Flutter Entertainment announces its debt restructuring plan. The online gambling company said the move will bring down interest repayments. It also said the restructure will increase its liquidity to expand its flexibility.
The debt restructuring will close to double the current US dollar term loan B by at least $1.5 billion. But the operator plans on using the funds from the move to clear senior unsecured notes worth $1 billion. These notes carried a 7% interest.
This will then leave the online gambling company with approximately £250 million in liquidity. The company says it will use these funds for general purposes within the company.
This loan will also undergo repricing at 2.25% over the LIBOR (London Interbank Offered Rate). This translates to 225 basis points. The prevailing LIBOR levels mean the rate will go to 2.5%. This is from the 3.72% Flutter was paying before restructuring.
The Euro term loan B facility is also set to undergo repricing. This loan is worth €500m. Repricing the loan using the EURIBOR (Euro Interbank Offered Rate) at 2.5% above the current rate will see the company pay the loan at a reduced rate. EURIBOR is at a negative meaning the current rate will be at 2.0%. This is instead of the 3.7% Flutter used to pay the loan.
The financial report for 2020 released by Flutter indicated the company’s plan to refinance the loan at better prices. Flutter’s board felt the repayment rates didn’t match the company’s credit situation.
Flutter stated the loan refinancing will see the average costs of current debts fall to 2.5% from the initial 4.2%. That means the company’s interest costs will drop by $50 million annually.
But Flutter isn’t the only company looking at loan refinancing as a viable solution to liquidity issues. Entain also stated its plans of refinancing its term loan B. The gambling company said this will afford it more acquisition and merger opportunities. This is apart from making it more flexible.
Mid-July saw Flutter announce its plans to sell its subsidiary company to Bruin Capital. The deal will see the private equity group acquire Oddschecker for $215.2 million. Bruin Capital is set to pay $190 million upfront. Undisclosed conditions will see it fork out another $28 million. Both companies are hopeful the deal will close by the end of quarter three of 2021.
Flutter also announced the appointment of a new chief executive the same day it broke the news about Oddschecker. Amy Howe will become FanDuel’s chief executive after Matt King’s exit.
Flutter also stated King’s exit may put off the company’s plans of launching an IPO (initial public offering) with FanDuel.