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888 Holdings will refinance £450m of its debt as it continues the deleveraging process begun following the 2022 acquisition of William Hill.

The retail and online gaming operator reported the successful pricing of a £400m senior secured note offering at 10.75%, to be issued on 9 May.

The business has also entered into an additional revolving £50m multi-currency credit facility with a 31 December maturity date.

The refinancing will reduce the company’s net debt by around £18m on completion, reflecting discounted cash compensation received up front to cover future increased interest costs.

However, 888 said its cash interest will increase by £4m-£5m on an annualised basis until 2028. The £400m portion of its debt will now be due in 2030, rather than 2028.

The operator added the refinancing will also improve the currency mix of its debt to more closely align with the firm’s cash generation.

It also highlighted it now has a better fixed vs floating debt mix than it had previously.

888 continues deleveraging process

888 took on significant debt during its £1.95bn acquisition of high-street betting brand William Hill’s non-US assets in July 2022.

Due to rising interest rates, these financial obligations became harder to service than was predicted, forcing the company begin the process of restructuring its debt in 2022.

The company’s net debt stood at £1.72bn as of 31 December 2023, representing a 5.6x debt/EBITDA ratio.

888 has said it has suspended dividend payments until this debt stands below the company’s mid-term target of 3x.

In its March investor presentation, 888 outlined its intention to have a 3.5x leverage by 2026, one year delayed from the target set by the company in 2022.

The business has committed to a “highly disciplined” approach to capital allocation in future to reduce its leverage, it added.

888 CEO Per Widerström said in March: “Our financial leverage is relatively high in the context of our sector, but I firmly believe this will be a significant positive driver of our return on equity and will magnify the returns that we will generate in the coming years.

“Our business is highly cash generative and we will use this cash wisely to ensure we deliver profitable growth and deleveraging, thereby multiplying our return on equity.”

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