IGT Figures Out How to Save $65 Million Annually

International Game Technology (IGT) has come up with a new plan on how to cut its debt. By making amendments to its term loan facility, the company will now be able to save around $65 million each year. At the end of Q1 in 2021, IGT’s debt was $7.07 billion. Compared to the debt a year earlier, the sum has declined by around $100 million. With these new amendments, the average maturity of IGT’s debt is extended to five years.

In a statement, IGT CFO Max Chiara stated that, with the current interest rates and balances, the amendment will result in around $65 million return each year with a lower annual interest. At the moment, the market capitalization of this company is $4.24 billion and lowering the debt by $65 million annually represents massive savings.

IGT’s Future With the New Financial Plans

In the first three months of 2021, IGT managed to refinance $1 billion in notes that are due next year, but also refinanced $750 million in commercial notes that are due in 2026. Furthermore, if cash and credit revolvers are taken into consideration, IGT has liquidity of $2.1 billion. The continued restructuring efforts are paying off substantially as the global iGaming and sports betting markets grow.

IGT provides back-end solutions for sportsbooks and lotteries and manufactures slots for companies around the world. The debt, which originated in 2017, increased the size of IGT from $1.01 billion to $1.17 billion with the new flexibility. Additionally, the maturity date of this company is now moved to January 25, 2027.

According to the calculations, the amortization payments for the years 2024, 2025 and 2026 need to be around $236 million. That number is increased two times for 2027, as the annual amortization payments for this year need to be around $472 million.

Some analysts believe that, after the sale of IGT’s Italian gaming division for $1.15 billion last December, the company will be prompted to reinstate its dividend, as the leverage is like to have a 4x decline.

IGT’s Stock Is On the Rise

2021 has so far been good for tech providers and game manufacturers. Their shares are better than those of brick-and-mortar casinos. The data shows that, in the year-to-date, the shares have risen by over 19% and IGT is a part of that rising trend. While presenting its earnings for the first quarter of 2021, the company stated that, compared to 2019, sales of store lottery products were up by 30%.

Additionally, the numbers from the second quarter are likely to top the 2019 levels by at least 20%. IGT has a massive presence in the US as it partnered with a majority of the states where betting on sports is considered legal.