Amaya Looks to Dissolve Debt, Releases Strong Q2 Expectations

July 30th, 2015 | by Greg Shaun
Amaya PokerStars debt refinancing Q2 financial results

Amaya said this week it would pay down hundreds of millions of debt stemming from its acquisition of PokerStars, another step in the Canadian-based company’s continued growth. (Image: casinorelease.com)

Amaya has $800 million in outstanding debts incurred from its $4.9 billion acquisition of PokerStars and Full Tilt Poker in June 2014, but the company says it plans to repay approximately $575 million of that total before the end of the third quarter.

In a statement to investors, the company affirms the refinancing will greatly reduce the ongoing and mounting interest stemming from the debt, and will “thereby strengthen Amaya’s cash flow generation, liquidity and leverage profile.”

Along with a $400 million first lien loan, the company says its selling of business-to-business entities Chartwell and Cryptologic to NYX Gaming in April aided in positioning Amaya to have $195 million in cash and the ability to decrease the debt.

Quarter 2 Quarter Billion

Along with announcing that it’s restructuring its debt, Amaya forecasted the continued rising of revenues.

For the second quarter ending June 30th, the company says it expects to see incomes in the $242 to $250 million range, or a quarter of a billion dollars.

“These financial expectations are for Amaya’s B2C business, primary comprising the online gaming brands PokerStars and Full Tilt,” the statement reads. “The financial results for the second quarter of 2015 reflect year-over-year revenue growth from Amaya’s core poker business, as well as growth from Amaya’s emerging online casino vertical.”

Considering Amaya’s 2014 Q2 revenues totaled just over $30 million, it’s easy to see why the seemingly astronomical price tag for the world’s largest online poker network might have been a good all-in call.

Casino Royale

Perhaps the most shocking revelation from the Amaya investor statement is that it shows how well the online casino offerings are performing.

When the company acquired PokerStars and Full Tilt, it was basically a one-trick pony, but that is certainly no longer the case.

The PokerStars and Full Tilt casinos, offering the most popular gambling formats including slots, blackjack, roulette, and baccarat, have translated into strong revenue sources to the tune of $38 million in the second quarter.

Revenues from the online casino products nearly doubled relative to the first quarter of 2015, now responsible for roughly 12 percent of the company’s total take.

Shares Undervalued? 

Finding additional revenue streams is vital to the company that was recently added to the NASDAQ exchange as shareholders will routinely expect to see the growth stock, well, grow.

And Amaya’s strategic planning and financial outlook has appealed to at least two financial media speculators, The Motley Fool and Seeking Alpha.

According to analysts, shares of Amaya remain relatively low compared to its earnings due to the ongoing investigation by Quebec securities officials into allegations of insider trading.

“Investing in Amaya at this point is speculating that the investigation will either yield nothing, or the company will decide to settle,” Motley Fool’s Nelson Smith says. “Even if the insider trading case doesn’t go particularly well, Amaya is still well positioned to deliver growth.”

Seeking Alpha, an investment research firm, agrees. “In Amaya, you are purchasing shares of a company that is set to continue to grow,” Étienne Bouchard, Seeking Alpha strategist opines. “I believe that Amaya is undervalued at this time.”

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