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March 9, 2007 |
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| Progressive Gaming seeks to sell table game business | |||
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On Monday Progressive Gaming
International announced that it will try to sell its table game
business, allowing the company to be a true systems provider with a
focus on technology, while freeing up cash flow and providing funds
to pay down some notes coming due next year.
“We have considered the sale of this business on prior occasions and determined that it was best to wait until the market position…in Macau [was] well established,” Progressive President Russel McMeekin told the Las Vegas Review-Journal. “We believe these games are positions for growth and believe the timing is appropriate to maximize the value of these assets.” Progressive has asked Roth Capital Partners to assist in the sale, for which no time frame was given. Aimee Marcel-Remey, Jefferies & Co. gaming analyst, said she believed a sale could generate between $40 million and $50 million. The estimate is 10 times the cash flow Progressive generates from table games, and is based on Shuffle Master paying 10 times cash flow when it acquired an Australian slot maker last year. “That seemed to be a pretty good model for us to base a sales price,” said Marcel-Remey in advising investors. “We backed out of what Progressive earns from table games as about $4 million to $5 million in cash flow.” Marcel-Remey suggested that the sale would be a good move, as Progressive would be better off concentrating on table game identification systems, jackpot systems, the Rapid Bet Live sports wagering system and mobile and wireless gaming. “The operating structure for the company’s hardware-based division is expensive,” she said. “Divesting of this division would create a more efficient operating structure and would allow management to focus on its current systems business.” Progressive owns the rights to over a dozen specialty table games, including World Series of Poker Texas Hold ‘Em Bonus Poker. The company said in a statement that it planned to retain certain rights—such as wireless applications—to the games. Progressive would use proceeds from a potential sale for working capital and to fund other growth initiatives. Additionally, the company would pay down all or part of its 11.875 percent notes, on which the company pays around $7 million every year in interest. “A transaction is not expected to have an impact on any of our other strategic initiatives,” McMeekin said, “including our central server product, peer-to-peer poker or our planned wireless and mobile gaming initiatives through our partnership with Cantor Gaming.” —Darby Harris |
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