Ronald Perelman is now known as the former chairman of Scientific Games. The casino equipment manufacturer has made a few changes at the top after he extricated himself from the company through a planned sale of his stake. Having controlled about 39% of the company, Perelman has sold 34.9% of that to a group that includes a global investment firm, Caledonia, with a history in the gaming industry, paving the way for several new appointments to be made at the top.
Going forward, former Aristocrat Leisure Ltd. CEO Jamie Odell will be the new executive chair of Sci Games. Joining him is Toni Korsanos, a former Aristocrat chief financial officer and non-executive director of Crown Resorts, who has been tapped to be the company’s executive vice chair. The tie-up between Sci Games and Aristocrat was most likely due to the stake purchase by Caledonia, which was previously an investor in the latter.
In arranging the sale of the stake, the incoming investors split the amount they took. A press release announcing the purchase indicates that the stakes will be distributed through “multiple tranches,” with no investor “expected to beneficially own more than 9.9 percent of the outstanding shares of Scientific Games.” One tranche was reportedly already reassigned, while the others are expected to be turned over in the following weeks. Details on the other investors involved weren’t provided.
The deal was made using Perelman’s shares held by his investment vehicle, MacAndrews & Forbes, Inc., and was reportedly worth $28 per share. Caledonia, which has a stake in fantasy sports operator and sportsbook DraftKings, and its Sci Games investment partners hope to give the company a huge boost, implementing business strategies designed to accelerate “debt-reduction efforts and increasing focus on digital gaming and sports betting growth opportunities,” according to the press release. Odell added, “We will be highly focused on rapidly deleveraging the balance sheet and creating a flexible, agile company that is poised to capitalise on evolving industry and macroeconomic trends to deliver outsized returns to investors.”
The news helped Sci Games to see improvement on the NASDAQ exchange, with its stock jumping 39.33% when trading closed yesterday. Chances are good that the stock will remain higher going forward as the new additions look to help the company continue to cut down its debt. Sci Games has already implemented initiatives to make that happen, taking its net debt from $8.65 billion in the second quarter of 2019 to $8.53 billion in the second quarter of this year.
Should the new executives decide that changes need to be made at the executive level, President and CEO Mike Cottle already made sure certain individuals are protected. Last month, a notice was filed with the U.S. Securities and Exchange Commission (SEC), outlining payment packages for six executives if they were pushed out. No word on whether or not any executives would be released has been provided, and Cottle said of the new board arrangement, “We are pleased to have the support of our refreshed board and new investor base as we continue to execute on our strategy to drive meaningful long-term growth and shareholder value creation.”