Final Step in Streamlining Portfolio
as the Leading Cross-Platform Global Games Company
Generates Approximately $800 Million in Gross
Proceeds
Facilitates Path to Achieve Targeted Net
Debt Leverage Ratio(1) Range of 2.5x to 3.5x
Advances Ability to Return Capital to
Shareholders and Invest in Key Growth Initiatives
Light & Wonder, Inc. (NASDAQ: LNW) (“Light & Wonder,”
“L&W” or the “Company”) today completed the previously
announced sale of its Sports Betting Business, OpenBet, to Endeavor
Group Holdings, Inc. (NYSE: EDR) (“Endeavor”), for total gross
proceeds of approximately $800 million, consisting of $750 million
in cash, subject to certain customary adjustments, and 2,305,794
shares of Class A common stock of Endeavor.
The sale marks the final step, as part of the Company’s
strategic plan announced in June 2021, to streamline the
organization and transform the Company. Additionally, the sale
positions OpenBet to build on their exceptional track record of
innovation as part of Endeavor. Light & Wonder has rapidly
delivered on key commitments, including strengthening the balance
sheet and positioning the Company to unlock tremendous value as the
leading cross-platform global games company.
“With the completion of the OpenBet divestiture and our now
streamlined organization, Light & Wonder is well positioned to
execute on our growth strategy with a singular focus on building
great games fully cross-platform,” said Matt Wilson, interim Chief
Executive Officer of Light & Wonder. “With our R&D engine
and world class talent at our core, we have an unparalleled ability
to leverage our leading industry positions, evergreen franchises
and unmatched platforms to drive sustainable differentiation and
significant value. I want to thank our teams for their hard work
and dedication to ensure a quick and successful completion of this
important transaction. Endeavor is the right partner for OpenBet
and we wish our OpenBet colleagues all the best on this exciting
new chapter.”
“Importantly, with the completion of this sale, we have
delivered on our key priority to transform our balance sheet, with
a clear path to achieving our Targeted Net Debt Leverage Ratio(1)
range of 2.5x to 3.5x. With our high mix of recurring and digital
revenues, double-digit growth profile, $1.4 billion of 2025
Targeted Consolidated AEBITDA(1) and strong cash flow, we have
created an opportunity to generate significant excess capital. Our
enhanced financial flexibility accelerates our ability to return
substantial capital to shareholders through our share repurchase
program, while also pursuing our key growth initiatives, enabling
us to unlock tremendous shareholder value going forward.”
(1)
Represents a non-GAAP financial measure.
Additional information on non-GAAP financial measures presented
herein is available at the end of this release.
Advisors
Oakvale Capital LLP and Macquarie Capital (USA) Inc. served as
financial advisors and Cravath, Swaine & Moore LLP served as
legal counsel to Light & Wonder.
About Light & Wonder, Inc.
Light & Wonder, Inc. (formerly known as Scientific Games
Corporation), is a global leader in cross-platform games and
entertainment. The Company brings together 5,000 employees from six
continents to connect content between land-based and digital
channels with unmatched technology and distribution. Guided by a
culture that values daring teamwork and creativity, the Company
builds new worlds of play, developing game experiences loved by
players around the globe. Its OpenGaming™ platform powers the
largest digital-gaming network in the industry. The Company is
committed to the highest standards of integrity, from promoting
player responsibility to implementing sustainable practices. To
learn more, visit lnw.com.
Forward-Looking Statements
In this press release, Light & Wonder makes “forward-looking
statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995, including statements relating to
financial targets. Forward-looking statements can generally be
identified by words such as “achieve,” “target,” “opportunity,”
“will,” “may,” and “should” or similar terminology. These
statements are based upon Light & Wonder’s management’s current
expectations, assumptions and estimates and are not guarantees of
timing, future results or performance. Therefore, you should not
rely on any of these forward-looking statements as predictions of
future events. Actual results may differ materially from those
contemplated in these statements due to a variety of risks,
uncertainties and other factors, including any inability to further
de-lever or refinance our indebtedness and position the Company for
enhanced growth and those factors described in Light & Wonder’s
filings with the Securities and Exchange Commission (the “SEC”),
including Light & Wonder’s current reports on Form 8-K,
quarterly reports on Form 10-Q and its latest annual report on Form
10-K filed with the SEC on March 1, 2022 (including under the
headings “Forward-Looking Statements” and “Risk Factors”).
Forward-looking statements speak only as of the date they are made
and, except for Light & Wonder’s ongoing obligations under the
U.S. federal securities laws, Light & Wonder undertakes no
obligation to publicly update any forward-looking statements
whether as a result of new information, future events or
otherwise.
Non-GAAP Financial Measures
Targeted Net Debt Leverage Ratio
Net debt is defined as total principal face value of debt
outstanding, the most directly comparable GAAP measure, less cash
and cash equivalents. Principal face value of debt outstanding
includes the face value of debt issued under Senior Secured Credit
Facilities, Senior Notes and Subordinated Notes, which are all
described in Note 15 of the Company's Annual Report on Form 10-K
for the year ended December 31, 2021 and in Note 11 of the
Company’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2022, but it does not include other long term obligations
primarily comprised of certain revenue transactions presented as
debt in accordance with ASC 470. Net debt leverage ratio,
represents Net debt divided by Consolidated AEBITDA (or Combined
AEBITDA for prior periods) (as defined below). The forward-looking
non-GAAP financial measure targeted net debt leverage ratio is
presented on a supplemental basis and does not reflect Company
guidance. We are not providing a forward-looking quantitative
reconciliation of targeted net debt leverage ratio to the most
directly comparable GAAP measure because we are unable to predict
with reasonable certainty the ultimate outcome of certain
significant items without unreasonable effort. These items are
uncertain, depend on various factors, and could have a material
impact on GAAP reported results for the relevant period.
Targeted Consolidated AEBITDA
Consolidated AEBITDA, is a non-GAAP financial measure that is
presented as a supplemental disclosure of the Company’s continuing
operations. Consolidated AEBITDA should not be considered in
isolation of, as a substitute for, or superior to, the consolidated
financial information prepared in accordance with GAAP, and should
be read in conjunction with the Company's financial statements
filed with the SEC. Consolidated AEBITDA may differ from similarly
titled measures presented by other companies. Consolidated AEBITDA
is reconciled to Net income (loss) attributable to the Company and
includes the following adjustments: (1) Net income attributable to
noncontrolling interest; (2) Net income from discontinued
operations, net of tax; (3) Restructuring and other, which includes
charges or expenses attributable to: (i) employee severance; (ii)
management restructuring and related costs; (iii) restructuring and
integration; (iv) cost savings initiatives; (v) major litigation;
and (vi) acquisition costs and other unusual items; (4)
Depreciation, amortization and impairment charges and Goodwill
impairments; (5) Loss on debt financing transactions; (6) Change in
fair value of investments and (Gain) loss on remeasurement of debt
and other; (7) Interest expense; (8) Income tax expense; (9)
Stock-based compensation; and (10) Other income, net, including
foreign currency (gains) and losses, and earnings from equity
investments. AEBITDA is presented exclusively as our segment
measure of profit or loss. The forward-looking non-GAAP financial
measure Targeted Consolidated AEBITDA represents a goal for the
Company and does not reflect Company guidance. We are not providing
a forward-looking quantitative reconciliation of Targeted
Consolidated AEBITDA to the most directly comparable GAAP measure
because we are unable to do so without unreasonable efforts or to
reasonably estimate the projected outcome of certain significant
items. These items are uncertain, depend on various factors out of
our control and could have a material impact on the corresponding
measures calculated in accordance with GAAP.
Combined AEBITDA
Combined AEBITDA, is a non-GAAP financial measure that combines
Consolidated AEBITDA (representing our continuing operations),
AEBITDA from discontinued operations and EBITDA from equity
investments included in continuing operations and is presented as a
supplemental disclosure. Combined AEBITDA should not be considered
in isolation of, as a substitute for, or superior to, the
consolidated financial information prepared in accordance with
GAAP, and should be read in conjunction with the Company's
financial statements filed with the SEC. Combined AEBITDA may
differ from similarly titled measures presented by other
companies.
AEBITDA from Discontinued Operations
AEBITDA from discontinued operations, is a non-GAAP financial
measure that is presented as a supplemental disclosure for the
Company’s discontinued operations. AEBITDA from discontinued
operations should not be considered in isolation of, as a
substitute for, or superior to, the consolidated financial
information prepared in accordance with GAAP, and should be read in
conjunction with the Company's financial statements filed with the
SEC. AEBITDA from discontinued operations may differ from similarly
titled measures presented by other companies. AEBITDA from
discontinued operations is reconciled to Net income from
discontinued operations, net of tax and includes the following
adjustments: (1) Restructuring and other, which includes charges or
expenses attributable to: (i) employee severance; (ii) management
restructuring and related costs; (iii) restructuring and
integration; (iv) cost savings initiatives; (v) major litigation;
and (vi) acquisition costs and other unusual items; (2)
Depreciation, amortization and impairment charges and Goodwill
impairments; (3) Income tax expense; and (4) Stock-based
compensation and other, net. In addition to the preceding
adjustments, we exclude Earnings from equity investments and add
(without duplication) discontinued operations pro rata share of
EBITDA from equity investments, which represents their share of
earnings (whether or not distributed) before income tax expense,
depreciation and amortization expense, and interest expense, net of
our joint ventures and minority investees, which is included in our
calculation of AEBITDA from discontinued operations.
EBITDA from Equity Investments
EBITDA from equity investments, represents our share of earnings
(loss) (whether or not distributed to us) plus income tax expense,
depreciation and amortization expense (inclusive of amortization of
payments made to customers for LNS), interest (income) expense,
net, and other non-cash and unusual items from our joint ventures
and minority investees. EBITDA from equity investments is a
non-GAAP financial measure that is presented as supplemental
disclosure for illustrative purposes only.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220929005964/en/
Investor Inquiries Jim Bombassei, Senior Vice President
of Investor Relations jbombassei@lnw.com
Media Inquiries media@lnw.com
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