Jackpotjoy plc (JPJ) has made another significant step towards the improvement of its capital structure, by securing a c £388.5m senior secured term and revolving credit facility. The facility will replace its existing first and second lien term notes and, although 2017e gross debt increases by c £40m, cash interest costs should decline by c 33% pa. We estimate that pro forma adjusted net leverage of 3.4x (3.35x at Q317) will fall to 2.4x in 2018 and 1.6x in 2019. We have increased our 2018 and 2019 EPS by c 10%. JPJ’s shares have risen 39% since the January listing in London, but still trade at a meaningful discount to peers at 7.0x P/E, 8.0x EV/EBITDA and 13.3% free cash flow yield for 2018e.

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