PartyGaming update

Wednesday, October 04, 2006 | | 0 comments »


UPDATE to recent posts (1, 2, 3) on UK gaming stocks:

Many visitors here are looking for guidance on the prospects of UK gaming stocks prospects, particularly PartyGaming (PRTY).

Some things are clear for them; the US is 75% of rev and 50% of custom - they are losing good clients; the massive $500m revolver negotiated last time they reported is surely subject to review by lenders; it will be very difficult to raise replacement debt on favourable terms; or tap markets for fresh equity without a large discount; they have already cancelled the interim dividend, not as good a sign as they have spun it; and, bar Presidential refusal to sign the Senate bill (chance would be a fine thing), it is unlikely recovery will be quick. One glimmer of hope is that they are now, ironically, takeover targets from big US casino operators.

However, the risks of this sector are now plain to see (even to those who did not read the PRTY prospectus) and outweigh the immediate odds of white M&A horses charging to the rescue.

Let the dust settle.

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