INSPIRED
A new day for INSPIRED
I Luke Alvarez of Inspired
nspired Gaming has developed an interesting and rather dynamic array of products for a wide range of markets – visitors to their trade show stands in recent years will have seen an SBG automated roulette product, for example,
alongside their renowned VLT and server-based gaming products. But server-based gaming remains the bread and butter of this technology-driven company. Casino International found out from Luke Alvarez, Chief Executive Officer of IGG, why the future is so bright for Inspired and what new investment means for them.
Casino International: How did the acquisition
come about? Luke Alvarez: We’ve been in an offer period for
quite a long time, on and off, with various approaches made to us. What we’ve now done I am happy to say is announced an acquisition by a London-based firm called Vitruvian Partners who are a blue-chip private equity firm. They’re taking the business private with a new finance structure which leaves us with less debt than we had on the other side – about £50m, which frees up our financing structure to grow the business more quickly. It means we can spend the operating cash flow we generate on new machine investment and new software and game development. We were a PLC, and they have paid £74m for the
equity in the business, at a share price of 60p, plus the net debt of £60m. So it’s an enterprise value of the sum of those parts, circa £134m in total.
CI: Debt reduction to £50m sounds promising –
what was the previous debt level? LA: Around £79m.
CI: So some of your cash flow is going to go toward servicing that debt still, but it’s a third less…
30 JULY/AUGUST 2010
business when the right opportunities emerge. CI: So why did they opt for Inspired Gaming
Group? LA: Because we have a strong technology lead in
server-based gaming and because from a macro point of view, internationally gaming is a big growth market. I also think that the financial market troubles of the last couple of years have actually created opportunities in gaming because governments see
Inspired Gaming Group is in the closing stages of a takeover – and subsequent de-listing – by private equity firm Vitruvian Partners and the sale should mark the beginning of a period of huge potential for the server-based gaming specialists
LA: It is significantly less. Also it is structured very
differently because with our current debt we were entering the last two or three years of the facility, so we were heavily amortizing paying it down, while under this facility there is pretty much no amortization until the end. Our cash flow then goes in to growing the business. The net effect is we are leaving the public market
as a PLC and becoming a private company. Instead of having lots of different institutional shareholders we have one London-based private equity shareholder, and that improved financing restructure. We can now invest and put lots of machines into markets like Italy, the Far East, and so on.
CI: With private ownership, is there room for future
investment from the buyers? You have a few facilities in the UK to maintain, but what about expansion? LA: They’re coming on board to grow the business.
Traditional private equity did leveraged buyouts where a public company is taken private with a lot more debt than it had as a public company. That would lead to a big focus on cost reduction, which wouldn’t help a business to grow. We’re in the opposite position, where it’s a de-leveraging buyout, precisely so we can free up that cash flow, invest in the business and grow it. And they have plenty of firepower to invest in the
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