The UK-based International Game Technology (BYSE: IGT) has amended its term loan facility, saving the gaming supplier $65 million this year. The move aims to reduce the company’s debt burden that stands at 7.07 billion at the end of the first quarter. Configuring its credit facility, IGT will extend its average maturity of the debt to five years. In a statement, IGT CFO Max Chiara noted that the move would lower annual interest expenses going forward.
“Based on the current balances and interest rates of the company’s debt, we expect this transaction and the debt transactions closed earlier this year to result in approximately $65 million in lower annualized interest expense going forward.”
Cutting annual interest by $65 million will represent a significant saving for a company with a $4.24 billion in capitalization. In the first quarter of 2021, repaid $1 billion in cash that was due in 2022 and $750 million in cash that was due in 2026. The company now stands at $2.1 billion, including cash and credit.
The new flexibility on IGT term loan originated in 2017. The flexibility enables IGT to increase from $1.01 billion to 41.17 billion while the maturity date is pushed out to 25th January 2027. IGT will thus be in a position to meet important debt reduction targets by making $236 million in 2024, 2025, and 2026 and then $472 million in 2027.
Some analysts believe that IGT’s leverage could decline four times following the sale of IGT’s Italian digital gaming machine and sports wagering operations. That could also prompt the company to reinstate its dividend.
Shares of the gaming solutions provider are performing well this year and topping land-based casino operators. The upside is credited to factors like recurring businesses and rebounding cashless gaming iLottery and online sports betting. In the US, IGT has partnered with lottery companies in more than half of the states.