Löwen Play bonds fall on restructuring proposal news

Bonds backing German arcade gaming group Löwen Play GmbH are down by more than 4 points today following reports that the firm this morning presented a debt restructuring proposal to its investor group.

A spokesperson for the company declined to comment when approached by LCD.

Following the reports, the notes dipped to about an 88.6 bid, according to Refinitiv quotes, having closed yesterday at 93, according to S&P Global Market Intelligence.

S&P Global Ratings on Nov. 23 downgraded the securities, which are issued by the Safari Beteiligungs GmbH holding company and placed in 2017, to CCC from CCC+. The agency cited refinancing risk posed by the potential introduction of new COVID-19 restrictions as Germany grapples with a fourth wave of the virus, which it said could hinder the company's near-term earnings recovery.

Regulation of the gaming industry — first introduced in 2018 and fully implemented this year, requiring user logins for slot machines — caused a serious blow to the company's sales and forced the group to upgrade its amusement-with-prize machines.

Under the Interstate Treaty, which came into effect in July, 15% of Safari's amusement-with-prize machines will be withdrawn by the end of 2022, rising to 20% by 2026, Ratings said.

S&P Global Ratings warned of growing default disk in its November report, due to regulatory headwinds and the impact of pandemic-related restrictions. Ratings forecast Safari's EBITDA to drop to between €20 million and €25 million in 2021, from €55 million in 2020 and €118 million in 2019, on an S&P Global Ratings-adjusted basis.

The group also has a €40 million revolving credit facility that matures in 2022. The company received nearly €80 million of state aid in April, May and November 2021, Ratings noted.