Light & Wonder Raises Revolving Credit Facility by $250M, Cuts Interest Margins

Background and Context

Light & Wonder, Inc. (ASX: LNW), a prominent player in gaming software, has taken a significant step to bolster its liquidity and financial flexibility by entering into Amendment No. 3 to its existing Credit Agreement. This amendment, executed on February 10, 2025, involves its wholly owned subsidiary Light and Wonder International, Inc. and a syndicate of major financial institutions led by JPMorgan Chase Bank, N.A.

Key Terms of the Amendment

The amendment notably increases the company's revolving credit commitments from $750 million to $1 billion, reflecting a substantial $250 million uplift. This expansion is supported by both existing lenders and new participants, including major banks such as Bank of America, BNP Paribas, Deutsche Bank, Goldman Sachs, and Wells Fargo among others.

In addition to the increased facility size, the maturity of the revolving commitments has been extended to the earlier of February 10, 2030, or 91 days prior to the maturity of the company's existing term loans and notes, subject to certain conditions. This extension provides Light & Wonder with a longer runway to manage its debt maturities and capital structure.

Interest Margin Adjustments and Leverage Tests

The amendment also introduces a reduction in the applicable interest margins on the revolving loans. Depending on the company's leverage ratios, the margin on term benchmark rate loans (including SOFR, EURIBOR, and BBSY) will range between 1.50% and 2.00% per annum, while loans bearing interest at the Alternate Base Rate (ABR) will see margins between 0.50% and 1.00% per annum. These adjustments are designed to reflect the company's improved credit profile and provide cost savings on its borrowing costs.

Reaffirmation of Guarantees and Security Interests

Alongside the credit facility amendment, Light & Wonder and its subsidiaries have reaffirmed their guarantees and security interests under the Guarantee and Collateral Agreement. This ensures that the lenders maintain their secured position and that the company's obligations remain fully backed by collateral, providing confidence to the lending syndicate.

Implications for Light & Wonder

This refinancing move signals Light & Wonder's proactive approach to managing its capital structure amid evolving market conditions. By increasing its revolving credit capacity and extending maturities, the company enhances its liquidity buffer, which is critical for operational flexibility and potential strategic investments or acquisitions.

The reduction in interest margins tied to leverage tests also incentivizes the company to maintain or improve its financial metrics, aligning the cost of debt with its creditworthiness. The participation of a broad range of reputable financial institutions underscores market confidence in Light & Wonder's business and financial strategy.

Looking Ahead

While the amendment strengthens Light & Wonder's financial position, the full impact will depend on the company's ability to manage its leverage and operational performance in the coming years. Investors and analysts will be watching closely for updates on financial results and any further capital management initiatives.