Strategic Move Grows AGS’s Recurring Footprint and Presents Opportunity for Yield Optimization
PlayAGS, Inc. (NYSE: AGS) (“AGS”, “us”, “we”, or the “Company”), a leading designer and supplier of electronic gaming machines, table products, and interactive solutions for the gaming industry, today announced it has entered into a definitive agreement (the “Agreement”) to acquire all issued and outstanding common shares of Integrity Gaming Corp. (TSX-V: IGAM) (OTCQX: IGAMF) (“Integrity”) for a cash payment of CAD$0.46 per share or a total transaction value of USD$49 million, which includes repaying USD$36 million of Integrity’s outstanding debt.
The transaction is expected to be funded with cash on the balance sheet and to close in the first half of 2019, subject to approval by Integrity’s shareholders, receipt of applicable regulatory, court, and third-party approvals, and other customary closing conditions. In fiscal 2017, Integrity generated revenue of approximately USD$16 million and pre-synergy EBITDA of approximately USD$9 million. As a result of revenue optimization and other efficiencies, the Company expects that adjusted EBITDA will grow at approximately 15 percent on an annualized and non-GAAP basis, beginning in fiscal 2019.
AGS Senior Vice President of Slot Products Andrew Burke said, “The Integrity team has built a strong business, with an installed base of more than 2,700 Class III and Class II games in Oklahoma and Texas, partnering with some of the largest tribal gaming operators in the United States. AGS’ roots are in Oklahoma, and we are excited to invest further in a market we are so passionate about and where we already have strong sales and customer support networks. We look forward to working in partnership with the Integrity team to provide Integrity’s customers with an exceptional service and support experience and a continued focus on driving optimal game performance.”
Integrity Interim Chief Executive Officer Robert Miodunski said, “We strongly believe this is a good transaction for our company and that our customers will benefit from AGS’ deep roots in Oklahomaand its proven ability to successfully manage a large footprint of leased games to drive strong performance for gaming operators. We look forward to working closely with the AGS team to ensure a smooth transition and continuity of service and support for our customers. I am proud of the Integrity team and the success we have achieved over our more than 20 years.”
Integrity owns slot machines manufactured by various slot suppliers, including AGS, in approximately 30 tribal casinos in Oklahoma and Texas and also offers direct sales of other gaming products and supplies.
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Blake, Cassels & Graydon LLP served as legal advisors to AGS.
About AGS
AGS is a global company focused on creating a diverse mix of entertaining gaming experiences for every kind of player. Our roots are firmly planted in the Class II Native American gaming market, but our Class II Native American gaming market and growth have helped us branch out to become a leading all-inclusive commercial gaming supplier. Powered by high-performing Class II and Class III slot products, an expansive table products portfolio, highly rated social casino solutions for players and operators, and best-in-class service, we offer an unmatched value proposition for our casino partners. Learn more at www.playags.com.
About Integrity Gaming Corp.
Integrity is a regional slot route operator with over 2,700 gaming machines in operation across over 33 casinos in Oklahoma and Texas. Integrity primarily derives its revenue from short-and-long-term revenue-share contracts with Native American casinos. It provides gaming equipment such as slot machines and electronic table games, and project financing to owners, operators, and managers of casinos and other regulated gaming venues. Integrity works with casinos, new casino developments, and gaming machine suppliers. Additional information about Integrity can be found on Integrity’s website at www.integritygaming.com and on the SEDAR website at www.sedar.com.
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