INTRALOT enters into a binding lock-up agreement with key noteholders in support of the proposed capital structure optimisation transactions that will address its upcoming maturities and materially deleverage its balance sheet.

This press release relates to the disclosure of information that prior to publication qualified, or may have qualified, as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation 596/2014.
Not for release, publication or distribution to any person located or resident in any jurisdiction where it is unlawful to distribute this press release.

Intralot S.A. (“Intralot”, the “Company” and, together with its subsidiaries the “Group”) is pleased to announce that is has entered into a lock-up agreement (the “Lock-up Agreement”) with an ad hoc group of noteholders (the “Ad Hoc Group”), holding in excess of 75% of the EUR 250 million senior unsecured notes due 2021 (the “2021 SUNs”), pursuant to which the parties agree to support the balance sheet optimisation transactions. Members of the Ad Hoc Group also hold in excess of 13% of the EUR 500 million senior unsecured notes due 2024 (the “2024 SUNs”).

The Lock-up Agreement marks an important milestone in the Group’s efforts to implement the transactions that will materially deleverage the Group’s balance sheet and enhance its maturity runway and liquidity. This would facilitate the Group to execute its business plan and capitalise on a number of attractive new opportunities across both the lottery and sports betting segments.

The Company has also been in discussions with other noteholders about these transactions and intends to continue to do so post execution of the Lock-Up Agreement.

Intralot Chairman and Chief Executive Officer Sokratis Kokkalis, said:
“The execution of the binding Lock-up Agreement is the successful result of a comprehensive balance sheet optimisation process launched by the Group. The transactions will significantly improve the Group’s capital structure, and provide a solid foundation to support future growth and deliver long-term value to all stakeholders.
The leadership team would like to thank all of our stakeholders, including our noteholders, creditors, shareholders, employees, and customers, for their commitment and continued support of Intralot throughout the process. We look forward to working together on the next chapter of Intralot’s journey.”

Key terms of the transactions
Deleveraging will be achieved through two transactions, involving cross-conditional exchange offers to the 2021 SUNs and the 2024 SUNs.

1. The exchange of the 2021 SUNs into €205 million of new senior secured notes (the “New SSNs”) issued by Intralot Inc. due 2025 (the “2021 Note Exchange”); and
2. An offer to holders of the existing 2024 SUNs to exchange their 2024 SUNs for up to 49% of the share capital of an entity to be established under the laws of Netherlands as a direct subsidiary of Intralot Global Holdings B.V. (“IGH”) and the indirect parent of Intralot Inc. (“TopCo”) (the “2024 Note Exchange”),

New Senior Secured Notes
The New SSNs will be issued in an aggregate principal amount of €205 million and will bear a cash interest rate of 5.90% in year one and two of issuance, 7.00% in year three of issuance, and 7.25% thereafter. The Group will also be provided with the option to capitalise interest at an 8.75% payment-in-kind interest rate, in lieu of paying cash interest, for each interest payment period. The New SSNs will mature in September 2025, subject to a springing maturity to September 2024 if the 2024 SUNs maturity is not extended by at least 12 months. The New SSNs will be issued by Intralot Inc. and guaranteed by a) TopCo (together with its subsidiaries, the “New Restricted Group”), b) an entity to be established under the law of The Netherlands as a direct subsidiary of TopCo and the direct parent company of Intralot Inc. (“HoldCo”) and c) Intralot Tech – Single Member SA, a company incorporated under the laws of Greece. The New SSNs will be secured by certain assets of the New Restricted Group on a first ranking basis and benefit from the terms of an Intercreditor Agreement to be entered on or about the issue date of the New SSNs to regulate the relative rights of the New SSNs and other permitted debt which may be incurred by the New Restricted Group. The issuance of the New SSNs will be, among others, conditional on the closing of the 2024 Note Exchange.

2024 Note Exchange
Each existing holder of the 2024 SUNs will be offered the opportunity to tender their 2024 SUNs in exchange for up to 49% of the share capital of TopCo through an exchange offer. Certain holders of 2024 SUNs who are parties to the Lock-up Agreement and are also members of the Ad Hoc Group (the “Backstop Commitment Parties” and the commitment, the “Backstop Commitment”) will provide a backstop to the 2024 Note Exchange by guaranteeing a minimum tender of €68 million of the 2024 SUNs they hold, for 18.7% of the share capital of TopCo (“Backstopped Amount”). The Backstop Commitment is subject to customary terms and conditions. The Backstop Commitment Providers will receive a cash fee of between 4.0%-7.5% of the Backstopped Amount, depending on the amount of 2024 SUNs validly tendered by other holders (and accepted) in the 2024 Note Exchange. The closing of the 2024 Note Exchange will be, among others, conditional on the issuance of the New SSNs.

JV Agreement
IGH, together with the other shareholders of TopCo, will enter into a joint venture agreement (the “JV Agreement”), which will govern the rights of the parties as shareholders of TopCo. Minority shareholders will receive certain standard minority protections, as applicable based on their respective holdings in TopCo, including board representation, minority veto rights on specific material matters, anti-dilution protection, tag and drag along protections, and certain exit rights (amongst others). 

Further details on the Lock-up Agreement
Under the terms of the Lock-up Agreement:

• the parties thereto have agreed to take all actions which are necessary in order to support, facilitate, implement, consummate or otherwise give effect to all or any part of the 2021 Note Exchange;
• the parties thereto have agreed not to take, encourage, assist, support any action that would or would reasonably be expected to delay, impede or prevent the implementation or consummation of the 2021 Note Exchange;
• certain customary termination events apply (some of which are automatic and some of which are voluntary and exercisable by different parties), including but not limited to termination on the long-stop date (which may be extended with the consent of the Company and the majority participating noteholders) and voluntary termination for material non-compliance with the terms of the Lock-up Agreement by certain parties and the occurrence of an insolvency event with respect to certain Group companies (subject to customary exceptions); and
• the participating noteholders may not transfer or sub-participate any of their 2021 SUNs that are subject to the Lock-up Agreement unless the relevant transferee or sub-participant agrees to be bound by the terms of the Lock-up Agreement, subject to certain exceptions.

All conditions to the effectiveness of the Lock-up Agreement have been satisfied.

Implementation
It is proposed that the transactions referred to above will be implemented in parallel by way of two cross-conditional exchange offers. It is proposed that the 2021 Note Exchange will be effected by way of an exchange offer requiring support from at least 90% of the holders of the 2021 SUNs. If the requisite 90% support is not achieved to implement the 2021 Note Exchange, the Company has alternative plans to implement the 2021 Note Exchange.

The 2024 Note Exchange will be effected via an exchange offer to the holders of 2024 Notes to exchange their 2024 Notes for ordinary shares in TopCo.

Next Steps
Lucid Issuer Services Limited (“Lucid”) has been engaged by the Company to act as information agent for the Lock-up Agreement (the “Information Agent”). All holders of 2021 SUNs that have not yet signed the Lock-up Agreement and wish to support the 2021 Note Exchange will need to complete and execute an Accession Agreement to the Lock-up Agreement in their capacity as a holder of 2021 SUNs and provide evidence of their beneficial holdings via the relevant clearing systems to Lucid (acting as Information Agent under the Lock-up Agreement) by no later than 5:00 pm (London time) on 25 January 2021. Noteholders should direct any queries as to how to accede to the Lock-up Agreement to Lucid as Information Agent at the telephone numbers and addresses listed below. All holders of 2021 SUNs are eligible to participate in the Lock-up Agreement. The Lock-up Agreement and copies of all documentation relating to Lock-up Agreement, together with any updates, will be available to holders of 2021 SUNs on the dedicated website: www.lucid-is.com/intralot/. Access to such dedicated website will be subject to holders of 2021 SUNs providing evidence of holdings satisfactory to the Information Agent.

Information Agent Contact Details

Lucid Issuer Services Limited
Email: intralot@lucid-is.com
Phone: + 44 20 7704 0880
Attention: Oliver Slyfield / Sunjeeve Patel

Any noteholder who wish to discuss the transactions described above should contact Evercore Partners International LLP, who are acting as financial advisors to the Company at Project-SyntaxEVR@evercore.com.

Noteholders may wish to contact the Ad Hoc Group via their financial advisors Houlihan Lokey and AXIA Ventures Group Limited.

Houlihan Lokey EMEA, LLP                                 AXIA Ventures Group Limited
Email: ProjectLegendHL@hl.com                      Email: Project.Legend@axiavg.com

Houlihan Lokey EMEA, LLP, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, and AXIA Ventures Group Limited, which is regulated by the Cyprus Securities and Exchange Commission, are acting exclusively for the members of the Ad Hoc Group in connection with the matters set out in this press release and for no one else and will not be responsible to anyone other than such persons for providing the protections afforded to its clients or for providing advice in relation to the matters set out in this press release.

Disclaimer
This announcement may include certain statements, estimates, targets and projections provided by the Company with respect to the anticipated future performance of the Company and the Group (together the “forward-looking statements”). In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes”, “could”, “estimates”, “anticipates”, “aims”, “expects”, “intends”, “may”, “will”, “plans”, “continue”, “ongoing”, “potential”, “predict”, “project”, “target,” “seek”, “should” or “would” or, in each case, their negative or other variations or comparable terminology or by discussions of strategies, plans, objectives, targets, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. Such forward-looking statements reflect significant assumptions and subjective judgements by the Company’s management concerning anticipated results. These assumptions and judgements may or may not prove to be correct and there can be no assurance that any estimates, targets or projections are attainable or will be realised. Accordingly, neither the Company nor any member of the Group (nor any of its or their respective directors, partners, employees or advisors) nor any other person, shall give any representation or warranty as to the achievements or reasonableness of future projections, estimates or targets nor will they be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in or omission from this press release; any such liability is expressly disclaimed. Any forward-looking statements are only made as of the date of this press release, and we do not intend, and do not assume any obligation, to update forward-looking statements set forth in this press release. You should interpret all subsequent written or oral forward-looking statements attributable to the Company or to persons acting on its behalf as being qualified by the cautionary statements in this note. As a result, you should not place undue reliance on these forward-looking statements.

The completion of the transactions is subject to various conditions, including but not limited to the approval of the transactions and agreement of its terms by prescribed percentages of the Group’s noteholders. Notwithstanding the support of a substantial number of the holders of the 2021 SUNs, there can be no assurance that the transactions will be completed on the terms currently envisaged, or at all.

No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither the Group nor any of its advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this press release or its contents. The information contained in this press release does not constitute investment advice.

This press release is not an offer to sell or a solicitation of an offer to buy or exchange or acquire securities in the United States or in any other jurisdiction and no offer, tender offer, sale, exchange or acquisition of securities is proposed in a jurisdiction where such offer, tender offer, sale, exchange or acquisition would be illegal. The securities mentioned in this announcement have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the laws of any other jurisdiction, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
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