XML 61 R23.htm IDEA: XBRL DOCUMENT v3.20.4
Long-Term and Other Debt
 12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Long-Term and Other Debt Long-Term and Other Debt
Outstanding Debt and Finance Leases
The following table reflects our outstanding debt:
As of December 31,
20202019
 Final MaturityRate(s)Face ValueUnamortized debt discount/premium and deferred financing costs, netBook ValueBook Value
Senior Secured Credit Facilities:
SGI Revolver2024variable$535 $— $535 $195 
SGI Term Loan B-52024variable4,060 (48)4,012 4,042 
SciPlay Revolver2024variable— — — — 
SGI Senior Notes:
2025 Secured Notes(1)
20255.000 %1,250 (13)1,237 1,235 
2026 Secured Euro Notes(2)
20263.375 %399 (4)395 359 
2025 Unsecured Notes20258.625 %550 (8)542 — 
2026 Unsecured Euro Notes(2)
20265.500 %306 (3)303 276 
2026 Unsecured Notes20268.250 %1,100 (12)1,088 1,085 
2028 Unsecured Notes20287.000 %700 (9)691 690 
2029 Unsecured Notes20297.250 %500 (7)493 493 
SGI Subordinated Notes:
2021 Notes20206.250 %— — — 339 
Finance lease obligations as of December 31, 2020 payable monthly through 2023 and other(3)
20234.217 %7 — 7 11 
Total long-term debt outstanding$9,407 $(104)$9,303 $8,725 
Less: current portion of long-term debt(44)(45)
Long-term debt, excluding current portion$9,259 $8,680 
Fair value of debt(4)
$9,574 
(1) In connection with the February 2018 Refinancing (as defined below), we entered into certain cross-currency interest rate swap agreements to achieve more attractive interest rates by effectively converting $460 million of the fixed-rate, U.S. Dollar-denominated 2025 Secured Notes, including the semi-annual interest payments through October 2023, to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946%. These cross-currency swaps have been designated as a hedge of our net investment in certain subsidiaries.
(2) We designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the change in foreign currency exchange rates of the Euro relative to the U.S. Dollar (see Note 16 for additional information). The total change in the face value of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes due to changes in foreign currency exchange rates since the issuance was a reduction of $7 million, of which a loss of $51 million and gains of $9 million and $43 million were recognized on remeasurement of debt in the Consolidated Statements of Operations for the years ended December 31, 2020, 2019, and 2018, respectively.
(3) Includes $7 million related to certain revenue transactions presented as debt in accordance with ASC 470.
(4) Fair value of our fixed rate and variable interest rate debt is classified within Level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities.
The following reflects the principal amount of debt and finance lease payments due over the next five years and beyond as of December 31, 2020:
DueTotal Principal DueSeries of Debt/Finance leasePrincipal Due per Series of Debt/Lease
2021$44 Term Loan B-5$42 
Finance lease obligation and other2 
202245 Term Loan B-542 
Finance lease obligation and other3 
202344 Term Loan B-542 
Finance lease obligation and other2 
20244,469 Term Loan B-53,934 
Drawn Revolving Credit Facility535 
20251,800 2025 Secured Notes1,250 
2025 Unsecured Notes550 
2026 and beyond3,005 2026 Secured Euro Notes399 
2026 Unsecured Euro Notes306 
2026 Unsecured Notes1,100 
2028 Unsecured Notes700 
2029 Unsecured Notes500 
Unamortized deferred financing costs and discount/premium(104)
Total debt book value as of December 31, 2020
$9,303 
Debt Financing Transactions
February 2018 Refinancing
On February 14, 2018, SGI issued an additional $900 million aggregate principal amount of its 2025 Secured Notes, €325 million aggregate principal amount of its new 2026 Secured Euro Notes and €250 million aggregate principal amount of its new 2026 Unsecured Euro Notes, and entered into an amendment to our credit agreement to refinance our existing term loan B-4 facility and increase the term loans outstanding by $900 million under a new term loan B-5 facility (the “February 2018 Refinancing”).
March 2019 Refinancing
On March 19, 2019, SGI issued $1,100 million in aggregate principal amount of its new 2026 Unsecured Notes. We used the net proceeds of the 2026 Unsecured Notes offering to redeem $1,000 million of our outstanding 2022 Unsecured Notes and pay accrued and unpaid interest thereon plus related premiums, fees, and costs, which redemption was completed on April 4, 2019, and paid related fees and expenses of the 2026 Unsecured Notes offering (the “March 2019 Refinancing”).
November 2019 Refinancing
On November 20, 2019, we entered into an amendment to the revolving credit facility under the credit agreement to refinance the existing revolving credit facility and to provide for an aggregate of $650 million of revolving credit commitments through 2024, and on November 26, 2019, SGI issued $700 million in aggregate principal amount of its new 2028 Unsecured Notes and $500 million in aggregate principal amount of its new 2029 Unsecured Notes (the “November 2019 Refinancing”). We used the net proceeds of the 2028 Unsecured Notes and the 2029 Unsecured Notes, together with cash on hand and borrowings under the revolving credit facility, to redeem the remaining $1,200 million of our outstanding 2022 Unsecured Notes and all $244 million of our outstanding 2020 Notes and pay accrued and unpaid interest thereon plus related premiums, fees, and costs, which redemption was completed on December 12, 2019, and paid related fees and expenses of the offering.
Issuance of 2025 Unsecured Notes and Redemption of 2021 Notes
On July 1, 2020, we completed the issuance of $550 million in aggregate principal amount of 8.625% senior unsecured notes due 2025 in a private offering and received total net proceeds of $543 million. We used a portion of the net proceeds to redeem all $341 million of our outstanding 2021 Notes and paid accrued and unpaid interest thereon plus related premiums, fees and costs, which redemption was completed on July 17, 2020, and are using the remaining net proceeds to fund working capital and general corporate purposes.
The 2025 Unsecured Notes were issued pursuant to an indenture dated as of July 1, 2020 (the “2025 Unsecured Notes Indenture”). We may redeem some or all of the 2025 Unsecured Notes at any time prior to July 1, 2022 at a redemption price
equal to 100% of the principal amount of the 2025 Unsecured Notes plus accrued and unpaid interest, if any, to the date of the redemption plus a “make whole” premium. We may redeem some or all of the 2025 Unsecured Notes at any time on or after July 1, 2022 at the prices specified in the 2025 Unsecured Notes Indenture.
The 2025 Unsecured Notes are senior obligations of SGI, rank equally to all SGI’s existing and future senior debt and rank senior to all of SGI’s existing and future debt, if any, that is expressly subordinated to the 2025 Unsecured Notes. The 2025 Unsecured Notes are guaranteed on a senior unsecured basis by SGC and all of its wholly owned domestic restricted subsidiaries (other than SGI, the unrestricted business entities comprising our SciPlay business segment and certain immaterial subsidiaries), subject to customary exceptions.
Debt issuance costs
We capitalize debt issuance costs associated with long-term financing arrangements and amortize the deferred debt issuance costs over the term of the arrangement using the effective interest method. The capitalized debt issuance costs associated with long-term debt financing, other than line-of-credit arrangements, are presented as a direct reduction from the carrying value of long-term debt, consistent with the treatment of unamortized debt discount. In connection with the February 2018 Refinancing, the March 2019 Refinancing and the November 2019 Refinancing, we reflected $26 million, $16 million and $17 million, respectively, in financing costs presented primarily as a reduction to long-term debt. In connection with the July 2020 issuance of the 2025 Unsecured Notes, we reflected $8 million in financing costs presented primarily as a reduction to long-term debt.
Loss on Debt Financing Transactions
The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting:
Years Ended December 31,
202020192018
Repurchase and cancellation of principal balance at premium $— $80 $110 
Unamortized debt (premium) discount and deferred financing costs, net— 20 (30)
Third party debt issuance fees1 — 13 
Total loss on debt financing transactions$1 $100 $93 
Description of Outstanding Debt
Credit agreement
SGC and certain of its subsidiaries are party to a credit agreement, dated as of October 18, 2013, by and among SGI, as the borrower, SGC, as a guarantor, Bank of America, N.A., as administrative agent, and the lenders and other agents party thereto (the “credit agreement”). As of December 31, 2020, the credit agreement included (a) a revolving credit facility of $650 million through November 20, 2024, with up to $350 million available for issuances of letters of credit and (b) a $4,060 million term B-5 loan facility that matures August 14, 2024.
The term B-5 loans amortize in equal quarterly installments in an amount equal to 1.00% per annum of the stated principal amount thereof, with the remaining balance due at final maturity. Our 2021 notes were extinguished on July 17, 2020 and are therefore no longer subject to provisions. All of the debt incurred under the revolving credit facility is subject to accelerated maturity if loans under our term B-5 loan facility remain outstanding 91 days prior to their stated maturity date of August 14, 2024 and we do not have sufficient liquidity at that time. In this case, liquidity would be based on our unrestricted cash (excluding SciPlay cash) and availability under our revolving credit facility. SGI may voluntarily prepay all or any portion of outstanding amounts under the credit agreement at any time, without premium or penalty, subject to redeployment costs in the case of a prepayment of eurocurrency loans on a day that is not the last day of the relevant interest period.
The applicable margin for the term B-5 loans is 2.75% per annum for eurocurrency (LIBOR) loans and 1.75% per annum for base rate loans. The applicable margin for revolver borrowings is 3.00% per annum for eurocurrency (LIBOR) loans and 2.00% per annum for base rate loans. SGI is required to pay commitment fees to revolving lenders on the actual daily unused portion of the revolving commitments at a rate of 0.50% per annum through maturity, subject to a step-down to 0.375% based upon the achievement of certain net first lien leverage ratios.    
SciPlay Revolver
SciPlay Holding, a subsidiary of SciPlay, entered into the SciPlay Revolver, a $150 million revolving credit agreement, dated as of May 7, 2019, that matures in May 2024, by and among SciPlay Holding, as the borrower, SciPlay Parent
LLC, as a guarantor, the subsidiary guarantors party thereto (which are all domestic entities that comprise our SciPlay business segment), the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent.
The interest rate is either Adjusted LIBOR (as defined in the SciPlay Revolver) plus 2.250% (with one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based step-up to the margin) or ABR (as defined in the SciPlay Revolver) plus 1.250% (with one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based step-up to the margin) at the option of SciPlay Holding. SciPlay Holding is required to pay to the lenders a commitment fee of 0.500% per annum on the average daily unused portion of the revolving commitments through maturity, which fee varies based on the total net leverage ratio and is subject to a floor of 0.375%. The SciPlay Revolver provides for up to $15 million in letter of credit issuances.
Notes
The following table sets forth the date of the indenture, redemption prices and dates and ranking, guarantees and collateral for each of our outstanding series of notes:
Series of Notes
Indenture Date
Redeemable at Make Whole Price Prior To(1)
Ranking, Guarantees and Collateral
2025 Secured NotesOctober 17, 2017October 15, 2020Senior Secured
2026 Secured Euro Notes(2)
February 14, 2018February 15, 2021Senior Secured
2025 Unsecured NotesJuly 1, 2020July 1, 2022Senior Unsecured
2026 Unsecured Euro Notes(2)
February 14, 2018
February 15, 2021
Senior Unsecured
2026 Unsecured NotesMarch 19, 2019March 15, 2022Senior Unsecured
2028 Unsecured NotesNovember 26, 2019May 15, 2023Senior Unsecured
2029 Unsecured Notes
November 26, 2019
November 15, 2024
Senior Unsecured
(1) Refers to the date prior to which such series of notes may be redeemed at a redemption price equal to 100% of the principal amount of such notes plus accrued and unpaid interest, if any, to the date of redemption plus a “make whole” premium. On or after such date, such notes may be redeemed at the prices specified in the indenture governing such notes.
(2) Effective April 30, 2018, the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes were listed on the Official List of The International Stock Exchange.
Ranking, guarantees and collateral
Borrowings under the credit agreement and the Secured Notes are senior secured obligations of SGI, rank equally to all of SGI’s existing and future senior debt and rank senior to all of SGI’s existing and future senior subordinated debt, if any. The Unsecured Notes are senior unsecured obligations of SGI, rank equally to all of SGI’s existing and future senior debt and rank senior to all of SGI’s existing and future senior subordinated debt, if any.
Borrowings under the credit agreement and the Senior Notes are guaranteed by us and each of our current and future direct and indirect wholly owned domestic subsidiaries (other than SGI, the unrestricted business entities comprising our SciPlay business segment and certain immaterial subsidiaries), subject to certain customary exceptions as set forth in the credit agreement and the indentures governing such notes. Borrowings under the credit agreement and the Senior Notes are structurally subordinated to all of the liabilities of our Non-Guarantor Subsidiaries.
The obligations under the credit agreement and the Secured Notes are secured by a first priority lien on (1) substantially all the property and assets (real and personal, tangible and intangible) of SGI and the other guarantors, and (2) 100% of the capital stock (or other equity interests) of the direct domestic subsidiaries of SGC, SGI and the guarantors and 65% of the capital stock (or other equity interests) of the direct foreign subsidiaries of SGC, SGI and the guarantors, in each case, subject to certain customary exceptions.
The SciPlay Revolver is secured by a (i) first priority pledge of the equity securities of SciPlay Holding, SciPlay Parent LLC’s restricted subsidiaries and each subsidiary guarantor party thereto and (ii) first priority security interests in, and mortgages on, substantially all tangible and intangible personal property and material fee-owned real property of SciPlay Parent LLC, SciPlay Holding and each subsidiary guarantor party thereto, in each case, subject to customary exceptions.
Restrictive covenants
Our only financial maintenance covenant (excluding SciPlay’s Revolver) is contained in SGI’s credit agreement. Prior to the Credit Agreement Amendment dated May 8, 2020, this covenant was tested at the end of each fiscal quarter and required us to not exceed a maximum consolidated net first lien leverage ratio of 5.00x Consolidated EBITDA (as defined in the credit agreement). Prior to the Credit Agreement Amendment and Credit Agreement Extension Amendment, this ratio stepped down
to 4.75x beginning with the fiscal quarter ended December 31, 2020 and to 4.50x beginning with the fiscal quarter ending December 31, 2021. See Note 1 for information on the Credit Agreement Amendment and Credit Agreement Amendment Extension. Additionally, the SciPlay Revolver requires that SciPlay maintain a maximum total net leverage ratio not to exceed 2.50x and maintain a minimum fixed charge coverage ratio of no less than 4.00x. We had no amounts drawn on our SciPlay Revolver as of December 31, 2020.We were in compliance with the financial covenants under our debt agreements as of December 31, 2020. See Note 1 for new Credit Agreement Amendments and ratio requirements.