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Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

14.

Derivatives and Hedging Activities

The Company was party to a 3-year, fixed-rate, cross-currency swap with Nomura Global Financial Products Inc. which swapped the principal and interest payments that would be payable in USD under the NPA to Euros ("EUR"), in part, and GBP, in part. Specifically, with respect to the principal payments 1/3 of the payments would be swapped from USD to EUR and 2/3 of the payments from USD to GBP. Additionally, with respect to the interest payments 1/3 would be swapped from USD to GBP and 2/3 from USD to EUR. The swap provided for a foreign exchange rate of $1.13935 USD per €1 EUR and $1.27565 USD per £1 GBP.

In connection with the entry into the Senior Facilities Agreement on October 1, 2019, the Company terminated the 3-year, fixed-rate, cross-currency swap and received a settlement of $1.5 million.

Hedges of Multiple Risks

The Company had variable-rate borrowings denominated in currencies other than its functional currency. As a result, the Company was exposed to fluctuations in both the underlying variable interest rate and the foreign currency of the borrowing against its functional currency, GBP. The Company used derivatives, including cross-currency interest rate swaps, to manage its exposure to fluctuations in the variable borrowing rate and the GBP-USD exchange rate. Cross-currency interest rate swaps involve exchanging fixed rate interest payments for floating rate interest receipts both of which will occur at the GBP-USD forward exchange rates in effect upon entering into the instrument. The Company designated these derivatives as cash flow hedges of both interest rate and foreign exchange risks.

For derivatives designated and that qualified as cash flow hedges of both interest rate risk and foreign exchange risk, the gain or loss on the derivative was recorded in Accumulated Other Comprehensive Income and subsequently reclassified in the periods during which the hedged transaction affected earnings within the same income statement line item as the earnings effect of the hedged transaction.

The Company did not have any derivatives as of December 31, 2019. As of September 30, 2018, the Company had the following outstanding derivatives designated as cash flow hedges that were used to hedge both interest rate risk and foreign exchange risk:

Foreign Currency Derivative	Number of Instruments	Pay Fixed Notional		Receive Floating Notional
		(in millions)
Cross currency interest rate swaps	1	GBP	36.6	USD	46.7

Non-designated Hedges

Derivatives not designated as hedges were not speculative and were used to manage the Company's exposure to interest rate movements and other identified risks but did not meet the strict hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships were recorded directly in earnings.

As of September 30, 2018, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships:

Foreign Currency Derivative	Number of Instruments	Pay Fixed Notional		Receive Floating Notional
		(in millions)		(in millions)
Cross currency interest rate swaps	1	EUR	81.9	USD	93.3

The table below presents the fair value of the Company's derivative financial instruments as well as their classification in the consolidated balance sheet as of September 30, 2018.

	Balance Sheet Classification	Asset Derivatives Fair Value		Balance Sheet Classification	Liability Derivatives Fair Value
		(in millions)			(in millions)
Derivatives designated as hedging instruments:
Interest Rate and Foreign Exchange Products	Fair Value of Hedging Instruments	$	0.8	Derivative Liability	$	(3.4	)
Total derivatives designated as hedging instruments		$	0.8		$	(3.4	)
Derivatives not designated as hedging instruments:
Interest Rate and Foreign Exchange Products	Fair Value of Hedging Instruments	$	—	Derivative Liability	$	(4.4	)
Total derivatives not designated as hedging instruments		$	—		$	(4.4	)

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the year ended December 31, 2019.

	Amount of Gain Recognized in Other Comprehensive Income on Derivative			Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)			(in millions)
Interest Rate and Foreign Exchange Products	$	2.9	Interest Expense	$	1.2
			Foreign Currency Remeasurement		3.2
Total	$	2.9		$	4.4

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the three months ended December 31, 2018.

	Amount of Gain Recognized in Other Comprehensive Income on Derivative			Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)			(in millions)
Interest Rate and Foreign Exchange Products	$	2.6	Interest Expense	$	0.4
			Foreign Currency Remeasurement		1.9
Total	$	2.6		$	2.3

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the year ended September 30, 2018.

	Amount of Gain Recognized in Other Comprehensive Income on Derivative			Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)			(in millions)
Interest Rate and Foreign Exchange Products	$	0.3	Interest Expense	$	—
			Foreign Currency Remeasurement		0.3
Total	$	0.3		$	0.3

The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the year ended December 31, 2019.

	Interest Expense		Foreign Currency Remeasurement
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	27.8	$	(3.2	)

Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	1.2	$	3.2

The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the three months ended December 31, 2018.

	Interest Expense		Foreign Currency Remeasurement
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	4.1	$	0.7

Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	0.4	$	2.0

The table below presents the effect of the Company's derivative financial instruments on the consolidated statements of operations for the year ended September 30, 2018.

	Interest Expense		Foreign Currency Remeasurement
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	20.6	$	20.6

Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	—	$	0.3

The table below presents the effect of the Company's derivative financial instruments that are not designated as hedging instruments in the consolidated statements of operations for the year ended December 31, 2019.

Derivatives Not Designated as Hedging Instruments under Subtopic 815-20

Location of

Income

Recognized in
Income on
Derivative

Amount of
Income
Recognized in
Income on
Derivative

(in millions)

Interest Rate and Foreign Exchange Products

Change in fair value of derivative liability

2.9

Derivatives Not Designated as Hedging Instruments under Subtopic 815-20	Location of Income Recognized in Income on Derivative	Amount of Income Recognized in Income on Derivative
		(in millions)
Interest Rate and Foreign Exchange Products	Change in fair value of derivative liability	$	0.8

Derivatives Not Designated as Hedging Instruments under Subtopic 815-20	Location of Loss Recognized in Income on Derivative	Amount of Loss Recognized in Income on Derivative
		(in millions)
Interest Rate and Foreign Exchange Products	Change in fair value of derivative liability	$	(7.4	)

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of September 30, 2018. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.

The ISDA Master Agreement between Gaming Acquisitions Limited and Nomura Global Financial Products, Inc. was documented using the 2002 Form and the ISDA standard set-off provision in Section 6(f) of the ISDA Master Agreement apply to both parties and was only modified to include Affiliates of the Payee. There was no CSA and thus there was no collateral posting. The only other security for the ISDA included a guaranty of Nomura's obligations from Nomura Holdings, Inc. and with respect to Gaming Acquisitions Limited, its obligations under the ISDA was cross-collateralized with the debt obligations under the Credit Agreement in the same pool of collateral that supported the debt obligations.

Offsetting of Derivative Assets
September 30, 2018
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	0.8	$	—	$	0.8	$	—	$	—	$	—

Offsetting of Derivative Liabilities
September 30, 2018
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	7.8	$	—	$	7.8	$	—	$	—	$	—