It was a win-win, which is what you always want
Interblock Gaming CEO John Connelly discusses the purchase of his company by Oaktree Capital Management.
How long was the deal in the works for?
It was probably one of the longest deals in history due to Covid. We started the process with Wall Street in 2019 and made a selection by the end of the year, and then Covid hit. That delayed a lot of things for various reasons, as you can imagine. On top of that the licensing process was delayed, on account of the licensing agencies being delayed: what usually took about 12 months stretched out to 18 months or more. So, a combination of Covid and then the regulatory licensing process meant that the deal took from 2019 until last week, when it closed. I don’t think anyone would have envisioned it but we’re over the line and we’re excited about it.
What does Interblock Gaming hope to gain from the transaction?
I think we already have. During the licensing process we were able to obtain an extraordinary amount of capital from Oaktree, more of a bridge financing. That gave us the tools we needed to sustain the company and give us a growth rate that we weren’t anticipating coming out of Covid. We were able to reinvest in areas in areas I’ve wanted to for a long time, such as in increasing R&D, in infrastructure, and in just scaling the company.
Our business is very capital intensive. We are able now to use that horsepower that Oaktree provides you to not only build your company organically but also to look at mergers and acquisitions and expand it moving forward. It’s a beautiful relationship with a great private equity firm. I’ve known them a long time. They’re amazing partners and we’ve already felt in the lead-up to the closing the impact of Oaktree on our company; the results are already showing.
And in this time of coming expansion, you will continue to be CEO of Interblock?
Yeah, that was part of the deal. My two partners were able to sell the company and I think they’re somewhere warm on a beach right now. I will be flying around for the company for the foreseeable future. I’m excited actually. I wasn’t ready to stop being a part of Interblock or working with Oaktree. I’m very much enjoying the relationship and I’m excited about the future. I think we’re just getting started. We’ve spent five years building a foundation and an infrastructure that we can now build upon, and it would be a shame to waste that.
Can you briefly note some of the details of the transaction itself?
I would say that the transaction was extremely beneficial for the existing ownership, especially in light of the Covid situation. In turn, it was beneficial for Oaktree. So I think it was a win-win, which is what you always want. I think the good news is that the company is doing well enough so that, even prior to closing the deal, Oaktree inserted a tremendous amount of capital inside the organization. We did just restructure our debt and we’re oversubscribed, which is always a good indication: when you have banks (who are meticulous in what they invest in and how they invest) have people wanting to give you money than you need. That’s a good indication on the health of the company and the trending of where we will be.
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