Tomorrow, Thursday, except in the unlikely event, the Prospectus for Intralot's capital increase will be approved by the Hellenic Capital Market Commission. The company will seek to raise €135 million by issuing 232,758,621 new shares to be distributed to shareholders with a right of first refusal of 0.62 new shares for every 1 old share at €0.58 each.
The increase will be completed by the end of October, followed by the certification by the stock exchange authorities that the equity has "turned positive" and on November 7, the date on which, according to the timetable of the Prospectus, the new shares will be traded, they will be reintroduced to the Main Market of the CSE, after three years in a surveillance regime.
A year ago, the company completed a EUR 129 million capital increase to acquire the majority of the shares of its US subsidiary Intralot Inc. At that time, Socrates Kokkalis had invested 46 million euros, raising his stake to 32.42%, and Suh Kim's US fund Standard General had entered as a strategic investor, acquiring through the raise 32.9% of Intralot, putting 71 million euros into the raise.
Now, as part of a broader restructuring of the group's debt, a new EUR 135 million capital increase is being launched, but this time the two main shareholders will also have 'allies' to cover part of their pre-emptive rights.
Mr Socrates Kokkalis is assigning part of his rights to Intracom Hlodings and the shipowner Mr George Mundrea. In particular, Mr Kokkalis will participate in the increase with EUR 2 million, Intracom Holdings with EUR 25 million and the shipowner Moundreas with EUR 16,8 million.
After the completion of the increase, and provided it is fully funded, S. Kokkalis will control 20.5% of Intralot's share capital, Intracom Holdings 7.13% and Mr Moudreas 4.78%.
Similarly, Suh Kim will exercise rights for 40 million shares by placing EUR 23.2 million, with the underwriters having secured the participation of institutional investors to cover Standard Capital's assigned rights, putting in a cumulative total of around EUR 21 million.
Upon completion of the raise, and provided it is fully funded, Standard Capital will control 26.86% of Intralot's share capital. Management's objective with the raise is, in addition to capital strengthening, to achieve an increase in the free float of the share from 32% to close to 40%.
Intralot is now attracting third-party investors as it has no relation to the past when it was one step away from bankruptcy. It maintains strong gaming technology contracts in developed markets with high margins, has drastically reduced its dependence on Greece, has a high level of expertise and is among the three largest lottery technology companies in the world.
The capital increase will be followed by a bank loan of EUR 100 million and a corporate bond issue of EUR 130 million on the stock exchange. These amounts together with the EUR 126 million of the raise (of the EUR 135 million, EUR 5 million will be expenses and EUR 4 million will boost working capital) will be used to refinance the EUR 356 million bond maturing in September 2024 at an interest rate of 5.25%.
After completion, the group's net debt (including the loans of the US subsidiary) will decrease due to the capital increase and the net debt to EBITDA ratio will fall to 2.8x. Management expects EBITDA of over EUR 130 million this year versus EUR 122 million in 2022.
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