Bally’s Corporation is moving on from its Asia interactive business to focus on its operations in North America and Europe.
According to an SEC filing on the company’s website, filed on 31 October, Bally’s has entered into an agreement to sell its interactive business in Asia and certain other international markets to a company formed by members of the carved-out business management. The identities of the members of the buying company were not revealed.
Under the terms of the transaction, the ownership of certain intellectual property will be placed in trust and licensed to the buyer for five years, while Bally’s will also provide certain transaction services to the buying company.
Once the transaction is completed, Bally’s will focus its capital and resource allocation on its North American and European business. It will not be involved in the management, operations, or governance of the carved-out business.
The SEC filing states: “On October 31, 2024, Bally’s Corporation (“Bally’s” or the “Company”) entered into an agreement to sell its interactive business in Asia and certain other international markets (the “Carved-Out Business”) to a company (the “Buyer”) formed by members of the management of the Carved-Out Business.
“Ownership of certain intellectual property has been placed in trust and will be licensed to the Buyer for a term of five years (subject to extension). The Company will also provide the Buyer with certain transition services. The Buyer is acquiring the Carved-Out Business in exchange for a note. Bally’s will have no role in the management, operations, or governance of the Carved-Out Business.
“The transaction is intended to allow Bally’s to focus its capital and resource allocation on North American and European business, and this Carved Out Business will benefit from focused management attention and aligned ownership.”
Bally’s also mentioned how it expects the Asia interactive business transaction to affect the financial performance of the overall company going forward.
The company noted that adjusted EBITDA and free cash flow will likely see a “modest decline” due to cost actions related to simplifying its organisational structure and other cost reductions.
“The financial impact of the transaction is not expected to be material to adjusted EBITDA or free cash flow of the Company,” the SEC filing continued.
“Going forward, the financial statements of the Company will only reflect licensing and royalty revenues received from the Buyer, which are expected to be lower than revenues under the current accounting treatment, but the profitability margins associated with those licensing revenues are expected to be higher as is customary in the gaming industry for IP licence business models.
“The expected modest decline in adjusted EBITDA and free cash flow resulting from the transaction are expected to be mitigated by cost actions to simplify Bally’s organisational structure and other cost reductions.”
