IGT Will Repurchase up to $500M of Outstanding Debt

Posted on: September 2, 2022, 04:43h. 

Last updated on: September 2, 2022, 07:59h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

International Game Technology (NYSE:IGT) is taking added steps to firm its balance sheet. Today, it told investors it will repurchase up to $500 million worth of its outstanding corporate debt.

IGT debt
A “Wheel of Fortune” slot machine in a casino. Maker IGT is buying back outstanding debt. (Image: Pinterest)

The slot machine manufacturer said the buyback plan will pertain to two large bundles. They include some $1.1 billion of 6.5% senior unsecured notes coming due in 2025, and $499 million of 3.25% senior unsecured euro notes maturing in 2024. IGT’s tender offer for the bonds expires at 11:59 P.M. (New York City time) on Sept. 30.

Holders who validly tender their Dollar Notes or their Euro Notes after the Early Tender Time but at or prior to the Expiration Time will be eligible to receive only the Dollar Tender Offer Consideration (which is an amount equal to the difference between the Total Dollar Consideration and the Early Dollar Tender Premium) or the Euro Tender Offer Consideration (which is an amount equal to the difference between the Total Euro Consideration and the Early Euro Tender Premium), respectively,” according to a statement issued by the company.

IGT is offering bondholders a premium of $30 per $1,000 of debt tendered. That’s as long as the investors tender the bonds prior to 5 P.M. Eastern standard time on Sept. 16.

Potential Cost Savings for IGT

By removing perhaps as much as $500 million of debt outstanding, IGT could realize significant savings on interest expense.

That’s a priority for the company, and it’s taken various steps to achieve that objective. For example, in July, the UK-based gaming technology company amended a credit facility, gaining access to more capital and pushing out the maturity date in the process.

The moves are relevant because IGT reduces its annual interest expense, which meshes with its ongoing efforts to pare debt and firm its balance sheet.

IGT’s debt reduction and balance sheet-firming efforts are relevant for another reason. As the company’s liabilities decline, it positions itself for a better credit rating. Currently, IGT carries a junk grade, but if its balance sheet improves, it becomes a candidate for an investment-grade rating. Companies with those marks earn the benefit of lower financing costs.

IGT Bond Buyback Particulars

As is par for the course with such transactions, there are details IGT creditors should be aware regarding the aforementioned transaction.

“Subject to applicable law and the terms and conditions of the Offer to Purchase, IGT may change the Acceptance Priority Levels and increase or decrease either or both of the Maximum Acceptance Amount and the Dollar Offer Sub Cap without extending the Early Tender Time or the Expiration Time or otherwise providing withdrawal rights. IGT may also terminate the Tender Offer, waive any or all of the conditions of the Tender Offer prior to the Expiration Time, extend the Expiration Time or amend the terms of the Tender Offer,” according to the statement.

Shares of IGT lost 6.95% this week, and are off almost 39% year-to-date.