8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

January 31, 2018 (January 31, 2018)

Date of Report (Date of earliest event reported)

PLAYAGS, INC.

(Exact name of registrant as specified in its charter)

Nevada	001-38357	46-3698600
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

5475 S. Decatur Blvd., Suite #100

Las Vegas, Nevada 89118

(Address of principal executive offices) (Zip Code)

(702) 722-6700 

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 7.01 Regulation FD Disclosure

As previously disclosed, on January 30, 2018, AP Gaming I, LLC (“APG”), a subsidiary of PlayAGS, Inc. (the “Company”), announced it is launching an amendment for its existing credit facilities under that certain First Lien Credit Agreement, dated as of June 6, 2017, as amended on December 6, 2017, among APG, AP Gaming Holdings, LLC, the lenders party thereto and Jefferies Finance LLC, as administrative agent, to, among other things, reprice the existing Term B Loans thereunder. The amendment, and the related pricing transactions, are subject to market and other conditions, and may not occur as described or at all.

On January 31, 2018, in connection with the amendment and the related pricing transactions, APG will provide a presentation to its lenders, which is attached to this report as Exhibit 99.1.

A copy of this presentation will also be available under the “Presentations” header of the “Investors” section of the Company’s website at www.playags.com. The Company’s website and the information contained on, or that can be accessed through, the Company’s website will not be deemed to be incorporated by reference in, and are not considered part of, this report. 

The information in this Item 7.01 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.

99.1 Lender Presentation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PLAYAGS, INC.
Date: January 31, 2018	By:	/s/ Kimo Akiona
		Name: Kimo Akiona
		Title: Chief Financial Officer, Chief Accounting Officer and Treasurer (Principal Financial and Accounting Officer)

EX-99.1

EXHIBIT 99.1

January 2018 Social Casino Table Games Premium EGMs Orion Core EGMs ICON Specialty EGMs Big Red Table Equipment Lender Presentation

1 Forward - Looking and Cautionary Language This presentation contains, and oral statements made from time to time by our representatives may contain, forward - looking state ments based on management’s current expectations and projections, which are intended to qualify for the safe harbor of Section 27A of the Se cur ities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward - looking statements include statements r egarding the public offering and other statements identified by words such as “believe,” “will,” “may,” “might,” “likely,” “expect,” “ant ici pates,” “intends,” “plans,” “seeks,” “estimates,” “believes,” “continues,” “projects” and similar references to future periods, or by the inclus ion of forecasts or projections. All forward - looking statements are based on current expectations and projections of future events. These forward - looking statements reflect the current views, models, and assumptions of PlayAGS, Inc. ("AGS") and are subject to various risks and uncertainties that cannot be predicted or qualified and could cause actual results in AGS’s performance to differ materially fro m those expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to, the ability of AG S t o maintain strategic alliances, unit placements or installations, grow revenue, garner new market share, secure new licenses in new jurisdictions, su ccessfully develop or place proprietary product, comply with regulations, have its games approved by relevant jurisdictions and other factors set f ort h under “Risk Factors” in AGS's registration statement on Form S - 1 filed with the Securities and Exchange Commission ("SEC") on January 19, 20 18, as such factors may be updated from time to time in AGS's periodic filings with the SEC, which are accessible at www.sec.gov. All forward - looki ng statements made herein are expressly qualified in their entirety by these cautionary statements and there can be no assurance that the actual re sults, events or developments referenced herein will occur or be realized. Readers are cautioned that all forward - looking statements speak only to the facts and circumstances present as of the date of this presentation. AGS expressly disclaims any obligation to update or revise any fo rwa rd - looking statements, whether as a result of new information, future events or otherwise. Non - GAAP Financial Information We have provided Credit Agreement Pro Forma Adjusted EBITDA in this presentation, which is a non - GAAP financial measure. Non - GAA P financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in unde rst anding and assessing our financial results. Therefore, non - GAAP financial measures should not be considered in isolation or as an alternati ve or superior to GAAP measures. You should be aware that our presentation of these measures may not be comparable to similarly - titled measures us ed by other companies. For more information on the use of Non - GAAP measures, please see the reconciliations to the nearest GAAP measure incl uded in this presentation. DISCLAIMER

2 AGS – Situation Update Successfully Priced IPO, Proceeds Used for Deleveraging ▪ PlayAGS, Inc. (“AGS”) successfully priced its IPO on January 25, 2018, priced at $16.00 / share resulting in $164mm of gross proceeds • Proceeds used to redeem all outstanding HoldCo PIK notes and for general corporate purposes • If the greenshoe is exercised we anticipate receiving $23mm of net proceeds ▪ Pro Forma Net Debt / LTM Credit Agreement Pro Forma Adjusted EBITDA (“CA PF Adj. EBITDA”) (1)(2)(3) of 4.1x (3.9x assuming the greenshoe is exercised) Closing Of Rocket Gaming Systems ▪ Completed acquisition of certain assets of or operated by Rocket Gaming Systems, LLC (“Rocket”) for $57mm, representing 5.7x annualized Rocket EBITDA of ~$10mm ▪ The acquisition expands AGS’ product offering in Class II floor positions in the U.S. by adding Rocket’s installed base of ~1,600 units Continued Outperformance in Q4 ▪ EGM installed base increased from 20,851 in Q4’16 to 23,821 in Q4’17 (14% increase) ▪ EGM equipment sales increased from 260 units in Q4’16 to 697 units in Q4’17 (168% increase) ▪ Total Revenue increased from $42.7mm in Q4’16 to $55.5mm – $57.5mm in Q4’17 (32% increase) ▪ EGM Adjusted EBITDA increased from $23.0mm in Q4’16 to $25.0mm – $26.5mm in Q4’17 (12% increase) Contemplated Repricing ▪ AGS is seeking to reprice its existing $513mm First Lien Term Loan • Annual interest savings of $6mm+ (4) at target spread reduction of 125 bps ▪ No change to the 1% LIBOR floor, maturity and maximum Net First Lien Leverage Ratio financial covenant ▪ Upon effectiveness of this repricing, the 101% soft call premium will be reset for six months ▪ Pro forma for the initial public offering, AGS will have a much stronger credit profile with higher interest coverage and significantly reduced leverage (1) LTM as of 9/30/17 (2) Pro Forma for Rocket Gaming Systems acquisition (3) Adjusted EBITDA as defined in the Credit Agreement. Please refer to the reconciliation of CA PF Adj. EBITDA to the nearest GA AP measure on slide 7 of this presentation (4) Assumes Term Loan repriced to L + 425

3 TRANSACTION AND CAPITAL STRUCTURE OVERVIEW Note: Assumes Term Loan repriced to L + 425 (1) Includes ~$1.4mm of accrued interest in January 2018 (2) Per PlayAGS, Inc. public filings (3) Includes total cash and cash equivalents and undrawn revolving credit facility (4) Assumes full exercise of greenshoe ($23mm of net proceeds) ($ in mm) Sources and Uses of Funds Sources of Funds Uses of Funds Repriced 1st Lien Term Loan $513 Repriced 1st Lien Term Loan $513 Cash from Balance Sheet 1 Financing Fees & Expenses 1 Total Sources $514 Total Uses $514 Capitalization Pro Forma Credit Statistics Actual Pro Forma Pro Forma LTM Pro Forma Pro Forma 12/31/17 Post IPO Repricing 9/30/17 Post IPO Repricing Cash and Cash Equivalents $19 $15 $14 EGM Adjusted EBITDA (2) $104 $104 $104 CA PF Adjusted EBITDA $122 $122 $122 Existing Revolver ($30mm) - - - Existing 1st Lien Term Loan 513 513 513 Credit Statistics Equipment Debt 3 3 3 Total Net Debt / CA PF Adj. EBITDA 5.3x 4.1x 4.1x HoldCo PIK Notes (1) 154 - - CA PF Adj. EBITDA / Cash Interest Expense 3.3x 3.3x 4.0x Total Debt $669 $515 $515 Liquidity (3) $49 $45 $44 Total Net Debt $650 $500 $501 Credit Statistics Including Greenshoe (4) Market Capitalization as of 1/30/18 - $658 $658 Total Net Debt / CA PF Adj. EBITDA 3.9x Total Capitalization NA $1,173 $1,173 CA PF Adj. EBITDA / Cash Interest Expense 4.0x % Equity Capitalization 56% 56% Liquidity (3) $67 % Net Debt 43% 43%

4 SUMMARY OF TERMS Borrower  AP Gaming I, LLC (the “Borrower”) Facility  $513mm Senior Secured First Lien Term Loan (the “First Lien”) LIBOR Floor  1.0% (same as existing) Guarantors  Same as existing Security  Same as existing Maturity  February 2024 (same as existing) Amortization  1.0% per annum, paid quarterly, with remainder due at maturity (same as existing) Mandatory Prepayments  Same as existing Voluntary Prepayments  101% soft call reset for 6 months Financial Covenant  Maximum Net First Lien Leverage Ratio (no change to existing levels) Affirmative and Negative Covenants  Same as existing

5 Date Event January 31 st Lender call February 6 th Amendment responses and commitments due (12:00 pm ET) February 9 th Close and fund Denotes Holiday Key Date TRANSACTION TIMELINE January 2018 February 2018 S M T W T F S S M T W T F S 1 2 3 4 5 6 1 2 3 7 8 9 10 11 12 13 4 5 6 7 8 9 10 14 15 16 17 18 19 20 11 12 13 14 15 16 17 21 22 23 24 25 26 27 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28

6 ▪ Signature pages to the amendment are due on Tuesday, February 6 th by 12:00PM ET ▪ Amendment consents will be managed through LendAmend. Please register your vote online at lendamend.com or send an executed signature page to AGSJan18@Lendamend.com ▪ For business diligence questions, please contact: • Yong Zheng, Associate, Jefferies Finance LLC ▪ yzheng@jefferies.com ▪ (212) 323 - 3356 • Chris Wade, Senior Vice President, Leveraged Finance ▪ cwade@jefferies.com ▪ (917) 421 - 1992 ▪ For legal diligence questions, please contact: • Javier Ortiz, Associate, Cahill Gordon & Reindel LLP ▪ jortiz@cahill.com ▪ (212) 701 - 3301 • Michael Sherman, Partner, Cahill Gordon & Reindel LLP ▪ msherman@cahill.com ▪ (212) 701 - 3747 CONTACT INFORMATION

7 CREDIT AGREEMENT PF ADJUSTED EBITDA RECONCILIATION (1) EBITDA losses associated with Table Products and Interactive segments which are currently ramping (2) Full - year adjustment for machines pending install and contracted to be placed within the next 6 months (3) Annualization of EBITDA contribution from new units placed intrayear ; net of units displaced (4) Per the Credit Agreement, Credit Agreement Pro Forma Adjusted EBITDA is calculated on a last - twelve month basis. As a result, Cr edit Agreement Pro Forma Adjusted EBITDA is not presented for the nine months ended September 30, 2016 and 2017 ($ in mm) EBITDA Reconciliation Year Ended Nine months ended LTM 12/31/2016 9/30/2016 9/30/2017 9/30/2017 Net Loss ($81.3) ($61.1) ($36.6) ($56.8) Income tax expense (benefit) (3.0) (4.9) 4.6 6.5 Depreciation and amortization 80.1 60.5 53.6 73.3 Write downs and other 3.2 2.1 2.7 3.8 Other expense (income) 7.4 6.3 (4.8) (3.7) Interest income 0.0 0.0 0.0 0.0 Interest expense 59.9 44.2 42.4 58.2 Loss on extinguishment and modification of debt - - 8.1 8.1 Other expense (income) 18.9 16.2 10.5 13.2 Total Adjusted EBITDA $85.3 $63.2 $80.4 $102.5 Credit Agreement Adjustments: Loss Associated with Table Products (Ramping Business) (1) $1.7 $1.0 Loss Associated with Interactive (Ramping Business) (1) 4.7 1.0 FY Impact of Capex Incurred / Contracted Placements within the Next 6 Months (2) 4.2 2.9 Run-Rate Net Impact of New Unit Placements (3) 5.8 4.0 Annualization of Realized Synergies 1.0 - FY Impact of In Bet Acquisition (Closed August 2017) - 1.0 FY Impact of Rocket Gaming Assets Acquisition (Closed December 2017) - 10.0 Credit Agreement Pro Forma Adjusted EBITDA (4) $102.7 $122.5