The financial uncertainty and volatility of global markets continue to impact the online gambling sector as 888 Holdings is reportedly struggling securing investors to back its £1bn bond.
During H1 trading, 888 proceeded to issue a £1bn debt bond, needed to finalise its £1.9bn takeover of William Hill’s UK and international units from Caesars International.
The debt bond, made-up of dollar and €uro tranches, was underwritten by the investment banks of JP Morgan and Morgan Stanley who are reported by the Financial Times to have made a string of losses on debt transactions.
The investment banks are reported to be struggling to find buyers for 888’s bond, despite offering a yield of 10% on payments that will be triggered from dollar and euro tranches in 2027 and 2028 respectively.
Though unconfirmed by JP Morgan and Morgan Stanley, the banks are reported to have taken on £760m of 888’s debt, due to a lack of buyers.
888’s debt sale was meant to be concluded last week as the company completed its merger with William Hill’s UK and international units. However, JP Morgan announced that it had delayed the closing of the transaction to ‘until mid-next week’.
Across markets, rising inflation is reported to have sapped the confidence of investors in debt transactions, as Europe’s high-yield bond indices have dropped 15% since the start of the year.
The FT noted that further uncertainties should be applied to 888’s debt, as the enlarged FTSE firm waits for the UK government to publish its White Paper of reforms on the gambling sector.
Speculation mounts that the government will proceed to implement technical constraints, limiting online casinos to £2-to-£5 wagers, stricter affordability checks on players and a ban on free bets and VIP rewards.
Further to the £1bn debt bond, 888 financed its William Hill acquisition by accessing a €400m and £360m credit facility.
Completing its acquisition of William Hill last Thursday, 888 unveiled its new C-level executive team led by Chief Executive Itai Pazner. That has set the target of securing £100m in pre-tax cost synergies that will be fully released by 2025 trading.