Scientific Games International Inc, a wholly-owned subsidiary of Scientific Games Corporation, is soliciting consents from senior note holders due from 2025 to 2029 for the adoption of certain proposed amendments to the indentures governing the notes.
The proposed amendments seek to amend the 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, SG is evaluating strategic alternatives for the intended divestiture of its lottery business, including an initial public offering or combination with a special purpose acquisition company, or a sale or a strategic combination with another business.
Said the firm: “If an initial public offering of SG Lottery is consummated, we expect 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.
“We are pursuing the Consent Solicitation to provide us greater flexibility with respect to the equity offered in the potential initial public offering. We can, though, consummate the initial public offering of SG Lottery and comply with the Indentures without receiving the required consents.”
SG added that in line with its stated intent to rapidly de-leverage its balance sheet, and bring its leverage in line with public industry peers, it currently intends to use a substantial majority of the net proceeds from an SG Lottery transaction to pay debt.
The company also confirmed that 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,” it noted. “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.”