 5pm local time today (Thursday), GGR Asia reports. The jurisdiction has confirmed 110 cases of Covid-19.

Speaking at a press conference yesterday, Macau CEO Ho Iat Seng said the measure was part of the latest round of “immediate prevention” steps to break the chain of transmission of the current outbreak. Ho said the authorities would continue to monitor the situation on a case-by-case basis.