Moody's eyes Gamesys for downgrade

Moody's Investors Service said it placed Gamesys Group plc's ratings on review for downgrade, including the Ba3 corporate family rating, the Ba3-PD probability of default rating and the Ba3 rating assigned to the company's senior secured £550 million equivalent senior secured term loan B due 2024 (£510 million outstanding) and Ba3 rating assigned to the £13.5 million senior secured multicurrency revolver due 2023 borrowed by the company and Luxembourg Investment Co. 192 Sarl. The agency changed the outlook to under review from stable.

The placing of the ratings on review follows the April 13 announcement that Gamesys agreed to be acquired by Bally's Corp.

“Today's rating action reflects the expected deterioration in Gamesys' financial metrics pro forma for the transaction. Bally's existing leverage is significantly higher than Gamesys' stand-alone leverage of around 2.5x for 2020 (on a Moody's-adjusted basis) and the acquisition of Gamesys will be funded largely with debt. Additionally, interest coverage and retained cash flow (RCF)/debt would weaken. These negatives are partly counterbalanced by the expected improvement in the combined group's business profile because of the increased size and diversification into new geographies and segments,” the agency said in a press release.

The review will focus on the pro forma capital structure, liquidity profile expected use of free cash flow, and future operating strategy and financial policy, following the deal’s close, Moody’s said.

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