Scientific Games Mulls Asx Launch
An American poker machine company is considering a launch onto the Australian Stock Exchange.
The Australian Financial Review reports that Las Vegas gaming giant Scientific Games is considering an Australian public offering, which would help it raise fresh capital and pay down debt.
The Nasdaq-listed Scientific Games has engaged Sydney-based Jarden Australia to run the numbers on a potential ASX-listing and feed their input into a broader strategic review that’s mulling options to fix up the company’s debt-heavy corporate structure.
An ASX-listing is believed to be just one option on the table, however sources said it was a serious consideration.
Australia’s equity capital markets are open to new floats, shares in fellow gaming companies are trading at all-time highs and Scientific Games has plenty of Australian hooks to help it catch some big domestic investors.
The Australian connections start with Scientific Games executive chairman Jamie Odell, who joined the company’s board in 2020.
Odell is a well known and highly respected Australian gaming company executive, having spent nearly a decade running poker machine maker Aristocrat Leisure and turning it into one of the country’s best performing companies.
Caledonia invests $1b in Scientific Games
Another connection is Sydney based fund manager Caledonia Investments, which spearheaded a consortium that invested US$1 billion in Scientific Games in 2020.
Odell was also part of the consortium, he knew Caledonia well from his days as a major Aristocrat shareholder.
Caledonia, run by Will Vicars and Mike MEssara, now owns 9.8 per cent of the company.
Also involved at Scientific Games is Toni Korsanos, another former Aristocrat Leisure executive now plying her trade on the boards of Crown Resorts and Treasury Wine Estates.
Korsanos is Scientific Games’ executive vice chair. Jarden advised Odell and Korsanos when they bought in last year.
It remains to be seen whether Scientific Games will turn the Australian scoping study into a listing, however fund managers reckon the deal would likely be well received.
Scientific Games shares have had a huge run since Caledonia and its co-investors agreed their deal in September 2020.
The consortium paid US$28 a share to take the stake from billionaire Ronald Perelman, and the stock last closed at US$56.09.
Part of the deal saw Caledonia re-shape the board, bringing in the likes of Odell and Korsanos, and working to re-shape its debt laden capital structure.
Scientific Games is carrying US$9.43 billion debt, according to S&P Global Markets research, while it has a US$19.93 billion enterprise value and US$5.39 billion market capitalisation.
Any funds raised at an Australian IPO would be expected to help repay some of that debt.
Last September, it was reported that an Australian fund was poised to purchase a 34.9 per cent stake in Scientific Games.
Australian fund Caledonia was reported to be purchasing a stake in Scientific Games from MacAndrews and Forbes Incorporated.
MacAndrews and Forbes is managed by billionaire investor Ron Perelman, who said earlier this year he wanted a “less complicated and less leveraged business life” and has been looking for ways to reduce his portfolio as several of his companies have been impacted by the coronavirus pandemic.
Caledonia has reached an agreement with MacAndrews and Forbes to buy nearly 35 per cent of Scientific Games, at a price of $28 per share.
As a result of the transaction, Scientific Games said it would implement a series of governance changes and enhancements.
This will see the gambling technology giant revamp its board of directors and terminate its stockholders agreement with MacAndrews and Forbes.
Caledonia is a Sydney-headquartered global investment management firm.
Aside from its newly acquired stake in Scientific Games, the investor owns a 10.4 per cent stake in Dublin-based Flutter Entertainment, which owns major brands such as Paddy Power, PokerStars and Sky Betting.
Scientific Games said its board will be restructured to include all existing directors except its MacAndrews and Forbes representatives, as well as three new directors.
