INLOT: quick reaction to Q2

Intralot’s Q2 results had some puts and takes but were mostly uneventful and neutral to the thesis. Q2 prop EBITDA came in a bit light and management similarly lowered 2019 guidance by ~8-10% (implying ~80mm of prop EBITDA at the midpoint). This figure continues to include Inteltek results in continuing operations (flattering results), but also excludes any Ohio terminal sales (expected for Q3). The expected negative variance is mostly driven by higher Illinois start-up costs, non-recurring Morocco guarantee payments related to the old contract (recently settled), and a Netherlands contract delay from Q4 ’19 to Q1 ’20. Most importantly, management […]

INLOT: justifying my projected trading values

I’ve received some great questions on my INLOT presentation since posting it last week and appreciate people taking a look. One recurring question is: how did I come up with my expected post-exchange YTM of 15%? It’s ultimately that assumption that drives my projected IRR for the 2024s, so it indeed is important. That assumption is definitely more art than science, but I’ll walk through my thinking in this post. One thing that I want to reiterate: my presentation laid out a specific liability management strategy to potentially deal with the 2021s – I think it’s helpful to show a […]

Intralot (INLOT): Compelling distressed situation – 5.250% Senior Notes due 2024

This post will include a 52 page presentation on a distressed situation that I think is interesting for a variety of reasons – Intralot. The company is a global provider of integrated gaming systems and services. The capital structure is relatively straightforward and primarily consists of two Senior Unsecured Notes issued by Intralot Capital Luxembourg S.A. After a variety of headwinds and missteps in recent quarters, the bonds are currently trading at distressed prices. I think the longer-dated 2024s are interesting here. If you haven’t already, you need to click “Read More” to see the presentation link below. -Matt