What makes you think that Amaya is, "very desperate"?
Share price is tanking very hard, they have huge debt repayments to keep up which they barely are and likely to fall behind on if a few things don't go their way.
They massively overpaid for stars and then mortgaged up to the hilt to pay for it. Think of the glazeers buying out man utd back in the day and then putting the debt onto the club.
I think its a belief held by quite a few people that a big driver of these changes is simply cost cutting and raising prices to mitigate those things. Not the PR spin they put on it that it is going to be good for the ecology for the games. A view held by more than a few that actually the changes long term will do the opposite.
Hence this seems like a somewhat desperate course of action from Stars/amaya
Net debt is around $2.4bn
Financing costs on this are around $200m annually I think.
You can certainly tweak the numbers so it becomes a problem, but you still need a pretty huge drop in revenues or huge hike in costs.
Share price has no (direct) impact on cash flow.
Lots of hyperbole on both sides. It doesn't help.
You are likely better informed than me to be honest. But do you have the source on this as amaya paid $4.9b for stars I think and around $3b was loaned for it?
I thought the costs were closer to $300m per year in finanicing ? The info I heard is kind of 2nd hand and perhaps the costs are not as high as believed.
Stars makes around $420mil per year profit or did in 2014 I think. In Nov this year amaya announced a profit warning ironic timing (well according to 2+2 so who knows lol) which doesn't suprise me thay much
With the costs of markets increasing quite alot (mainly taxation/regulation) and revenues likely to dip due to some markets getting closed off. Plus the $ is very strong atm (if you are going to withdraw some $ now is a great time) which is likely hurting them pretty hard.
I would not be suprised if loan repayments start getting close to profit or closer to the point it makes the board very uncomfortable. Either way net profit will be very small (compared to pre amaya) once the debt burden is taken into account.
It seems the reality of what amaya promised investors is not true. A big part of the dream sold was rentry into the USA which is seemingly not as smooth as they were sold.
Hence the share price tanking quite hard, obviously it doesn't impact cash flow at all though. Having worked previous to poker in a few large business I know how obessive (overly so) companies are to share price even the the city is incredibly fickle
Like the other poster said I don't think all this is as much of an issue as the strikers believe. Likely there will either be another round of financing or the company is simply sold off to another Corp. It's not like stars is not profitable it is extremely so and this won't change overnight.
Still seems to me that these changes/cuts/increase are very short term reactionary to a bunch of macro issues. Which if the executives at amaya had any clue about the poker market before they over paid for stars. They could have easily forseen. I guess they equated gambling= poker and they know about gambling. Plus took a huge punt on getting into the USA quickly.
It's a public company. You don't need some bloke on 2+2 to let you know what's going on, you can just look it up yourself
Try here
http://www.amaya.com/pdf/20151118_aya-presentation_for-website.pdfSlide 46 shows Adjusted net debt as US$2,359,574
Slide 44 shows YTD financing costs to Q3 2015 as CAD$184,878 (US$129m).
They very recently refinanced the debt on better terms and have access to additional fund raising up to $3bn if required.
You are definitely correct that profit is not at pre-Amaya levels, and the investors were sold a massive growth story based on huge revenues from casino and sports as well as increased poker revenues. So it's not all plain sailing. But defaulting on debt seems unlikely to me. But Tighty would be far better placed to analyse that than me.
The profit warning is what sent the share price tumbling, but it's still going to make a healthy profit this year. Just not as much as it previously thought.
USA is an odd one. It's more a reputational benefit than a financial benefit. NJ wouldn't be acretive to bottom line in the short-term I wouldn't have thought.
Author