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LONDON (Alliance News) - Moody's Investor Service on Wednesday affirmed gaming technology firm Playtech PLC's Ba2 rating and stable outlook.
Moody's also issued a Ba2 rating to the company's proposed EUR350 million senior secured notes, which are due in 2026. The proceeds of these notes are to be used to refinance its EUR297 million convertible bonds due November 2019, as well as for transaction feeds and general corporate purposes.
Once the bond refinancing is complete, Moody's expects Playtech to have around EUR297 million of cash available, adjusting for a number of factors such as its EUR272 million loan due in April 2021, which is currently undrawn.
Moody's affirmed Playtech's Ba2 corporate family ratting, its Ba2-PD probability of default rating, and the Ba2 rating of the EUR530 million senior secured notes also issued by the company.
According to Moody's, while the refinancing is "broadly leverage neutral" at around 2.6 times, it will weaken Playtech's liquidity, raising its interest cost by between EUR14 million and EUR15 million.
"The group is more weakly positioned in the Ba2 category compared to when Moody's assigned the first time ratings in October 2018, due to a deteriorated trading environment and limited visibility as to the extent Playtech will be able to mitigate these various downside risks with cost optimization measures and a new commercial strategy," Moody's said.
Looking ahead, Moody's expects that Playtech's credit metrics will weaken in 2019 as a result of, among other things, high competition in Asia, a rise in gambling taxes, and other regulatory measures in the UK and Italy.
For this reason, Moody's is forecasting that Playtech's gross leverage will trend toward 3.0 times, with and "cash flow generation turning negative provided that the Italian sports betting licences are renewed in 2019".
"Moody's positively notes that the group renegotiated the Sun Bingo contract and expects it to become profitable in 2019 and signed a new long-term agreement with GVC Holdings PLC. Under the agreement, Playtech will provide its services and products to all GVC brands, in existing and new markets, representing an extension in scope and duration to the current arrangements," Moody's said.
