888 hedges debt in spite of dire UK economic outlook
The board of 888 Holdings has provided a group financing update alongside its Q3 2022 trading results, published this morning.
Enlarging its business by acquiring William Hill UK and International units, 888 carries a long-term debt structure across instruments with maturities ranging from five-to-six years.
The FTSE250 operator announced that it had entered a “series of hedging arrangements” to fix interest costs at approximately 35%.
At present, 888 debt is made up of 36% in GBP, 8% in USD and approximately 56% in €uros.
“While the Group also benefits from partial natural hedging on the Euro exposure through its Euro-based cash generation, it continues to explore additional hedging arrangements in order to provide further certainty, including with regard to interest rates,” read the statement
888 expects its cash interest costs to be approximately £75m in H2 2022, as a result of hedging in place and considering current market conditions and spot rates
The firm further recognises expected rate rises in 2023, which could result in cash interest costs of approximately £170m for full-year trading
As stands, 888 carries a gross debt holding of £1.8bn, with “cash (net of customer balances) of £186m as of 30 September 2022 and undrawn committed facilities of £150m, giving total liquidity of £336m” – figures reflecting current FX rates on non-GBP denominated debt.
888’s financing and debt arrangements are closely monitored by industry analysts. iGaming strategic advisory Regulus Partners commented on the group’s debt developments;
“888 has gone long on UK macro, UK policy retail and debt risk at a time when each has soured beyond anyone’s expectations. All 888’s significantly improved operational skills will be needed to combat these headwinds.
“However, the recent history of global gambling has demonstrated that it is very difficult to buy or operate a business out of strategic trouble. We believe the two most important strategic moves from a defensive standpoint are to make UK online a sustainable level playing field in terms of customer interactions and unlock the customer interaction rather than the diminishing legacy cash flow value of retail. These strategic levers will decide whether 888 can grow the key UK market or see it sink the ship.”
Source: SBC News
