COVID-19 has affected countless industries around the world and none more so than the casino industry. Since its first emergence at the beginning of 2020, the pandemic has taken its toll on performance.
The Canadian gaming industry has been dealt a massive blow following countrywide closures. The state of the industry is reflected in the Q4 full-year financial results of Canada’s local casino operator, the Great Canadian Gaming Corporation.
What is the Great Canadian Gaming Corporation?
It is an Ontario-based company that was founded in 1982. Across Ontario, British Columbia, New Brunswick, and Nova Scotia, the company operates 26 gaming, entertainment, and hospitality facilities.
The fortunes of this gaming giant have taken their toll, and it appears to have left some scars. Over the last year, it has had to keep its doors closed for months on end, and in some cases, up to a full twelve months with just intermittent reopenings. All this upset had led to decreases across the board, including adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), net losses incurred by shareholders’ earnings, a significant drop in total cash flow, and a driving down of overall revenue performance compared with other years.
Reports from the company show that it experienced an increase in negative free cash flow, to the tune of $97.4 million, during 2020’s final quarter. Over the 12 months, ending December 21, 2020, the figure for negative free cash flow was $326.4 million.
What led to the increase was a massively decreased adjusted EBITDA prompted by the long-term temporary closures of the company’s gaming venues. Outstanding company credit facilities incurred higher interest, which was in part offset by income tax relief.
During the period covered by the report, credit facilities had become an interest-incurring backup. This happened due to a decrease in cash income generated by the company’s operating activities. Cash inflow for the year was decidedly lower than previous years, at just $105.1 million.
Apollo Has Jumped in to Help Weather the Storm
Apollo Global Management Inc. has jumped in to help Great Canadian Gaming Corporation. At the end of 2020, it was confirmed that this global alternative investment manager firm would be acquiring the gaming giant. According to the agreement signed by the board of directors, it will receive the company through funds managed by the company’s affiliates at a rate of CA$39 per outstanding share acquired.
This rate is equal to a 59% premium as of the close of business on November 9, 2020. Apollo is expected to pay more than CA$3.3 billion, and it’s anticipated the deal will be finalized towards the end of the second quarter of 2021.
Great Canadian Gaming Will Stay True to Its Roots
It’s been announced that Great Canadian Gaming will retain its headquarters in Toronto, Canada. Company management will also remain predominantly Canadian. The board of directors will continue to be made up of Canadian directors and executive management.
It is also expected that when the deal is finalized and the close of sale draws near, several Canadian investment institutions and holding companies will get the opportunity to co-invest in the transaction, making them equity owners alongside Apollo.
Apollo is Bringing More Than Just Capital to the Table
Chief Executive of Great Canadian, Rod Baker, anticipates the deal to be beneficial for everyone involved, including stakeholders, team members, company employees, actual guests, and customers.
He also added that Apollo is an asset and funds management powerhouse boosted by vast and extensive experience, specifically in the gaming sector. He further added that such knowledge could only prove beneficial by creating an additional strategic support structure and boost for and to the expansion of Great Canadian’s hospitality, leisure, and gaming offerings and amenities.
So, while Great Canadian has taken a bit of a knock over recent months, the future is still looking rosy for this gaming giant and the Canadian gaming industry in general.