Scientific Games Offers USD $350 Million in Senior Secured Promissory Notes for Their USD $631 Million Acquisition of NYX Gaming Group

In iGaming by on October 6, 2017

US gaming and lottery specialist, Scientific Games Corp., has secured a deal to acquire digital gaming provider, NYX Gaming Group Ltd. The Nevada based company secured the takeover deal earlier last month for a total of CAD $775 million (USD $631 million). They have proposed a private offering of senior secured notes to raise USD $350 million, which will be used to fund the purchase.

Scientific Games Corp.’s Acquisition of NYX Gaming Group Ltd.

Earlier last month, on Wednesday, the 20th of September 2017, the two industry giants, Scientific Games and NYX Gaming Group Ltd. announced that they have entered into a definitive merger agreement. Under the terms of the transaction, Scientific Games will acquire NYX Gaming Group and all the outstanding shares of the company. Scientific Games has agreed to pay a total of CAD $2.40 for each share in NYX Gaming. This is what was used to come to the value of approximately CAD $775 million or USD $631 million for the company on the date of the agreement.

The parties involved announced that the deal will firstly give rise to a global digital gaming and lottery ‘powerhouse’. The merger will also speed up the rate at which Scientific Games’ interactive business has been growing. Last but not least, it will also ensure that NYX Gaming continues to rise through the ranks quickly too.

Matt Davey, the Chief Executive Officer of NYX Gaming Group Ltd., said that the deal will allow NYX to expand their offerings, while at the same time give shareholders a substantial injection of profits.

He said, “Scientific Games’ acquisition of NYX will provide immediate and compelling cash value for our shareholders, expand the products and solutions we are collectively able to offer our customers and accelerate the execution of our long-term strategic plan.”

He also added that the partnership with Scientific Games will be ideal for the company as together they will have the amenities to really increase productivity for both the parties involved.

He said, “We will now have scale, content and product development capabilities, complementary global infrastructure and access to an expanded customer base. We believe Scientific Games is the ideal partner for NYX, and we look forward to working alongside the talented Scientific Games team.”

The agreement will definitely cement Scientific Games’ position in the global ranks as one of the leading gaming and lottery provider. They will have the best possible portfolio of content technologies, digital products and services for both their global gaming and lottery customers.

Kevin Sheehan, the President and Chief Executive Officer at Scientific Games Corp. said that through the merger, Scientific Games will be able to offer one of the largest end- to- end portfolios of contents to all their customers around the world.

He said, “This important transaction creates a global gaming and lottery powerhouse. Scientific Games will be a stronger industry leader offering one of the broadest end- to- end portfolios of engaging content, innovative technologies and digital products and services across gaming and lottery.”

He also added that through the combination of Scientific Games’ products and services and NYX’s digital platforms and distribution network, the company can really increase their reach in their online gaming and sports betting capabilities.

He said, “This strategic and financially compelling acquisition combines NYX’s premier digital gaming and sports betting platforms and expansive distribution network to our own global, industry- leading content, technologies and digital products and services. NYX ideally positions us to capitalize on the growing online gaming and sports betting markets.”
Funds for the Merger

The private offering for the total sum of USD $631 million that is payable to NYX Gaming Group Ltd. is to be conducted through its Scientific Games International subsidiary. This will be used alongside part of the payment that is to be made in cash. The rest of the money will be borrowed from Scientific Games’ existing revolving credit facility.

It has also been said that part of the funds will be used to refinance some of NYX’s debt, as well as related fees and expenses.

If for any reason the merger fails to go though, these funds will be used for other general corporate purposes. These could include prepaying term loan borrowings under the company’s existing credit agreement.

In a correspondence to investors, Scientific Games Corp. stated that “The offering of the Notes is not conditioned upon the consummation of the NYX Acquisition. If the NYX Acquisition is not consummated for any reason, the Company intends to use the net proceeds from the offering of the Notes for general corporate purposes, which may include the prepayment of term loan borrowings under the Company’s existing credit agreement.”

The senior secured notes worth USD $350 million will become due for repayment in 2025. These will be guaranteed by Scientific Games and its subsidiaries. The notes will also be secured by liens on the same collateral that has been used to secure its existing credit facility and senior secured notes, which are due in 2022.

They also added in the same correspondence that “The Notes will be guaranteed on a senior basis by Scientific Games and certain of its subsidiaries. The Notes will be secured by liens on the same collateral that secures indebtedness under Scientific Games’ existing credit agreement and SGI’s 7.000 per cent senior secured notes due 2022.”

As a private offering, the notes will not be registered under the US Securities Act. Under the terms of this act, the company will not be able to offer or sell them in the USA, unless a special exemption is acquired. They will only be able to offer the notes to qualified institutional buyers, as well as non- US investors.

New Roles at the Merged Company

It has been outlined in the merger deal that Sheehan, who is the Chief Executive Officer and President of Scientific Games Corp. will continue to serve in the same role for the consolidated company. On the other hand Davey, who is currently the CEO of NYX Gaming Ltd., will be tasked with overseeing a newly created Digital Gaming and Sports Division at Scientific Games. Scientific Games has also announced that Shawn Dennis will be appointed in the role of Chief Marketing Officer (CMO) for the newly merged entity.

As the CMO, Dennis will be responsible for promoting Scientific Games’ global leadership and brand. She will have to find avenues to endorse the brand as well as increase their customer engagement numbers. Her job will include promoting both the company’s gaming content and technology side of things as well as their products that are focused on the interactive and lottery side of the business.

Sheehan announced the new appointments and said that they were excited to have Dennis on their team. He added that she has the potential to do wonders for the company’s next growth phase, with her expertise and experience with high profile marketing efforts.

He said, “We are excited to welcome Shawn to the Scientific Games executive team. With her tremendous experience leading marketing for high profile companies and brands in the entertainment and technology sector, she is perfectly suited to lead our marketing efforts to enhance consumer and customer engagement, drive top line revenue growth and catapult the Company’s next phase of growth.”

Scientific Games Corporation

Scientific Games Corp. is an American gambling provider that trades with all the top organisations across the globe. The company is headquartered in Enterprise, Nevada. They provide products such as instant lottery games, lottery gaming systems, terminals and services, internet applications, server- based interactive gambling terminals, and gambling control systems.

Scientific Games introduced the first secure, instant lottery ticket in 1974. Today they provide lottery retailers with secure point of sale systems that securely print tickets for major national lotteries, such as the Mega Millions and Powerball.

Over the last ten years, Scientific Games has introduced rewards for customer loyalty. These have been added through Scientific Gaming websites. Players are now able to use these sites to earn points and prizes on non- winning tickets that are bought at retail.

NYX Gaming Group Ltd.

NYX Gaming Group Ltd. is one of the leading digital gaming providers in the world. Headquartered in Las Vegas, USA, the company employs a staff of more than 1,100 employees, who are based in offices in 14 countries across Europe, North America, Asia, New Zealand and Australia.

They offer one of the world’s largest portfolios of leading content and technology to some of the foremost gaming operators, lotteries and casinos across the globe. The company also has one of the broadest distribution bases in the gaming industry; which includes more than 200 unique customers. They also have the widest portfolio of content available from their own global studios and broad partner network. The diversified game catalogue focuses on Bingo, Casino, Lottery and Sportsbook verticals. They deliver this content across web in both desktop and mobile formats.

NYX Gaming Group was recognised at the iGaming North America Awards (iGNA) for their commitment to innovation and product development. They were awarded the 2016 Best Platform Supplier, one of the most competitive categories at the iGNA.

Recent years have been a good for NYX too. Besides the iGNA awards, their Open Gaming System (OGS) was also named 2016 Platform of the Year. This was mainly attributed to the position NYX holds for being the market leading gaming providers in the industry. Their award winning platform is used by licensees to leverage the best, out of the countless, multi-vendor casino content from around the world.