LeoVegas preparing bond issue to fund growth strategy

Swedish financial institutions Skandinaviska Enskilda Banken (SEB) and Swedbank to arrange investor meetings ahead of a potential bond issue. 

The senior, unsecured bond would have an expected volume of SEK500m (£44.0m/€49.2m/$58.7m), within an SEK1.2bn framework, that would mature after three years. This may be followed by a capital market transaction, depending on market conditions. 

The proceeds from the potential bond issue would be used to refinance existing debt and fund future M&A activity. 

Alongside the transaction, the operator has entered into a new three-year revolving credit facility for €40m. 

“With this, we ensure a long-term and stable financing for LeoVegas. We strengthen the company’s financial flexibility and diversify our financing with the combination of a bond and new bank loans,” LeoVegas chief executive Gustaf Hagman said. 

“This enables us to continue to deliver on our expansion strategy where we focus on regulated markets and markets soon to become regulated,” he explained. “Further, we continuously evaluate strategic and complementary acquisitions that may fit into the LeoVegas Group.”

The operator added that it would look to maintain a leverage ratio of net debt to adjusted earnings before, interest, tax, depreciation and amortisation (EBITDA) of 1.0x, though may exceed this level in the short term, to pursue larger acquisitions or other strategic initiatives. 

Its other, existing financial targets remain unchanged. The business will therefore aim to continue outperforming the wider gaming market, and keeping the long-term EBITDA margin of at least 15%, as well as returning at least 50% of profit after tax to shareholders as dividends. 

Earlier this month LeoVegas reported marginal year-on-year growth for the third quarter of 2020, with revenue up 0.8% to €88.9m (£80.2m/$104.4m). It said that growth was slowed by Sweden’s temporary restrictions on spend for online casino, which the operator has strongly opposed from the outset. 

This week it was one of a number of operators to speak out against plans to extend measures including an SEK5,000 deposit cap until June next year, arguing that the Swedish authorities should instead shift focus to tackling offshore activity.