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Global Cash Set to Acquire Multimedia Games for $1.2B

Global Cash Access Holdings (GCA) recently agreed to acquire Multimedia Games Holding Company (MGAM) for approximately $1.2 billion or $36.50 per share. This represents a 31.4% premium to Multimedia Games’ closing price of $27.78 on Sep 5.

Las Vegas-based Global Cash provides services such as cash advance, ATM cash withdrawals and check services to gaming industry companies. The company also sells slot machines and jackpot kiosks.

Multimedia Games primarily sells slot machines. As of Jun 30, 2014, the company’s installed base was approximately 13,167 units throughout North America.

The deal is expected to be immediately accretive to Global Cash Holdings. The combined entity is expected to earn cost synergies of approximately $30 million, favorably impacting profitability.

The combined entity is forecasted to yield earnings before interest, tax, depreciation and amortization (:EBITDA) of $217 million and revenues of $800 million. The proposed merger is expected to be completed in early 2015.

Per Global Cash, the deal will diversify its revenue base, broaden product portfolio and enhance recurring revenue base (approximately 80%) thereby expanding margins. Global Cash Holdings believes that the acquisition provides it a significant cross-selling opportunity and will help it to penetrate new markets.

Global Cash announced that it has received financing commitment from Bank of America Merrill Lynch and Deutsche Bank for $800 million Term B loan, $400 million Senior Notes and a revolving credit facility of $50 million.

However, the debt financing will significantly leverage Global Cash’s balance sheet. As of Jun 30, 2014, Global Cash had cash & cash equivalents of $162 million and borrowings of $96 million.

Currently, gaming operators are replacing existing machines at a much slower rate than they have historically, primarily due to the challenging environment and the need to preserve cash. Frequent consolidations have also become a norm as large established players continue to search for distressed companies for cheap.

Scientific Games (SGMS) recently agreed to buy Bally Technologies (BYI), while Italian operator GTECH Spa is in the process of acquiring slot maker International Game Technology. We believe that the current deal makes Global Cash an attractive acquisition candidate in these sluggish market conditions.

Currently, Global Cash has a Zacks Rank #4 (Sell).

Read the Full Research Report on SGMS
Read the Full Research Report on BYI
Read the Full Research Report on GCA
Read the Full Research Report on MGAM

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Mergers, Acquisitions & TakeoversInvestment & Company Information […]

Higher rates, ECB loan repayments spur euro repo activity

By Emelia Sithole-Matarise

LONDON (Reuters) – The European repo market grew almost 9 percent in the first half of this year as banks weaned themselves off cheap European Central Bank cash and higher money market rates spurred inter-bank lending.

The repo market is a key source of funding for banks. A borrower offers collateral, usually government bonds, as security against a cash loan.

Euro-denominated business grew while sterling and U.S. dollar repo activity declined, reflecting the tentative return of banks in the currency bloc to the money market as they repaid emergency loans from the ECB.

A snapshot of the total value of outstanding repo contracts showed the size of the market at 6.076 trillion euros at close of business on June 12, 2013. Six months earlier, the market totalled 5.611 trillion euros.

After reaching a record high of 6.979 trillion in June 2010, repo activity had shrunk as the euro zone debt crisis fractured trust between the region’s banks. The ECB’s 1 trillion euros of cheap long-term loans, extended in late 2011 and early 2012, also reduced the need for banks to tap the market.

The survey, conducted by the European Repo Council of the International Capital Market Association (ICMA) using data from 61 financial groups, also highlighted a bounce in the value of electronic trading to a record high of 1.059 trillion euros. The revival followed a slump to 960 billion euros in December from the previous record of 1.01 billion hit in June 2012.

“The revival in repo activity in Europe appears to be driven by banks in the euro zone returning to the market for funding as they start to repay the exceptional assistance of over 1 trillion euros provided to the market via the European Central Bank,” ICMA said in a press release.

“Higher repo rates have had a reinforcing effect by attracting lenders into the market.”

Banks have so far repaid 450 billion euros of the ECB’s extraordinary three-year loans, squeezing excess liquidity in the financial system to 243 billion euros from over 800 billion euros in early 2012.

Along with the U.S. Federal Reserve’s plans to start trimming its monetary stimulus, that has contributed to higher money market rates, luring banks away from the ECB deposit facility – which pays a zero percent rate – and into the market.

An easing of concerns over the euro zone debt crisis – reinforced by the ECB’s pledge to whatever it takes to save the euro – has also aided confidence.

ANONYMOUS REPO

The survey highlighted a rise in the share of anonymous electronic trading via central clearing counterparties (CCPs).

CCPs allow banks to trade repo anonymously, with the clearing house assuming the members’ counterparty risk. Of the electronic trading surveyed, 94 percent was cleared via CCPs.

The survey said the rise in activity might reflect increased reliance among Italian banks on CCP-cleared repos as prolonged political uncertainty affected other banks’ willingness to lend.

Clearing house LCH Clearnet has also said it will drop a guarantee on repo transactions on Italian government bonds, potentially threatening this funding channel.

In contrast, Spanish banks – many of which had to be rescued by the government with European Union funds last year – have been able to return to the non-electronic, non-CCP market, where they pay a lower haircut.

The use of short-dated repos of one month or less maturity, jumped to 57.2 percent from 50.5 percent, showing that banks are still cautious about lending beyond one month.

(Editing by Catherine Evans)

[…]

Chrysler working on loan refinancing: Fiat CEO

FLORENCE, Italy (Reuters) – Italian carmaker Fiat SpA’s U.S. unit Chrysler is still working on a $3 billion loan refinancing, Fiat CEO Sergio Marchionne said on Thursday, confirming what sources had earlier told Reuters.

On June 12 Reuters reported that Chrysler had set terms on a loan refinancing that could lower its borrowing costs and make it possible for Fiat to access Chrysler’s cash flow.

Fiat owns 58.5 percent of Chrysler and wants to buy up the rest. Talks with the seller, an autoworkers’ union-affiliated healthcare trust, are continuing, Marchionne said on Thursday.

Asked for a progress report on the Chrysler loan talks, Marchionne said: “The transaction has not yet been concluded.”

The completion of an agreement is expected on June 21, Reuters had reported, citing banking sources.

Fiat aims to complete the transaction, merge the two carmakers into one group, then list the new company on the New York Stock Exchange by 2014, it has said.

Marchionne already runs the two automakers as a single group. But a full merger with Chrysler is seen increasing the group’s value, because the combined automaker would have more cash to invest in expensive new technology like hybrid engines.

It needs these advancements to remain in the top league of the world’s automakers, alongside the likes of Volkswagen and Toyota , analysts say.

(Reporting by Stefano Rebaudo; Writing by Jennifer Clark; Editing by David Holmes)

[…]

Ascent Resources granted loan to repay debts

LONDON (ShareCast) – Ascent Resources has been granted another loan to repay debts and finance projects in the New Year.

The European-focused oil and gas exploration company has entered into an agreement with Henderson Global Investors and Henderson Alternative Investment Advisor for the subscription of convertible loan notes of up to £5.5m.

Part of the funds will be used to repay the firm’s £2.3m loan from YA Global Master SPV, an investment fund managed by Yorkville Advisors. The Yorkville loan facility charge an interest rate of 9% per annum. Ascent owed £1.9m by December 2012, in addition to about £0.8m of debt to Cento Bank in the company’s Italian subsidiary.

While the company had sufficient cash resources to meet overheads until year end, it needed the loan to meet overheads and to continue making repayments to Yorkville and Cento bank of £1.9m and cira £350,000 respectively.

The company attributed a decline in sales and demand of hydrocarbons for its underperformance.

“Monthly revenues from the sale of hydrocarbons are declining, as expected, as the field nears towards the end of its life over the next 12 to 18 months and hence the company does not currently have the capital resources to make its loan repayments and also meet its other obligations,” the company said in a statement.

“The company has therefore sought other sources of financing, including additional loans from major shareholders and other third parties.”

The loan will also be used to finance its Peti?ovci Project in Slovenia, which has been stalled awaiting various signatures that have been unreasonably withheld.

The convertible loan will be issued in units of £1 and interest will be at a fixed rate of 9% per annum, which will be rolled up quarterly in arrears and included as principal to be repaid or converted.

The news sent the share price plunging 35% to 1.02p by mid-morning.

RD

[…]

City splash the cash on deadline day

Manchester City completed a triple swoop for Inter Milan star Maicon, Swansea winger Scott Sinclair and Fiorentina defender Matija Nastasic as the Premier League champions embarked on a transfer deadline day spending spree.

City boss Roberto Mancini has endured a frustrating time in the transfer market since the end of last season, but there was a late flurry of activity at Eastlands before Friday’s 2200GMT deadline.

The Italian’s £6 million move for Sinclair was followed by the capture of Brazil right-back Maicon for £3 million.

Next up was a £12 million deal for Serbia’s Nastasic, which saw City defender Stefan Savic join Fiorentina in part exchange for the 19-year-old, as well as the arrival of former Arsenal goalkeeper Richard Wright on a free transfer.

Mancini wasn’t finished there and he was hoping to complete a move for Benfica midfielder Javi Garcia in the final minutes before the transfer window shut until January.

To make room for his fresh recruits, Mancini sold Dutch midfielder Nigel de Jong to AC Milan, while Paraguay striker Roque Santa Cruz moved to Malaga on a season-long loan.

Tottenham were the other big movers, signing Lyon goalkeeper Hugo Lloris and swooping for Fulham forward Clint Dempsey.

United States international Dempsey was reported to be having a medical with Tottenham after Liverpool and Aston Villa were unable to complete a deal for the £7 million-rated star.

As well as gate-crashing the Dempsey chase, Tottenham boss Andre Villas-Boas pushed through an £8 million swoop for French international Lloris, who signed a four-year contract.

“I am here because I believe in Tottenham,” Lloris told Spurs TV Online.

“They have great team and everything is right to win a place in the Champions League next year.”

On a frantic day at White Hart Lane, Villas-Boas also sold Holland midfielder Rafael van der Vaart to his former club Hamburg and off-loaded Mexico forward Giovani Dos Santos to Spanish club Real Mallorca.

Fulham boss Martin Jol sealed a significant coup for his club as he signed Bulgarian striker Dimitar Berbatov from Manchester United for £5 million.

Berbatov rejected interest from Juventus, Fiorentina and Tottenham to be reunited with Jol, who worked with the forward at Spurs.

“I’m delighted to have signed for Fulham and I look forward to playing under Martin Jol once again,” Berbatov said.

Jol also brought in former England left-back Kieran Richardson from Sunderland, who then landed Tottenham defender Danny Rose on loan as a replacement.

Liverpool boss Brendan Rodgers continued his Anfield clear-out as Scotland international Charlie Adam was sold to Stoke for £4 million, while fellow midfielder Jay Spearing joined Bolton on a season-long loan and striker Nathan Eccleston moved to Blackpool.

Across Merseyside, Everton signed Bryan Oviedo from FC Copenhagen after agreeing a £5 million fee for the Costa Rica defender.

Southampton finally signed Gaston Ramirez from Bologna for around £12 million after chasing the 21-year-old Uruguay playmaker for several weeks, and also landed USA Under-20 international goalkeeper Cody Cropper from Ipswich.

Swansea, needing a replacement for Sinclair, signed Spain winger Pablo Hernandez from Valencia for a club record £5.55 million.

Arsenal allowed South Korea striker Park Chu-young to go out on loan to Celta Vigo with a view to a permanent switch, while Denmark striker Nicklas Bendtner agreed a season-long loan with Italian champions Juventus.

QPR midfielder Joey Barton joined French club Marseille on a season-long loan, with defender Stephane Mbia moving in the other direction on a two-year contract.

Aston Villa boss Paul Lambert bolstered his squad with the signings of Belgium striker Christian Benteke, who cost £7 million from Genk, £2 million Crewe midfielder Ashley Westwood and young striker Jordan Bowery, a £500,000 capture from Chesterfield.

West Bromwich Albion signed Dynamo Kiev’s Macedonia left-back Goran Popov on a season-long loan with a view to a permanent deal.

[…]

Macro chatter: How one man paid off his $111,000 student loan bill in cash

Need to know:
The US housing market may be doing a little bit better, but nearly one in three homeowners are still underwater on their mortgages, according to the real estate website Zillow.

A few sunbelt states and Michigan have it even worse. In Arizona, one of the states hardest hit by the housing downturn, more than half of all homeowners owe more than their homes are worth.

But the news isn’t all bad. Zillow said nine in every 10 underwater borrowers were still making mortgage payments on time.

Want to know:
Everyone knows CEOs make a lot more money than pretty much everyone else, but the Associated Press has painful new way to quantify it.

David Simon, the head of Simon Property, the company that operates probably at least a few of your favorite shopping malls, was paid more than $137 million last year. It would take a minimum wage employee at a Simon Mall 3,489 years to earn that much money, according to the AP’s fascinating CEO pay analysis.

Of course, Simon is among the higher-paid US CEOs. He makes more than the US government’s top 600 leaders combined. The media CEO salary is around $9.6 million. Of course a minimum wage worker would have to work 636 years to earn even that much.

Dull but important:
Petrol is not a happy word in India today.

The Indian government raised fuel prices today in hopes of stopping the Indian rupee’s slide. The people, perhaps understandably, are not happy, particularly if they’re burning gas trapped in traffic in Delhi or Mumbai.

The increase is the steepest in a decade. Pretty much any one who needed fuel was scrambling to a station to beat the increase Thursday, and station owners ended up having to call in the police as their own fuel stocks ran dry, Time said.

Just becuase:
The Vatican has fired its top banker, Financial Times reported.

Ettore Gotti Tedeschi, an ethics professor, had been part of an Italian investigation into potential money laundering violations by the bank. The Vatican didn’t specify why he was dismissed beyond saying the bank’s board had lost faith in Tedeschi’s ability to do his job.

The Vatican’s bank has been having a tough time lately. The bank is on a US list of institutions susceptible to money laundering and had $23 million frozen by suspicious foreign officials in 2010.

Strange but true:
Alex Kenjeev is a man who likes to pay cash, even for a $111,000 student loan bill.

Kenjeev recently sold the software start-up he’s been pouring most of his money into for the past few years. Since he walked away with more than enough money to pay off his student loan tab, he decided to make it memorable.

Kenjeev went to his bank and withdrew $111,000 in cash, put it in a grocery bag and walked down the street to pay off his student loan, ABC said. Naturally, he snapped a photo and posted it to Facebook. “It was a milestone moment in your life, when you become debt-free, and not everyone had a receipt, but I did because of the way I did it,” he told ABC.

http://www.globalpost.com/dispatches/globalpost-blogs/macro/macro-chatter-student-loan-India-petrol

<… Euro crisis: Just bang your head</a> | […]

ECB Cash Averts ‘Funding Crisis’ for Italy, Spain: Euro Credit

The European Central Bank’s unprecedented cash injection is easing borrowing costs for Italy, Spain and Belgium, compensating for the lack of a solution to the debt crisis and the risk of recession. […]