888 Holdings PLC (LSE:888) said it will issue more than £1bn in debt and borrow a further £900mln to fund its proposed purchase of betting shop chain William Hill for £2.2bn.
The online betting and gaming company said it plans to market £1.02bn of debt through a US dollar term loan B facility maturing in 2028, euro-denominated senior secured fixed rate notes due in 2027 and euro-denominated senior secured floating rate notes due in 2028.
The company also plans to enter into a £401mln euro-denominated term loan A debt facility and a £358mln sterling denominated term loan A facility, which will each mature in 2028, with underwriters.
An additional £150mln multicurrency revolving credit facility will remain undrawn by the issue date and mature in 2028.
The company said it will combine proceeds from the debt offering with borrowing under its senior facilities and cash reserves, including £159mln from the placing of new shares in April, which would together total at least £2.08bn.
It said it would use the capital to refinance or finance the proposed acquisition of the global William Hill business and repay debt held in the business, and as working capital.
The capital raising will be made through its subsidiary 888 Acquisitions in an offering that will run until 1 July.
The betting company simultaneously issued an update to the market on its earnings for the year through to February 2022.
The gambling shop, which agreed to buy William Hill’s global business except for its US operations from Las Vegas casino company Caesars in 2021, said it generated £690mln of annual revenue and underlying earnings (adjusted) of £109mln for the year.
The reopening of retail platforms in regulated countries had a “positive impact” on earnings, it said, but this was offset by closures in the Netherlands and the impact of new online gambling measures in the UK.
The group said it expects to post revenue of £330 mln to £335mln for the six months ending 30 June.
William Hill, excluding the US market, generated £1.37bn of revenue and adjusted underlying earnings of £238mln. The company is expected to generate revenue of between £620mln and £630mln for the six months ending 28 June.
888 added that it is expecting higher capital expenditure in 2022 than in 2021 for both business lines.
It said its board aims to keep its net leverage ratio in the medium term at up to 3.0x.