Progressive finally finalizes deal with Shuffle Master

Oct 2, 2007 3:12 AM

After several weeks of delay, Progressive Gaming and Shuffle Master have entered into an agreement in which Shuffle Master will acquire Progressive’s Table Game Division.

In addition, the companies have agreed to a 5-year "Technology License" to integrate Progressive’s Casinolink Jackpot System progressive jackpot system module for use with Shuffle Master’s progressive specialty table games

Under terms of the deal, which is expected to close by the end of the year, Progressive will receive upfront payments of approximately $23.4 million, and "earn-out" payments based on the installed base growth of the Table Game Division assets through 2016, including $3.5 million in guaranteed minimum payments.

Progressive will also receive monthly royalty payments for the placement of Progressive’s Casinolink system on Shuffle Master’s specialty table games.

Roth Capital Partners, in an analysis of the transaction, estimated that the present value of the consideration to be received by Progressive Gaming is between $37.4 million and $46.5 million.

Upon completion of the acquisition of Progressive’s worldwide TGD assets, Shuffle Master will own the worldwide rights and contracts for all of Progressive’s specialty table game titles including Caribbean Stud and Texas Hold ”˜Em Bonus Poker.

"The sale of our Table Game Division will complete our transition to a company that is solely focused on achieving sustainable revenue growth from high-margin recurring systems’ placements," said Russ McMeekin, president and CEO of Progressive Gaming International Corporation. "We intend to use the upfront cash proceeds from this transaction as well as the majority of proceeds from the strategic financing that was completed last month to repay a significant portion of our outstanding debt. The effect of this debt reduction will be a significant decline in our interest expense, which will be immediately accretive to our cash flows and earnings. We are also actively reviewing opportunities to restructure our remaining outstanding debt in a manner that will further strengthen our balance sheet."

McMeekin added that he expected Shuffle Master would continue to expand the growth of Caribbean Stud and Texas Hold’em Bonus Poker in a worldwide market.

Mark Yoseloff, Ph.D., Shuffle Master’s chairman and chief executive officer said progressive jackpots and bonusing would enhance the popularity of the company’s library of table games.

"We look forward to adding Progressive Gaming’s Table Game Division assets to our specialty table game portfolio which includes the majority of the industry’s top performing titles and anticipate that this transaction will be immediately accretive from both an EBITDA and earnings-per-share perspective," Yoseloff said. "Additionally, PGIC’s progressive technology will enable us to offer exciting progressive jackpots on many of our popular games, an enhancement that we believe will add a new element of excitement to some of our top-performing titles."