Scientific Games International, Inc., a wholly-owned subsidiary of Scientific Games Corporation (SGMS), on Thursday said it is soliciting consents from the holders of several series of senior notes and secured notes to adopt certain proposed amendments to the indentures governing the notes.
The consent solicitation is made to the holders of SG’s 5% Senior Secured Notes due 2025, 3.375% Senior Secured Notes due 2026, 8.625% Senior Notes due 2025, 5.5% Senior Notes due 2026, 8.25% Senior Notes due 2026, 7% Senior Notes due 2028 and 7.25% Senior Notes due 2029.
SG said the proposed amendments seek to amend the indentures' requirement that at least 75% of the consideration received from an asset sale is cash or cash equivalents to reduce that percentage to 60%, solely with respect to an initial public offering relating to SG Lottery occurring prior to June 30, 2022.
As previously disclosed on June 29, 2021, SGMS is evaluating strategic alternatives for the intended divestiture of its lottery business (SG Lottery), including an initial public offering or combination with a special purpose acquisition company, or a sale or a strategic combination with another business.
If an initial public offering of SG Lottery is consummated, SGMS expects to hold no more than a minority equity interest in the entity that owns SG Lottery, but the amount of such minority equity interest is uncertain at this time, the company noted.
“We are pursuing the consent solicitation to provide us greater flexibility with respect to the equity offered in the potential initial public offering,” SGMS said in a statement. “We can, though, consummate the initial public offering of SG Lottery and comply with the indentures without receiving the required consents.”
Officials with SGMS said the company currently intends to use a substantial majority of the net proceeds from an SG Lottery transaction to repay indebtedness of SGMS and its restricted subsidiaries. They added this is consistent with the company’s previously stated intent to rapidly de-leverage its balance sheet and bring its leverage in line with public industry peers.
SGMS added it does not intend to pay any dividends, or make any repurchase of its equity, with the net proceeds from an SG Lottery transaction, nor does it intend to distribute any retained interests in SG Lottery to its shareholders (as a dividend or otherwise).
“We cannot assure you we will ultimately consummate an initial public offering of SG Lottery, or that, if we do so, we will do so prior to June 30, 2022,” the company said. “If we fail to do so prior to such date, the proposed amendments will not become operative and we will not make the consent payment.”
The consent solicitation will expire at 5 p.m., New York City Time, on September 30, 2021, unless extended or earlier terminated by SGMS.
Only holders of the notes as of 5 p.m. New York City Time on September 22, 2021, are entitled to consent to the proposed amendments pursuant to the consent solicitation.
Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are the solicitation agents in the consent solicitation, while Global Bondholder Services Corporation has been retained to serve as the information, tabulation and paying agent.
