PlayAGS has successfully completed its debt refinancing, the manufacturer and supplier of gaming products announced on Tuesday. The transaction lowers the total principal amount of debt outstanding by approximately $40 million and reduces annualized cash interest expense by about $10 million, while expanding Revolving Credit Facility capacity to $40 million and extending key debt maturities.
The completion of the refinancing of the company’s total debt outstanding was carried through the issuance of a senior secured first lien term loan in an aggregate principal amount of $575 million due 2029 (New Term Loan Facility), the proceeds of which, together with cash on hand, were used to repay all amount outstanding under the company’s existing term loan facilities and to pay related fees and expenses.
The refinancing was also achieved through a $40 million senior secured first lien revolving facility due 2027 (New Revolving Credit Facility), which was “undrawn at close.” The new term loan facility will bear interest at the Secured Overnight Financing Rate (SOFR) plus 4%, subject to a 0.75% SOFR floor, while the new revolving credit facility will bear interest at SOFR plus 4%, subject to a 0% SOFR floor.
"I am extremely pleased with the outcome of the Company's recent debt refinancing, as it simultaneously lowers our total principal amount of debt outstanding, reduces our borrowing costs and extends key debt maturities," commented AGS Chief Financial Officer, Kimo Akiona.
The executive further said that the increase in the company’s revolver capacity from $30 million to $40 million “strengthens” AGS’ overall financial flexibility. The business has provided additional details in regards to its refinancing transaction in a filing with the SEC.
“Looking ahead, supported by the approximately $10 million of annualized cash interest expense savings we expect to realize, relative to the level incurred for the full-year 2021, coupled with the operating momentum we continue to see in the business, I remain confident in our ability to deliver upon our previously issued year-end 2022 net leverage target of less than 4.0x,” Akiona added.
The company had previously announced intentions to refinance its outstanding debt and expand its revolving credit facility capacity last month, following the report of preliminary financial results for Q4 and financial year 2021.
AGS President and CEO David Lopez
The company expects total revenue between $68.4 million and $70.8 million for Q4, up from $46.6 million the prior year; and revenue within the $258.6 million-$261 million range for the whole fiscal year, up from $167 million in 2020.
The business also expects a net loss in the range of $11.6 million to $6 million for Q4, versus a net loss of $17.2 million in the same quarter in 2020. In terms of the full year, a net loss in the range of $24.7 million to $19.2 million is anticipated, vastly different from an $85.3 million loss in 2020.
“Our preliminary fourth quarter 2021 financial results further reflect the operating momentum we are witnessing across all three segments of our business,” said AGS President and Chief Executive Officer David Lopez on January 18. “I continue to believe we have the best lineup of new products in our company's history and am excited about the opportunities that lie ahead.”