Scientific Games Considers ASX Listing
American poker machine manufacturer Scientific Games is considering listing on the Australian Stock Exchange (ASX). Scientific Games is headquartered in Las Vegas and listed on the American NASDAQ exchange.
The American pokies giant has hired Sydney-based financial experts Jarden Australia to look into its figures. Scientific Games is interested in an ASX listing in addition to listening to feedback about its long-term strategy.
Floating on the ASX will raise capital, which Scientific Game plans to use to repay its debt. The company has US$9.43 billion ($12.14 billion) of debt weighing it down. That is an immense sum of money, which costs the company vast amounts of interest.
ASX Listing Makes Perfect Sense For Scientific Games
The ASX is open to new floats, and shares in gambling rivals are on an upward trajectory. Shares in Crown Resorts, for example, are flying high thanks to a possible merger and takeover.
Scientific Games’ shares are sky-high right now. A single share cost US$28.28 ($36.39) on February 14, 2020, but plummeted to only $5.87 ($7.55) on April 4, 2020. The almost unbelievable fall in value came after the start of the COVID-19 pandemic.
The shares have not only recovered to February levels but are trading at an all-time high. One Scientific Games share costs US$63.21 ($81.33) at the time of writing. A similar price is improbable on the ASX, especially when one considers Tabcorp shares are only $5.08 and Crown are $13.15 each. However, a double-figure float price is likely, which would raise much-needed funds.
Scientific Games’ Australian Links
You may be wondering why an American company wants to list on the ASX. We mentioned Aussie gambling shares are performing well right now, but Scientific Games has several Australian ties.
First, Jamie Odell is the executive chairman. Odell joined the company’s board in 2020. He is massively respected in Australia, courtesy of his success as CEO for Aristocrat Leisure. Odell spent almost a decade at Aristocrat and turned the Aussie pokies maker into a roaring success.
Caledonia Investments, a Sydney-based hedge fund manager, is another connection. Caledonia Investments fronted a consortium that invested US$1 billion ($1.29 billion) in Scientific Games. It now owns 9.8% of the American giant.
Another former Aristocrat Leisure executive is involved at Scientific Games. Toni Korsanos is the company’s executive vice-chair and sits on the Crown Resorts and Treasury Wine Estates boards.
Who Is Scientific Games?
Scientific Games provides gambling products and services to lottery and gambling organisations around the world. The company is famous for creating the first scratchie, doing so in 1974.
The company wholly owns several subsidiaries that are global names. These include:
- NYX Gaming Group Limited
- Bally Technologies
- WMS Industries
- MDI Entertainment
- The Global Draw
- Barcrest
It has spent vast sums of money acquiring companies over the past few years. It paid $3.3 billion plus $1.8 billion in assumed debt for Bally Technologies in 2014. That acquisition came 13-months after spending $1.5 billion for WMS Industries, the third-largest pokies manufacturer in the world.
All those companies generate approximately US$3-3.6 billion ($3.86-$4.63 billion) annually. However, its huge operating costs and large debt repayments mean Scientific Games has not shown a profit for several years. It lost US$548 million ($705.75 million) in 2020, US$108 million ($139.08 million) in 2019, and $339.3 million ($436.97 million) in 2018.
Scientific Games looks like it needs a financial boost from floating on the ASX. Reducing its debt gives it extra firepower and makes turning a profit more likely. The company is massive and has a ridiculous amount of potential, hence the upturn in its share price, but it is about time Scientific Games starting making vast sums of money instead of reporting losses.
