FDJ signs €380m bond to fund lottery rights deal

2 April 2020

French operator La Française des Jeux (FDJ) has secured a syndicated loan worth €380m (£333.8m/$413.0m) to finance its acquisition of exclusive operating rights for lottery games in the country for a further 25 years.

The rights cover the operation of lottery games at points-of-sale and online, as well as sports betting at point-of-sale locations.

Terms of the deal saw FDJ required to make substantial financial commitment before 30 June in order to secure the rights, with this commitment set at a sum of €380m in October 2019.

FDJ said at the time of its initial public offering (IPO) that it would consider a number of financing methods for this payment, including syndicated credit.

As such, FDJ agreed terms on a syndicated loan with five French institutions from across France, amortised on a straight-line basis over 20 years at a variable rate.

Financing was coordinated by Caisse d’Epargne Ile de France as co-arranger and agent, with BRED, Caisse d'Epargne Hauts de France, Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile de France and Crédit Lyonnais as authorised co-arrangers.

FDJ said that the loan would strengthen its “already extremely solid financial situation”.

Confirmation of the loan comes after FDJ last month warned that the novel coronavirus (Covid-19) outbreak could lead to a revenue decline of around €192m and an earnings drop of apporixmately €77m.

FDJ said its lottery vertical, which accounts for 80% of total revenue, is expected to see revenue fall by up to €72m, with the country under lockdown and all non-essential shops and retailers closed. Earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to fall €27m before new cost-saving measures.

For sports betting, which makes up the remaining 20% of group revenue, FDJ said around €120m is set to be cut in revenue, with earnings also set to drop by €50m, before any mitigation.