Bally Technologies provides business update

Bally will use the net proceeds from the new credit facilities to fund the stock tender offer announced, to fund share repurchases, to refinance its existing credit facilities (US$ 162.4 million outstanding as of March 31, 2011), to pay fees and expenses incurred in connection with the transactions, to provide for ongoing working capital, and for other general corporate purposes. 

The new credit facilities are expected to close on or about April 13, 2011 and fund on or about May 6, 2011, simultaneous with the closing of the stock tender offer. At funding and giving effect for the stock tender offer, Bally will have at least US$ 150 million of undrawn availability under its new revolver.

It  will initially be priced at LIBOR +175bps (assuming a gross leverage ratio of 2.0) and will be subject to a leverage-based pricing grid and a maximum leverage and a minimum interest coverage covenant.

“Our ability to more than double the size of our credit facilities with a more favorable pricing grid and better terms demonstrates the strength of our business and the free cash flow it generates,” said Neil Davidson, the Company’s CFO. “The new credit facilities will provide us incremental flexibility to pursue strategic initiatives as well as the opportunity to better optimize our capital structure.”

Share Repurchase Plan
During the third quarter, Bally repurchased approximately 898,000 shares for a total of US$35.1 million, leaving US$ 27.3 million available under its existing share repurchase plan.

Under the new Credit Facilities, the Company will have unlimited capacity to repurchase its common stock or make other restricted payments as long as its gross leverage ratio is below 2.0 and may make up to US$ 100 million in restricted payments per year if its gross leverage is above 2.0. 

Fiscal 2011 Business Update
The Company updated fiscal 2011 guidance for Diluted Earnings per Share (“Diluted EPS”) from continuing operations to US$ 1.82 to US$ 1.95, with the fiscal fourth quarter’s Diluted EPS expected to exceed the fiscal third quarter’s Diluted EPS. This updated Diluted EPS guidance range does not reflect the impact of the pending stock tender offer and debt refinancing due to the uncertainty as to the number of shares that will be tendered. 

The updated guidance reflects lower than expected systems revenue caused from the timing of decisions for large installations, and lower than expected gross margins in gaming equipment due to a higher than anticipated mix of Pro Series cabinet sales. In addition, the Company now believes it will no longer achieve US$ 205 million in systems revenue for fiscal 2011 and will provide a further update on its fiscal third quarter conference call on April 28, 2011.