Everi Holdings Suspends $130M Share Buyback, Considers Issuing Special Dividend

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Everi Holdings, a Las Vegas-based gaming device manufacturer traded on the NYSE under the ticker EVRI, has made the unexpected decision to halt its previously declared $130 million share repurchase initiative, a follow-up to a $180 million program that was slated to continue through November 3, 2024, the firm stated today. The company also suggested the possibility of administering a special dividend in lieu of completing the buyback, utilising the remaining capital from the prematurely concluded initiative.

From the initial $180 million repurchase plan set in motion roughly a year ago, Everi brought back an estimated $100 million of its shares by the close of 2023. This leaves a substantial $80 million unused in the abruptly ended buyback program, birthing the consideration of issuing a special dividend.

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To facilitate this potential change of course, Everi has enforced a mandatory sell-to-cover policy to satisfy tax requirements related to restricted and performance stock units (RSUs and PSUs), incentives often offered as part of executive remuneration packages. The company stated that funds originally earmarked for the stock repurchase program or to fulfill tax withholding obligations concerning RSUs and PSUs might better be redirected towards this prospective special dividend.

However, the specifics surrounding the potential special dividend remain unclear. Everi has yet to release any details regarding the timing or the prospective amount of the said payout.

A significant merger disclosed in February might be the catalyst for this potential special dividend. International Game Technology (IGT), under ticker NYSE: IGT, declared a massive $6.2 billion unification of its global gaming and PlayDigital divisions with Everi, marking one of the year’s most substantial gaming industry transactions.

Everi, which currently abstains from regular quarterly payouts, hinted to investors at the time of the merger announcement that the possibility of a special dividend existed. Despite an initial surge post the merger announcement, the company’s shares have since fallen; they now sit at a 12% loss over the past month and nearly a 28% decline year-to-date.

The gaming manufacturer further explained that the probable special dividend payout would mirror the cash flow generated from the time of the merger. It stated, “The amount of the Special Dividend, if any, shall be calculated… and shall be based on the Company’s cash and cash equivalents at closing in excess of a target of $30 million,” As Everi has 83.47 million shares currently in circulation, the expense to the company would be relatively modest if the company opted for a $30 million disbursement.

If it does opt to issue a special payout, Everi would join a growing roster of gaming companies that have recently done so, including MGM China and Wynn Macau, both of whom made headlines with surprise special dividends in March. Furthermore, since November 2021, Red Rock Resorts, Inc. has dealt three special dividends on top of its regular quarterly yield. Other Las Vegas-based firms such as Golden Entertainment and Gaming and Leisure Properties have also granted special distributions in recent times.