Mackie Research Capital analyst is giving the thumbs up to Intertain Group’s (TSX:IT) recent debt financing.
On Friday, Intertain Group announced it had completed a debt financing of 160-million pounds sterling. Management said the proceeds would be used to finance a 150-million pound prepayment of the earn-out payment required to be made to Gamesys Ltd. in connection with Intertain’s Jackpotjoy and Starspins brands.
“Today’s debt financing is an important step forward for Intertain,” says Intertain CEO Andrew McIver. “The financing unlocks the benefit of the advantageous additional non-competition covenants and the amendments to our various operating agreements with the Gamesys group. It also provides certainty to our shareholders and other stakeholders with respect to the funding of our future earnout obligations.”
Thadani says this financing is a positive step forward, though he does expect the stock will be volatile until its UK listing is secured.
“IT securing UK debt financing on Friday should be viewed as a positive signal for the company’s assets’ underlying cash flow potential,” says the analyst. “While we do not expect persistent negative sentiment on this stock (renewed since the fall) to evaporate overnight, this news is positive regardless of potential additional stock price gyrations while we await UK listing.”
In a research update to clients today, Thadani maintained his “Buy” recommnendtion and one-year price target of $20.00 on Intertain Group, implying a return of 101 per cent at the time of publication.
Thadani believes Intertain will post EBITDA of $174.2-million on revenue of $479.9-million in fiscal 2016. He expects these numbers will improve to EBITDA of $182.5-million on a topline of $494.2-million the following year.