UK: Allwyn Forerunner in Camelot Takeover?
The Allwyn Group, a lotto operator working across multiple countries, has announced its successful loan, which may be used in part for the takeover of Camelot UK. Allwyn recently won its bid to take over operation of the UK National Lottery after Camelot was unsuccessful in winning after nearly thirty years of operating the system. The changeover has not been without its ups and downs. The latest news is that Allwyn may in fact buy Camelot outright.
The Allwyn Group has secured substantial loan financing for various projects, including a possible takeover of Camelot UK. Towfiqu barbhuiya/Unsplash
Allwyn’s collaborative loan
The Allwyn Group has worked out a deal with several international banks in order to accumulate enough financial backing to offer a substantial bid in the Camelot takeover. This backing comes in the form of a $1.66 billion USD loan. Its various lenders have agreed to make up this amount via different types of loans.
$455 million are amortizing term loans. An amortizing loan is organized around a payment plan that factors in loan payments and interest so that the borrower pays off the full amount due by the end of an agreed-upon time period. In the case of Allwyn’s loans, these should be paid off in 5 years.
Another $455 million are organized as bullet term loans. These are due in 2028 and have a key difference to amortizing term loans, which is that most of the payment will happen towards the end of the loan term rather than being evenly distributed throughout. This will give the lotto group more time to earn back its investment.
A further $310 million is tied into a revolving credit facility. This kind of scheme means that as parts of the loan are paid off, further loans are paid out to the borrower (in this case, Allwyn). It’s useful in that it reduces overall interest payments on that chunk of the borrowed amount, but it also requires trust on the part of the lender in order to be an option. This loan will mature in 2027.
How will the loan be used?
Allwyn has outlined their intentions for the substantial loan amount, defining three areas for its immediate use. Part of the amount will help refinance debt the company has accumulated from a previous syndicate deal for $643 million USD. Some will go towards a bank guarantee to have insurance in case the company is not able to repay the loan amount due to unforeseen circumstances. About $310 million is earmarked for other outstanding debt.
Some part of the loan will also help with the group’s National Lottery license financing. It was announced that Allwyn would take over the lottery for its fourth cycle of licensing earlier this year. The previous license holder Camelot appealed the decision, but their appeal was ultimately dropped.
Allwyn and Camelot joining forces
Allwyn announced its interest in buying Camelot UK. However, representatives from the company have not confirmed yet whether this particular syndicate loan will be used towards that purpose. It is possible as the company has had detailed discussions with Camelot about the purchase.
The multi-national’s CFO, Kenneth Morton shared his enthusiasm for the project, explaining that Allwyn was successful in getting its loan amount despite today’s difficult financial climate. He said that banks they had previously partnered with were willing to increase their loan amounts, while new banks have also entered the fold for the deal.
Morton referred to the successful loan bid as proof of Allwyn’s reputation and credit as a lottery operating institution. It seems to be a positive sign for future growth. Indeed, Allwyn beat out three other companies in order to secure the National Lottery bid, which renewed this year for the fourth time since its inception in 1994.
