Tabcorp updates on Covid-19 financing plans

4 June 2020

Australian gambling operator Tabcorp has reached an agreement with its US private placement note holders in regards to its financial planning for the ongoing novel coronavirus (Covid-19) pandemic.

Last month, Tabcorp said that it was in talks to secure changes to existing covenants to provide additional flexibility and help mitigate the impact of Covid-19.

Tabcorp has now agreed with the holders of AUD$2.1bn (£1.16bn/€1.29bn/US$1.45bn) of fully hedged debt, to waive interest cover covenants and adjustments to leverage covenant ratios in relation to the next two testing dates of 30 June and 31 December.

According to Tabcorp, the amendments will provide the business with additional financial flexibility as it continues its efforts to mitigate the impact of Covid-19 on the group.

Tabcorp last month also secured an agreement from its bank lenders under its Syndicated Facility Agreement, which represents facilities of A$2.2bn, for a waiver of leverage and interest cover covenants.

As a condition of the arrangement, Tabcorp agreed to not to pay a final dividend for its fiscal year ended 30 June, 2020.

“Following on from the support of our syndicate banks, we now welcome the support of our US note holders for the financial flexibility they have afforded us in managing the uncertainty created by Covid-19,” Tabcorp’s managing director and chief executive David Attenborough said.

Tabcorp had already taken the decision to furlough more than 700 of its staff until 30 June as part of its Covid-19 strategy.

Full-time staff were also told to take at least one day of leave per week between 6 April and 30 June, while there was an initial cut of around 40% in the number of technology contractors employed by the business.

In addition, Attenborough took a 20% reduction in his fixed pay until 30 June, while board chairman and non-executive director fees were reduced by 10%, also until that date.