The chairman of Scientific Games (SG) has dug into his wallet and pulled out huge wads of cash this week. According to required filings with the US Securities and Exchange Commission (SEC), Ronald Perelman has reportedly spent around $4.60 million buying a total of 230,000 shares in the gaming equipment company he helps manage.
Those SEC filings show that Perelman purchased 110,000 shares on Monday at a cost of $2.17 million, making the average price of each share $19.73. Then, on Wednesday, he broke out the wallet again, spending $2.43 million to pick up another 120,000 shares at an average price of $20.29 a share. As a result, he now controls over 39% of the company’s shares with a total investment of 36.38 million shares.
SG is currently involved in a lawsuit in Nevada against Hong Kong-based Sylebra Holdings, one of the company’s largest shareholders. SG is trying to get the courts to order Sylebra to turn over information related to that entity’s suitability for a gaming license in the state. According to CDC Gaming Reports, the company has not been willing to release data on its own investors for over two years, which isn’t going to sit well with Nevada authorities.
That lawsuit, and questions over Sylebra’s suitability, were most likely the impetus behind the purchases, according to SunTrust Bank gaming analyst Barry Jonas. He explains, “Mr Perelman has consistently added to his Scientific Games equity position when there’s been some sort of dislocation in the stock price – including [the] recent noise around Sylebra. We think this points to Mr Perelman’s current view on valuation and his longer-term conviction in the business.”
SG is, among other things, behind SciPlay Corp., a company it formed to manage its mobile and online casino games. That entity launched an initial public offering (IPO) last month, which has become extremely popular with analysts and investors. One analyst, Deutsche Bank’s Bryan Kraft, asserted, “SciPlay is positively leveraged to continued growth in mobile gaming due to its strong position in the attractive social-casino segment, but with a stronger economic model that is much less hit-driven than are most mobile-video-game companies.”
The IPO gave SG $301 million in proceeds, which the company said would be used to help pay down its debt of around $8.96 billion. SG holds 17.4% of SciPlay.
