William Hill Recovery ‘Strong,’ US Topping Expectations, Company Unveils Massive Share Sale

Posted on: June 16, 2020, 10:14h. 

Last updated on: June 16, 2020, 12:08h.

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

William Hill Plc, one of the largest sportsbook operators, said there’s evidence of a strong recovery in betting markets as the sports calendar grows fuller and that the US region is topping internal estimates.

William Hill Secondary Offering
William Hill said conditions are improving and the US is setting up nicely, but its stock declined on news of a secondary offering. (Image: Getty Images)

The UK-based bookmaker added that it’s planning a secondary offering equivalent to 19.99 percent “of its existing ordinary share capital.” New supply of shares coming to market dilutes current investors, and the news sent William Hill’s US-listed equity lower by about four percent at this writing. The stock trades over-the-counter in the US under the ticker “WIMHY.” Its London-listed shares under the identifier “WMH” closed higher by 0.62 percent today. The share sale and financial updates, which were revealed in separate statements, were released after the close of UK markets.

We expect the trading backdrop to remain uncertain, but are encouraged to see both Online and the US performing ahead of our initial expectations,” said the sportsbook firm in a statement.

In its home market, William Hill could get a near-term boost from the return of the Royal Ascot horse racing festival, which starts today and runs through the end of the week, and the English Premier League (EPL) on Wednesday.

Improving Financial Health

During the darkest days of the coronavirus crisis, William Hill and rivals, such as Flutter Entertainment and GVC Holdings, warned investors earnings would be slammed by canceled and postponed sporting events. UK bookmakers scrambled to conserve and raise cash, moves that include debt sales and suspending dividends.

However, the situation rapidly improved, with William Hill saying today its monthly cash burn rate is declining and that it entirely paid off a 2020 bond with $254.65 million outstanding. The company said it has $627.23 million in liquidity “and a line of sight to generating positive cash flow from our operations in the second half of the year.”

Regarding the share sale, William Hill said the proceeds will be used to bolster its balance sheet and finance long-term growth plans. The company isn’t the first sportsbook operator to take advantage of improving market conditions to raise capital. Last month, rival Flutter announced a $1 billion secondary offering.

Familiar Refrain: Online and the US

These days, the drivers investors are looking for with sportsbook operators are online and US footprints, because that’s where the growth is at.

For the six weeks ending June 9, William Hill experienced a material uptick in online bets with the returns of horse racing and Germany’s Bundesliga.

“US sports staking benefited significantly from the availability of alternative sports and the resumption of UFC and NASCAR in May,” said the company.

The operator added that during the COVID-19 shutdown, it offered drive-through services in Nevada, whereby bettors could register for the William Hill mobile app. In the Silver State, gamblers must register in person to use online betting platforms and the related apps. William Hill said the plan was effective “and generated considerable re-engagement online.”

In a note out Monday, Jefferies analyst James Wheatcroft said investors currently assign practically no value to UK bookmakers for the companies’ US exposure, meaning those stocks could potentially rally as the firms continue highlighting growth in the States.