LAS VEGAS, Sept. 23, 2021 /PRNewswire/ -- Scientific Games International, Inc. announced today that it is soliciting consents (the "Consent Solicitation") from the holders of its 5.000% Senior Secured Notes due 2025 ("5% Secured Notes"), 3.375% Senior Secured Notes due 2026 ("3.375% Secured Notes"), 8.625% Senior Notes due 2025 ("8.625% Notes"), 5.500% Senior Notes due 2026 ("5.5% Notes"), 8.250% Senior Notes due 2026 ("8.25% Notes"), 7.000% Senior Notes due 2028 ("7% Notes") and 7.250% Senior Notes due 2029 ("7.25% Notes" and, together with the 5% Secured Notes, the 3.375% Secured Notes, the 8.625% Notes, the 5.5% Notes, the 8.25% Notes and the 7% Notes, the "Notes") for the adoption of certain proposed amendments as set forth below (the "Proposed Amendments") to the indentures governing the Notes (the "Indentures").
The Proposed Amendments seek to amend the Indentures' requirement that at least 75% of the consideration received from an Asset Sale is cash or cash equivalents to reduce that percentage to 60%, solely with respect to an initial public offering relating to SG Lottery (as defined below) occurring prior to June 30, 2022, subject to the terms and conditions described in the Issuer's Consent Solicitation Statement dated September 23, 2021 (the "Statement"). Unless otherwise defined herein, capitalized terms used herein have the meanings given to them in the Statement.
As previously disclosed on June 29, 2021, SGMS is evaluating strategic alternatives for the intended divestiture of its lottery business ("SG Lottery"), including an initial public offering or combination with a special purpose acquisition company, or a sale or a strategic combination with another business (any such transaction, a "SG Lottery Transaction").
If an initial public offering of SG Lottery is consummated, we expect to hold no more than a minority equity interest in the entity that owns SG Lottery, but the amount of such minority equity interest is uncertain at this time.
We are pursuing the Consent Solicitation to provide us greater flexibility with respect to the equity offered in the potential initial public offering. We can, though, consummate the initial public offering of SG Lottery and comply with the Indentures without receiving the required consents.
Consistent with our previously stated intent to rapidly de-leverage our balance sheet, and bring our leverage in line with public industry peers, we currently intend to use a substantial majority of the net proceeds from an SG Lottery Transaction to repay indebtedness of SGMS and its restricted subsidiaries. SGMS does not intend to pay any dividends, or make any repurchase of its equity, with the net proceeds from an SG Lottery Transaction, nor does it intend to distribute any retained interests in SG Lottery to its shareholders (as a dividend or otherwise).
We cannot assure you we will ultimately consummate an initial public offering of SG Lottery, or that, if we do so, we will do so prior to June 30, 2022. If we fail to do so prior to such date, the Proposed Amendments will not become operative and we will not make the Consent Payment.
The Consent Solicitation will expire at 5:00 p.m., New York City Time, on September 30, 2021, unless extended or earlier terminated by the Issuer in its sole discretion (such date and time, as the same may be extended, the "Expiration Date").
Only Holders of the Notes as of 5:00 p.m. (New York City time) on September 22, 2021 (such date and time, including as such date and time may be changed by the Issuer, from time to time, the "Record Date") are entitled to consent to the Proposed Amendments pursuant to the Consent Solicitation. If the Holders of a majority in aggregate principal amount outstanding of each series of the Notes (the "Required Consents") validly deliver Consents to the Proposed Amendments on or prior to the Expiration Date and do not validly revoke such Consents prior to the Revocation Deadline (as defined below), it is expected that the Issuer, SGMS, the guarantors party thereto (the "Guarantors") and the trustee will execute supplemental indentures (the "Supplemental Indentures") effecting the Proposed Amendments (such time of execution, the "Consent Effective Time"). The Supplemental Indentures will be effective immediately upon execution thereof as to all Holders at the Consent Effective Time, whether or not a Holder delivered a Consent, but will not be operative until the Consent Payment is made.
The earlier to occur of the Consent Effective Time and the Expiration Date is referred to herein as the "Revocation Deadline." Consents may be validly revoked at any time prior to the Revocation Deadline, but not thereafter. Consents to the Proposed Amendment shall not be revoked at any time after the Revocation Deadline, even if the Expiration Date is later than such Revocation Deadline. Promptly after the Consent Effective Time, the Issuer will notify DTC of the occurrence of the Consent Effective Time.
In the event that the Consent Effective Time for a series of Notes has occurred and the SG Lottery IPO is consummated, the Issuer will pay in cash, on the date on or prior to the consummation of an initial public offering of SG Lottery, an aggregate amount of (i) US$3,125,000.00 with respect to the 5% Notes, (ii) €812,500.00 with respect to the 3.375% Secured Notes, (iii) US$1,375,000.00 with respect to the 8.625% Notes, (iv) €625,000.00 with respect to the 5.5% Notes, (v) US$2,750,000.00 with respect to the 8.25% Notes, (vi) US$1,750,000.00 with respect to the 7% Notes and (vii) US$1,250,000.00 with respect to the 7.25% Notes, in each case for the benefit, on a pro rata basis, of each Holder of record of such series of Notes on the Record Date which has validly delivered a Consent to the Proposed Amendments on or prior to the Expiration Date and not validly revoked its Consent prior to the Revocation Deadline. If the Required Consents with respect to a series of Notes are not delivered, no Holder of such series of Notes will be eligible to receive any pro rata portion of the Consent Payment, including Holders who have validly delivered their Consent. The Consent Payment will be made by the Issuer to the Paying Agent (as defined herein) for the benefit of the holders of the Notes who delivered (and did not revoke) such valid Consents to the Proposed Amendments with respect to the series of Notes for which Required Consents were obtained. Holders of Notes for which no Consent is delivered will not receive any pro rata portion of the Consent Payment, even though the Proposed Amendments, once effective, will bind all Holders of such series of Notes and their transferees. No Consent Payment will be payable unless the Required Consents are delivered in the Consent Solicitation for each series of Notes at or prior to the Expiration Date and the Supplemental Indentures related thereto are executed and delivered by the parties thereto.
The Issuer reserves the right to modify the Statement and the terms and conditions of the Consent Solicitation or to terminate the Consent Solicitation at any time.
Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are the solicitation agents in the Consent Solicitation and Global Bondholder Services Corporation has been retained to serve as the information, tabulation and paying agent. Persons with questions regarding the Consent Solicitation should contact Morgan Stanley & Co. LLC at (toll free) +1 (800) 624-1808 or (collect) +1 (212) 761-1057 and Goldman Sachs & Co. LLC at (toll free) +1 (800) 828-3182 or (collect) +1 (212) 902-5962 or by e-mail at GS-LM-NYC@gs.com. Requests for the Statement should be directed to Global Bondholder Services Corporation, at (toll free) +1 (866) 470-3700, (banks and brokers) +1 (212) 430-3774, by facsimile (for Eligible Institutions only) at +1 (212) 430-3775/3779 or by email to contact@gbsc-usa.com.
None of the Issuer, SGMS, the solicitation agents, the information, tabulation and paying agent and the trustee or any of their respective affiliates is making any recommendation as to whether Holders of the Notes should deliver consents in response to the Consent Solicitation. Holders must make their own decisions as to whether to deliver consents.
This press release is for informational purposes only and is neither an offer to sell nor a solicitation of an offer to buy any security. This announcement is also not a solicitation of consents with respect to the Proposed Amendments or otherwise. The Consent Solicitation is being made solely through the Statement referred to above and related materials. The Consent Solicitation is not being made to Holders of Notes in any jurisdiction in which the Issuer is aware that the making of the Consent Solicitation would not be in compliance with the laws of such jurisdiction. In any jurisdiction in which the securities laws or blue sky laws require the Consent Solicitation to be made by a licensed broker or dealer, the Consent Solicitation will be deemed to be made on the Issuer's behalf by the solicitation agents or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction.
Neither the Statement nor any documents related to the Consent Solicitation have been filed with, and have not been approved or reviewed by, any federal or state securities commission or regulatory authority of any country. No authority has passed upon the accuracy or adequacy of the Statement or any documents related to the Consent Solicitation, and it is unlawful and may be a criminal offense to make any representation to the contrary.
Forward-Looking Statements
In this press release, Scientific Games makes "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "will," "may," and "should." These statements are based upon management's current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks, uncertainties and other factors, including those factors described in our filings with the Securities and Exchange Commission (the "SEC"), including Scientific Games' current reports on Form 8-K, quarterly reports on Form 10-Q and its latest annual report on Form 10-K filed with the SEC on March 1, 2021 (including under the headings "Forward-Looking Statements" and "Risk Factors"). Forward-looking statements speak only as of the date they are made and, except for Scientific Games' ongoing obligations under the U.S. federal securities laws, Scientific Games undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. No assurance can be given that the transactions described herein will be consummated or as to the ultimate terms of any such transactions.
