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Table of Contents
TABLE OF CONTENTS
Table of Contents
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-235347
The information contained in this preliminary prospectus supplement and the accompanying prospectus is not complete and
may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and we are not soliciting an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 4, 2019
PROSPECTUS SUPPLEMENT
(to Prospectus dated December 4, 2019)
10,000,000 Shares
Everi Holdings Inc.
Common Stock
We are offering 10,000,000 shares of our common stock, par value $0.001 per share. Our common stock is listed on the New York Stock Exchange under the symbol
"EVRI." On December 3, 2019, the last reported sale price of our common stock on the New York Stock Exchange was $12.98 per share.
Investing in our common stock involves a high degree of risk. Please read "Risk Factors" beginning on page S-10 of this prospectus supplement, on page 3 of the accompanying
prospectus and in the documents incorporated by reference into this prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense. No gaming or regulatory agency has approved or disapproved of
these securities, or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
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Per Share
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Total
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Public Offering Price
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$
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$
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Underwriting Discounts and Commissions(1)
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$
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$
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Proceeds to us before expenses
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$
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$
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(1)
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See "Underwriting."
Delivery of the shares of common stock is expected to be made on or
about , 2019. We have granted the underwriters an option for a period of
30 days to purchase up to an additional 1,500,000 shares of our common stock. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us
will be $ , and the total proceeds to us, before expenses, will be $ .
Joint Book-Running Managers
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Jefferies
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Stifel
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Joint Lead Managers
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Craig-Hallum Capital Group
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Raymond James
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Co-Manager
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SunTrust Robinson Humphrey
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Prospectus Supplement dated , 2019
Table of Contents
TABLE OF CONTENTS
Table of Contents
IMPORTANT NOTICE ABOUT INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering of shares of our common stock.
The second part is the accompanying prospectus, which gives more general information, some of which may not apply to this offering of shares of our common stock. Generally, when we refer only to the
"prospectus," we are referring to both parts combined. If the information about this offering of shares of our common stock varies between this prospectus supplement and the accompanying prospectus,
you should rely on the information in this prospectus supplement.
Any
statement made in this prospectus or in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or in any other subsequently filed document that is also incorporated by reference into this prospectus modifies or supersedes
that statement. Any statement so modified
or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus. Please read "Incorporation of Certain Information by Reference" in this prospectus
supplement.
We
have not, and the underwriters have not, authorized anyone else to make additional representations or to provide you with information other than information provided or incorporated by reference in
this prospectus supplement, the accompanying prospectus or any free writing prospectus prepared by or on behalf of us relating to this offering. Neither we nor the underwriters take responsibility
for, or provide assurances as to the reliability of, any other information that others may give you or representations that others may make. We are offering to sell shares of our common stock, and
seeking offers to buy shares of our common stock, only in jurisdictions where offers and sales are permitted. You should not assume that the information contained in this prospectus supplement, the
accompanying prospectus or any free writing prospectus is accurate as of any date other than the dates shown in these documents or that any information we have incorporated by reference herein is
accurate as of any date other than the date of the document incorporated by reference. Our business, financial condition, results of operations and prospects may have changed since such dates.
i
Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange
Act, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide our current expectations and forecasts about future events.
These
forward-looking statements include, among other things, statements regarding the following matters: the timing of the offering contemplated by this prospectus supplement; the recurring nature of
our revenues; trends in gaming establishment and patron usage of our products; benefits realized by using our products and services; product development, including the release of new game features and
additional game and system releases in the future; regulatory approvals; gaming regulatory, card association, and statutory compliance; the implementation of new or amended card association and
payment network rules; consumer collection activities; future competition; future tax liabilities; future goodwill impairment charges; international expansion; resolution of litigation; dividend
policy; new customer contracts and contract renewals; future results of operations (including revenue, expenses, margins, earnings, cash flow and capital expenditures); expected key improvements in
free cash flow; expectations regarding our improved credit profile; future interest rates and interest expense; future borrowings; and future equity incentive activity and compensation expense.
In
some cases these statements are identifiable through the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "can," "could," "may," "will,"
"should," "would," "likely," and similar expressions. In addition, any statements that refer to projections of our future financial performance, our anticipated growth, and trends in our business and
other characterizations of future events or circumstances are forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. These forward-looking
statements are not a guarantee of future performances and are subject to assumptions and involve known and unknown risks, uncertainties and other important factors that could cause the actual results,
performance or achievements of the Company, or industry results, to differ materially from any future results, performance, or achievement implied by such forward-looking statements. These risks,
uncertainties and important factors include, but are not limited to, market and economic forces; our substantial leverage; our ability to compete in the gaming industry, manage competitive pressures,
navigate gaming market contractions, and continue operating in Native American gaming markets; expectations regarding our existing and future installed base and win per day, our product portfolio, and
development and placement fee arrangements; expectations regarding customers', gaming establishments', and patrons' preferences and demands for future gaming offerings; our ability to comply with the
Europay, MasterCard, and Visa global standard for cards equipped with security chip technology; changes in gaming regulatory, card association, and statutory requirements, as well as regulatory and
licensing difficulties; our ability to maintain our current customers; uncertainty of the timing and closing of acquisitions, if any; and our ability to successfully access the capital markets to
raise funds.
No
assurance can be given that the actual future results will not differ materially from the forward-looking statements that we make for a number of reasons including those described above and in the
"Risk Factors" section of our Annual Report on Form 10-K for the year ended
December 31, 2018 and in our subsequently filed quarterly reports on Form 10-Q. For information on the documents we are incorporating by reference and how to obtain a
copy, please see the "Incorporation of Certain Information by Reference" section in this prospectus supplement. Unless required by law, we undertake no obligation to publicly update or revise any
forward-looking statements to reflect new information or future events or otherwise.
You
should read this prospectus supplement and the accompanying prospectus with the understanding that our actual future results may be materially different from what we expect.
ii
Table of Contents
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information contained elsewhere in this prospectus supplement. This summary does not contain all of the
information that you should consider before deciding whether to invest in our common stock. You should read this entire prospectus supplement carefully, including the "Risk Factors" section, the
accompanying prospectus, and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, prior to making an investment decision. References in this
prospectus supplement to "we," "us," "our," the "Company," and "Everi" refer to Everi Holdings Inc. unless otherwise stated or the context otherwise requires.
Our Business
Everi is a leading supplier of entertainment and technology solutions for the casino, interactive, and gaming industry. With a focus on both customers and
players, Everi develops games and gaming machines, gaming systems and services, and is the provider of core financial products and services, player loyalty tools and applications, and intelligence and
regulatory compliance solutions. Everi reports its results of operations based on two operating segments: Games and FinTech.
Our
Games segment provides gaming operators products and services, including: (a) gaming machines primarily comprised of Class II, or bingo style, and Class III, or casino style,
slot machines, including TournEvent® terminals that allow operators to switch from in-revenue gaming to out-of-revenue tournaments;
(b) system software, licenses, and ancillary equipment, and maintenance, including managing the central determinant system for the video lottery terminals ("VLTs") installed in the State of New
York and also providing similar technology in certain tribal jurisdictions; and (c) business-to-consumer ("B2C") and business-to-business ("B2B") interactive activities. See the section titled
"Regulation" found in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2018 for a description of Class I, Class II, and Class III
designations and related regulatory oversight.
As
of September 30, 2019, we operated 14,272 gaming machines in our installed base, including both Class II and Class III gaming units, of which approximately 30.8% were premium
game units. Of the premium game units, 866 were wide-area progressive ("WAP") units. For the nine months ended September 30, 2019, the average daily win per unit of the gaming machines in our
installed base, inclusive of the premium game units, was $32.68. Our gaming machines, which include access to use certain third-party licensed brands, are either placed under revenue participation or
fixed fee lease arrangements or sold to casino customers. For the nine months ended September 30, 2019, 3,569 gaming machines were sold, reflecting a 7.0% increase in unit sales over such
period.
Our
FinTech segment provides gaming operators cash access and other FinTech related products and services, including: (a) access to cash at gaming facilities via Automated Teller Machine
("ATM") cash withdrawals, credit card cash access transactions, point of sale ("POS") debit card cash access transactions, and check verification and warranty services; (b) equipment that
provides cash access and efficiency-related services; (c) self-service enrollment, loyalty, and marketing equipment and services; (d) products and services that improve credit decision
making, automate cashier operations, and enhance patron marketing activities for gaming establishments; (e) compliance, audit, and data solutions; and (f) online payment processing
solutions for gaming operators in states that offer intrastate, Internet-based gaming, and lottery activities.
For
the nine months ended September 30, 2019, more than 70% of total revenues were of a recurring nature, primarily from our gaming operations, cash access services and information services and
other. Within the Games segment, our gaming operations installed base of gaming units under placement and revenue participation arrangements generated 35.7% of total consolidated revenues for the nine
months
S-1
Table of Contents
ended
September 30, 2019. Approximately 30% of our total units in the installed base are placed under multi-year machine placement agreements. Within the FinTech segment, our cash access
services generated 31.9% of total consolidated revenues for the nine months ended September 30, 2019. We have multi-year contracts with casinos for our cash access services, with a typical
contractual term three to five years. During the last contract renewal cycle for our cash access services, 100% of our top 30 customers renewed contracts. The average life of these customer
relationships is 11 years. Approximately 67% of our fully-integrated, ticket redemption kiosk placements are at least three years old. Within the FinTech segment, information systems and other
revenues from software and services contracts and subscriptions generated 8.6% of consolidated revenues for the nine months ended September 30, 2019. Gaming equipment and systems sales and
FinTech equipment sales comprised of 17.4% and 6.4%, respectively, for the nine months ended September 30, 2019.
Everi
was formed as a Delaware limited liability company on February 4, 2004 and was converted to a Delaware corporation on May 14, 2004. Our principal executive offices are located at
7250 South Tenaya Way, Suite 100, Las Vegas, Nevada 89113. Our telephone number is (800) 833-7110. Our website address is www.everi.com. Except for the documents incorporated by
reference in this prospectus as described under the heading "Incorporation of Certain Information by Reference," the information and other content contained on our website are not incorporated by
reference and do not constitute part of this prospectus and should not be relied upon in connection with making any investment in our securities.
Recent Developments
Proposed Amendment to the Credit Facility
We are currently in discussions to amend (the "Proposed Amendment") our credit agreement, dated May 9, 2017, among Everi Payments Inc., as
borrower, Everi Holdings, Inc., as a guarantor, the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender, letter of credit
issuer, sole lead arranger and sole bookrunner (as amended, the "Credit Agreement"). The Credit Agreement provides for: (i) a $35.0 million, five-year senior secured revolving credit
facility (the "Revolving Credit Facility") and (ii) an initial $820.0 million, seven-year senior secured term loan facility (the "Term Loan Facility," and together with the Revolving
Credit Facility, the "Credit Facilities").
The
interest rates on (i) the outstanding principal amount of the Term Loan Facility are (x) the Adjusted Eurodollar Rate + 3.00% for Eurodollar Rate Loans (with a 1.00%
LIBOR floor) and (y) the Base Rate + 2.00% for Base Rate Loans and (ii) the outstanding principal amount of the Revolving Credit Facility are (x) the Adjusted
Eurodollar Rate + 4.50% for Eurodollar Rate Loans (with a 1.00% LIBOR floor) and (y) the Base Rate + 3.50% for Base Rate Loans. The maturity date of the Revolving
Credit Facility is May 9, 2022, and the maturity date of the Term Loan Facility is May 9, 2024. At September 30, 2019, we had $782.0 million of borrowings outstanding under
the Term Loan Facility and no borrowings outstanding under the Revolving Credit Facility. We had $35.0 million of additional borrowing availability under the Revolving Credit Facility as of
September 30, 2019.
The
Proposed Amendment would provide, among other things, (i) a reduction in the applicable margins for the interest rates payable in respect of the Term Loan Facility and (ii) the
addition of a prepayment premium applicable to the repriced Term Loan Facility of 1.00% of the principal amount thereof that is repaid in respect of (a) any voluntary prepayment or mandatory
prepayment with proceeds of debt that has a lower effective yield than the repriced Term Loan Facility or (b) any amendment to the repriced Term Loan Facility that reduces the interest rate
thereon, in each case, to the extent occurring within six months after the closing date of the Proposed Amendment. No other changes are expected to be made to the pricing, debt repayment terms,
maturity dates and/or financial covenants, in each case, applicable to the Credit Facilities pursuant to the Proposed Amendment. The consummation of the Proposed Amendment is subject to certain
conditions precedent, including the consummation of this offering on terms and conditions
S-2
Table of Contents
satisfactory
in all respects to us. We can provide no assurance that the Proposed Amendment will be consummated on the terms described above or at all.
Corporate Information
Our principal executive offices are located at 7250 S. Tenaya Way, Suite 100, Las Vegas, Nevada 89113. Our telephone number is (800) 833-7110,
and our website address is www.everi.com. Information on or connected to our website is not a part of or incorporated by reference into this prospectus supplement.
S-3
Table of Contents
Selected Historical Financial and Operating Data
The table below sets forth selected financial and operating data as of and for the nine months ended September 30, 2019 and 2018, and as of and for the
years ended December 31, 2018, 2017 and 2016. The data set forth below are qualified in their entirety by and should be read in conjunction with our consolidated financial statements and
related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our
Annual Report on Form 10-K for the year ended December 31,
2018 and our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2019, each of which is incorporated by reference into this prospectus supplement. Historical results are not necessarily indicative of results that may be
expected for any future period.
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Nine Months Ended
September 30,
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Year Ended December 31,
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Selected financial data
($ in thousands)
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2019
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2018
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2018
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2017
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2016
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(unaudited)
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Revenues(1):
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Games total revenues
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$
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206,079
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$
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192,004
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$
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258,978
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$
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222,777
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$
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213,253
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FinTech total revenues
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181,971
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158,009
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210,537
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752,171
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646,203
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Total revenues
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$
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388,050
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$
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350,013
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$
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469,515
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$
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974,948
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$
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859,456
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Net income (loss)
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$
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20,661
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$
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8,153
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$
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12,356
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$
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(51,903
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)
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$
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(249,479
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)
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Adjusted EBITDA(2):
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Games Adjusted EBITDA
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$
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102,417
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$
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97,143
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$
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126,745
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$
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115,986
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$
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116,011
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FinTech Adjusted EBITDA
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87,629
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78,669
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103,643
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96,850
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82,003
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Total Adjusted EBITDA
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$
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190,046
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$
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175,812
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$
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230,388
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$
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212,836
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$
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198,014
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Free Cash Flow(2)
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$
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39,294
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$
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26,691
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$
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24,790
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$
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13,858
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$
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11,009
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Selected Games operating data
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Units sold(3)
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3,569
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3,336
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4,513
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3,647
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|
2,954
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Units installed at end of period
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14,272
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14,116
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13,999
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13,296
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13,264
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Premium units at end of period(4)
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4,395
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2,840
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2,859
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2,532
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|
1,851
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As percentage of total units installed
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30.8
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%
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20.1
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%
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20.4
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%
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19.0
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%
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14.0
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%
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Proprietary units in installed base(5)
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13,697
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13,498
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13,390
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|
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12,533
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|
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11,931
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Approximate daily win per unit(6)
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$
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32.68
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$
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29.13
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$
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28.95
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$
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27.00
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$
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27.79
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Selected FinTech operating data
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Aggregate dollar amount processed (in billions)
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$
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22.7
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$
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20.9
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$
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27.9
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$
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25.3
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$
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21.6
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Number of transactions completed (in millions)
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|
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86.2
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80.7
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|
|
107.6
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|
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99.6
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|
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87.4
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|
-
(1)
On
January 1, 2018, we adopted ASC 606, which primarily impacted our FinTech segment, using the modified retrospective method, which resulted in
the recording of an immaterial cumulative adjustment in the amount of approximately $4.4 million to accumulated deficit as of the adoption date. Prior to such adoption, we reported costs and
expenses related to our cash access services as a cost of revenues. Under ASC 606, such costs are reflected as reductions to gaming operations revenues on a net basis of presentation. In addition, we
previously reported certain costs incurred in connection with our WAP platform, consisting primarily of the jackpot expenses, as cost of revenues. Our prior period results were not recast to reflect
the new revenue recognition standard under the modified retrospective method. FinTech total revenues on a comparable basis to retrospectively reflect net versus gross reporting of revenues under ASC
606 were $188.5 million and $169.8 million for the year ended December 31, 2017 and 2016, respectively.
(2)
For
a reconciliation of net income to Adjusted EBITDA and to Free Cash Flow, see "Non-GAAP Financial Information."
S-4
Table of Contents
-
(3)
-
Unit
sales is the total electronic gaming machines sold in a period excluding those units that have a non-standard gross margin. Our methodology for
computation of this metric may vary from other equipment suppliers.
-
(4)
-
Premium
game units include electronic gaming machines that have content that is generally not for sale, are wide-area progressive units or have unique
game play functions and features that have generated a premium daily win per unit. Our methodology for computation of this metric may vary from other equipment suppliers.
-
(5)
-
Proprietary
units excluded third-party Class III game units of 305 units at September 30, 2019, 618 units at September 30, 2018,
609 units at December 31, 2018, 763 units at December 31, 2017 and 1,333 units at December 31, 2016.
-
(6)
-
Daily
Win Per Unit is computed as 1) the net revenue earned from units placed under fixed fee or revenue participation agreements and other
similar items, divided by 2) the average number of units installed during the reporting period, and by 3) the number of calendar days in the reporting period. The estimated wide-area
progressive jackpot liability is excluded from this computation. Our methodology for computation of this metric may vary from other equipment suppliers.
Non-GAAP Financial Information
In order to enhance investor understanding of the underlying trends in our business, our cash balance and cash available for our operating needs, and to
provide for better comparability between periods in different years, we are providing in this prospectus supplement Adjusted EBITDA and Free Cash Flow, which are not measures of our financial
performance or position under United States Generally Accepted Accounting Principles ("GAAP"). Accordingly, Adjusted EBITDA and Free Cash Flow should not be considered in isolation or as a substitute
for measures prepared in accordance with GAAP. These measures should be read in conjunction with our net earnings, operating income, basic and diluted earnings per share, and cash flow data prepared
in accordance with GAAP.
We
define Adjusted EBITDA as earnings before interest, loss on extinguishment of debt, taxes, depreciation and amortization, non-cash stock compensation expense, accretion of contract rights, non-cash
goodwill impairment charges, separation costs related to the Company's former CEO, non-cash write-down of note receivable and warrant, loss on the sale of aircraft, manufacturing relocation costs, the
non-cash write-off of certain inventory and fixed assets, non-cash adjustment to certain purchase accounting liabilities and non-recurring professional fees and acquisition costs. We present Adjusted
EBITDA as we use this measure to manage our business and consider this measure to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our
operating performance, as measured by Adjusted EBITDA; and our current credit facility and existing senior unsecured notes require us to comply with a consolidated secured leverage ratio that includes
performance metrics substantially similar to Adjusted EBITDA.
We
define Free Cash Flow as Adjusted EBITDA less cash paid for interest, cash paid for capital expenditures, cash paid for placement fees, and cash paid for taxes net of refunds. We present Free Cash
Flow as a measure of performance and believe it provides investors with another indicator of our operating performance. It should not be inferred that the entire Free Cash Flow amount is available for
discretionary expenditures.
S-5
Table of Contents
A
reconciliation of the Company's net income per GAAP to Adjusted EBITDA and Free Cash Flow for the nine months ended September 30, 2019 and 2018 is provided below.
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Nine months ended
September 30, 2019
(unaudited)
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|
Nine months ended
September 30, 2018
(unaudited)
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|
|
|
Games
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|
FinTech
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|
Total
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|
Games
|
|
FinTech
|
|
Total
|
|
Net income
|
|
|
|
|
|
|
|
$
|
20,661
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|
|
|
|
|
|
|
$
|
8,153
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Income tax benefit
|
|
|
|
|
|
|
|
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(2,747
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)
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|
|
|
|
|
|
|
(2,310
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)
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166
|
|
Interest expense, net of interest income
|
|
|
|
|
|
|
|
|
60,130
|
|
|
|
|
|
|
|
|
62,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
8,729
|
|
$
|
69,315
|
|
$
|
78,044
|
|
$
|
5,914
|
|
$
|
62,684
|
|
$
|
68,598
|
|
Plus: depreciation and amortization
|
|
|
83,927
|
|
|
13,278
|
|
|
97,205
|
|
|
80,280
|
|
|
12,493
|
|
|
92,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
92,656
|
|
$
|
82,593
|
|
$
|
175,249
|
|
$
|
86,194
|
|
$
|
75,177
|
|
$
|
161,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock compensation expense
|
|
|
1,895
|
|
|
4,246
|
|
|
6,141
|
|
|
2,075
|
|
|
4,042
|
|
|
6,117
|
|
Accretion of contract rights
|
|
|
6,539
|
|
|
|
|
|
6,539
|
|
|
6,299
|
|
|
|
|
|
6,299
|
|
Adjustment of certain purchase accounting liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(550
|
)
|
|
(550
|
)
|
Write-off of inventory and fixed assets
|
|
|
843
|
|
|
|
|
|
843
|
|
|
2,575
|
|
|
|
|
|
2,575
|
|
Asset acquisition expense and other non- recurring professional fees
|
|
|
484
|
|
|
790
|
|
|
1,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
102,417
|
|
$
|
87,629
|
|
$
|
190,046
|
|
$
|
97,143
|
|
$
|
78,669
|
|
$
|
175,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
|
|
|
|
|
(52,077
|
)
|
|
|
|
|
|
|
|
(54,930
|
)
|
Cash paid for capital expenditures
|
|
|
|
|
|
|
|
|
(81,642
|
)
|
|
|
|
|
|
|
|
(78,545
|
)
|
Cash paid for placement fees
|
|
|
|
|
|
|
|
|
(17,102
|
)
|
|
|
|
|
|
|
|
(15,300
|
)
|
Cash paid for income taxes, net of refunds
|
|
|
|
|
|
|
|
|
69
|
|
|
|
|
|
|
|
|
(346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
|
|
|
|
$
|
39,294
|
|
|
|
|
|
|
|
$
|
26,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-6
Table of Contents
A
reconciliation of the Company's net income per GAAP to Adjusted EBITDA and Free Cash Flow for the year ended December 31, 2018, 2017 and 2016 is provided below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2018
|
|
Year ended December 31, 2017
|
|
Year ended December 31, 2016
|
|
|
|
Games
|
|
FinTech
|
|
Total
|
|
Games
|
|
FinTech
|
|
Total
|
|
Games
|
|
FinTech
|
|
Total
|
|
Net income (loss)
|
|
|
|
|
|
|
|
$
|
12,356
|
|
|
|
|
|
|
|
$
|
(51,903
|
)
|
|
|
|
|
|
|
$
|
(249,479
|
)
|
Income tax (benefit) provision
|
|
|
|
|
|
|
|
|
(9,710
|
)
|
|
|
|
|
|
|
|
(20,164
|
)
|
|
|
|
|
|
|
|
31,696
|
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
166
|
|
|
|
|
|
|
|
|
51,750
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of interest income
|
|
|
|
|
|
|
|
|
83,001
|
|
|
|
|
|
|
|
|
102,136
|
|
|
|
|
|
|
|
|
99,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
3,071
|
|
$
|
82,742
|
|
$
|
85,813
|
|
$
|
8,952
|
|
$
|
72,867
|
|
$
|
81,819
|
|
$
|
(166,243
|
)
|
$
|
47,688
|
|
$
|
(118,555
|
)
|
Plus: depreciation and amortization
|
|
|
110,157
|
|
|
16,313
|
|
|
126,470
|
|
|
97,487
|
|
|
19,300
|
|
|
116,787
|
|
|
120,974
|
|
|
23,659
|
|
|
144,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
113,228
|
|
$
|
99,055
|
|
$
|
212,283
|
|
$
|
106,439
|
|
$
|
92,167
|
|
$
|
198,606
|
|
$
|
(45,269
|
)
|
$
|
71,347
|
|
$
|
26,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock compensation expense
|
|
|
2,317
|
|
|
4,934
|
|
|
7,251
|
|
|
1,728
|
|
|
4,683
|
|
|
6,411
|
|
|
1,642
|
|
|
5,091
|
|
|
6,733
|
|
Goodwill impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146,299
|
|
|
|
|
|
146,299
|
|
Accretion of contract rights
|
|
|
8,421
|
|
|
|
|
|
8,421
|
|
|
7,819
|
|
|
|
|
|
7,819
|
|
|
8,692
|
|
|
|
|
|
8,692
|
|
Separation costs for former CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,687
|
|
|
4,687
|
|
Write-down of note receivable and warrant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,289
|
|
|
|
|
|
4,289
|
|
Write-off of inventory and fixed assets
|
|
|
2,575
|
|
|
|
|
|
2,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of aircraft
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
878
|
|
|
878
|
|
Manufacturing relocation costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
358
|
|
|
|
|
|
358
|
|
Adjustment of certain purchase accounting liabilities
|
|
|
|
|
|
(550
|
)
|
|
(550
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring professional fees
|
|
|
204
|
|
|
204
|
|
|
408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
126,745
|
|
$
|
103,643
|
|
$
|
230,388
|
|
$
|
115,986
|
|
$
|
96,850
|
|
$
|
212,836
|
|
$
|
116,011
|
|
$
|
82,003
|
|
$
|
198,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
|
|
|
|
|
(81,609
|
)
|
|
|
|
|
|
|
|
(89,008
|
)
|
|
|
|
|
|
|
|
(93,420
|
)
|
Cash paid for capital expenditures
|
|
|
|
|
|
|
|
|
(103,031
|
)
|
|
|
|
|
|
|
|
(96,490
|
)
|
|
|
|
|
|
|
|
(80,741
|
)
|
Cash paid for placement fees
|
|
|
|
|
|
|
|
|
(20,556
|
)
|
|
|
|
|
|
|
|
(13,300
|
)
|
|
|
|
|
|
|
|
(11,312
|
)
|
Cash paid for income taxes, net of refunds
|
|
|
|
|
|
|
|
|
(402
|
)
|
|
|
|
|
|
|
|
(180
|
)
|
|
|
|
|
|
|
|
(1,532
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
|
|
|
|
$
|
24,790
|
|
|
|
|
|
|
|
$
|
13,858
|
|
|
|
|
|
|
|
$
|
11,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-7
Table of Contents
The Offering
|
|
|
Issuer
|
|
Everi Holdings Inc.
|
Common stock offered by us
|
|
10,000,000 shares (or 11,500,000 shares, if the underwriters exercise in full their option to purchase additional shares as
described below).
|
Option to purchase additional shares
|
|
We have granted the underwriters an option to purchase up to an additional 1,500,000 shares. The underwriters may exercise
this option at any time within 30 days from the date of this prospectus supplement. See "Underwriting."
|
Common stock outstanding after giving effect to this offering
|
|
82,957,850 shares (or 84,457,850 shares if the underwriters exercise their option to purchase additional shares in
full).
|
Use of proceeds
|
|
We estimate that our net proceeds from this offering will be approximately
$ (or approximately $ if the underwriters exercise their option to
purchase additional shares in full), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of this offering to refinance a portion of our existing
indebtedness in one or more transactions, which may include the repayment of certain outstanding borrowings under the Term Loan Facility and/or the redemption and/or repurchase of a portion of our outstanding 7.50% Senior Unsecured Notes due 2025
(the "2025 Notes"). Pending the deployment of the net proceeds for such refinancing transactions, we may invest the net proceeds in short-term, interest-bearing, investment-grade securities.
|
Dividend policy
|
|
We do not currently intend to pay dividends on our common stock. We plan to retain any earnings for use in the operation of
our business and to fund future growth.
|
Listing
|
|
Our common stock is listed on the New York Stock Exchange under the trading symbol "EVRI."
|
Risk factors
|
|
You should read the section titled "Risk Factors" beginning on page S-10 of, and the other information included or
incorporated by reference in, this prospectus supplement for a discussion of some of the risks and uncertainties you should carefully consider before deciding to invest in our common stock.
|
The
number of shares of our common stock to be outstanding immediately after the closing of this offering is based on 82,957,850 shares of common stock outstanding as of December 2, 2019 and,
except as otherwise indicated, all information in this prospectus supplement:
-
§
-
reflects the offering price of $ per share of common stock;
-
§
-
assumes no exercise of the underwriters' option to purchase 1,500,000 additional shares
of common stock in this offering;
S-8
Table of Contents
-
§
-
does not include 700,000 shares of common stock issuable upon exercise of warrants
outstanding as of such date; and
-
§
-
does not include 15,464,190 shares of common stock reserved for issuance under our stock
incentive plans, of which (1) 12,009,391 shares of common stock are issuable upon exercise of options awarded and outstanding under the plans as of such date, and (2) 3,454,799 shares of
common stock are issuable upon vesting of restricted stock units awarded and outstanding under the plans as of such date.
S-9
Table of Contents
RISK FACTORS
Investing in our common stock involves risks. Our business is influenced by many factors that are difficult to predict and beyond our control and that involve
uncertainties that may materially affect our results of operations, financial condition or cash flows, or the value of our common stock. These risks and uncertainties include those described below, as
well as in the risk factors and other sections of the documents that are incorporated by reference in this prospectus supplement, including "Item 1A. Risk Factors" in our
Annual Report on Form 10-K for the year ended December 31,
2018 and in our subsequently filed quarterly reports on Form 10-Q. You should carefully consider these risks and uncertainties and all of the information contained or
incorporated by reference in this prospectus supplement and the accompanying prospectus before you invest in our common stock.
Risks Related to This Offering and Ownership of Our Common Stock
The market price of and trading volume of our shares of common stock may be volatile.
The market price of our shares of common stock has fluctuated substantially and may continue to fluctuate in response to many factors which are beyond our
control, including:
-
§
-
fluctuations in our operating results, including results that vary from expectations of
management, analysts and investors;
-
§
-
announcements of strategic developments, acquisitions, financings and other material
events by us or our competitors;
-
§
-
the sale of a substantial number of shares of our common stock held by existing security
holders in the public market; and
-
§
-
general conditions in the gaming industry.
The
stock markets in general may experience extreme volatility that may be unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the
trading price of
our common stock, make it difficult to predict the market price of our common stock in the future and cause the value of our common stock to decline.
Because we do not currently intend to pay dividends on our common stock, stockholders will benefit from an
investment in our common stock only if it appreciates in value.
We do not currently anticipate paying any dividends on shares of our common stock. Any determination to pay dividends in the future will be made by our board
of directors and will depend upon results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law, and other factors our board of directors deems
relevant. Accordingly, realization of a gain on stockholders' investments will depend on the appreciation of the price of our common stock. There is no guarantee that our common stock will appreciate
in value or even maintain the price at which stockholders purchased their shares.
We might require additional capital to support business growth, and this capital might not be available on
favorable terms, or at all.
Our operations or expansion efforts may require substantial additional financial, operational, and managerial resources. While we believe we have sufficient
liquidity to fund our working capital and other operating requirements, we may raise additional funds for acquisitions or to expand our operations. If we obtain additional funding in the future, we
may seek debt financing or obtain additional equity capital. Additional capital may not be available to us, or may only be available on terms that adversely affect our existing stockholders, or that
restrict our operations. For example, if we raise additional funds through issuances of equity or convertible debt securities, our existing stockholders could suffer dilution, and any new equity
securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock.
S-10
Table of Contents
Current and future economic, capital and credit market conditions could adversely affect our ability to
service or refinance our indebtedness and to make planned expenditures.
Our ability to make payments on, and to refinance, our indebtedness and to fund planned or committed capital expenditures and investments depends on our
ability to generate cash flow in the future, borrow under our senior secured revolving credit facility or incur new indebtedness. If regional and national economic conditions deteriorate, we could
experience decreased revenues from our operations attributable to decreases in consumer spending levels and could fail to generate sufficient cash to fund our liquidity needs or fail to satisfy the
financial and other restrictive covenants in our debt instruments. We cannot assure you that our business will generate sufficient cash flow from operations or continue to receive distributions from
our affiliates or subsidiaries. We cannot assure you that future borrowings will be available to us under our senior secured revolving credit facility in an amount sufficient to enable us to pay our
indebtedness or to fund our other liquidity needs. We cannot assure you that we will be able to access the capital markets in the future to borrow additional indebtedness on terms that are favorable
to us.
Our
ability to timely refinance and replace our indebtedness in the future will depend upon the economic and credit market conditions discussed above. If we are unable to refinance our indebtedness on
a timely basis, we might be forced to seek alternate forms of financing, dispose of certain assets or minimize capital expenditures and other investments. There is no assurance that any of these
alternatives would be available to us, if at all, on satisfactory terms, or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.
If securities or industry analysts do not publish or cease publishing research or reports about our business
or publish negative reports, our stock price could decline.
The trading market for our common stock relies in part on the research and reports that industry or securities analysts publish about us or our business. If
one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or
trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrades our common stock or if our operating results do not meet their expectations, our stock price could
decline.
We conduct our business in an industry that is subject to high taxes and may be subject to higher taxes in
the future.
In gaming jurisdictions in which we conduct our business, state and local governments raise considerable revenues from taxes based on casino revenues and
operations. From time to time, state and local
governments have increased gaming taxes and such increases could significantly impact the profitability of our customers and our business.
In
addition, from time to time, federal, state and local legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. Further,
worsening economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes and/or similar taxes. It is not possible to determine with
certainty the likelihood of changes in tax laws in these jurisdictions or in the administration of such laws. Such changes, if adopted, could adversely affect our business, financial condition,
results of operations or prospects. Any material increase, or the adoption of additional taxes or fees, could adversely affect our future financial results.
We are subject to extensive governmental gaming regulation, which may harm our business.
Our ability to conduct both our gaming and cash access businesses, expand operations, develop and distribute new games, products and systems, and expand into
new gaming markets is also subject to significant federal, state, local, Native American and foreign regulations which vary from jurisdiction to jurisdiction. In the United States and many other
countries, gaming must be expressly authorized by law.
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Once
authorized, such activities are subject to extensive and evolving governmental regulation. The gaming laws, regulations and ordinances generally concern the antecedents, acumen, financial
stability and character of our owners, officers and directors, as well as those persons financially interested or involved in our companies; dictate the technical standards and regulations of our
electronic player terminals, gaming systems and certain other products; set forth the process and manner by which the various city, county, state, provincial, federal, tribal, and foreign government
agencies (collectively, "Gaming Authorities") issue such licenses, findings of suitability and product approvals. In addition, the suspension, revocation, nonrenewal or limitation of any of our
licenses or product approvals, or the inability to obtain or maintain requisite license or product approvals could have a material adverse effect on our business operations, financial condition, and
results of operations and our ability to maintain key employees. The Gaming Authorities may deny, limit, condition, suspend or revoke a gaming license or related approval for violations of applicable
gaming laws and regulations and may impose substantial fines and take other actions, any one of which could have a significant adverse effect on our business, financial condition and results of
operations.
Further,
changes in existing gaming laws or regulations or new interpretations of existing gaming laws may hinder or prevent us from continuing to operate in those jurisdictions where we currently do
business, which could harm our operating results. In particular, the enactment of unfavorable legislation or government efforts affecting or directed at manufacturers or gaming operators, such as
referendums to increase gaming taxes or requirements to
use local distributors, or uncertainty as to the means and manner in which existing gaming laws may be interpreted and applied, either singly or together, could have a negative impact on our
operations.
In
May 2018, the United States Supreme Court struck down the Professional and Amateur Sports Protection Act ("PASPA") as unconstitutional, which led many states to quickly propose and, in some
instances, pass legislation authorizing sports betting. Consequently, gaming regulators, many of our operator customers, and many of our competitors dedicated resources to service this new market, as
did we. However, in January 2019, the Office of Legal Counsel of the Department of Justice ("OLC") published an opinion (the "2019 Opinion") reversing its prior 2011 opinion interpreting the
Interstate Wire Act of 1961 (the "Wire Act"). The 2019 Opinion now indicates that the Wire Act is applicable to any wire communication across state lines and specifically indicates that the Unlawful
Internet Gambling Enforcement Act ("UIGEA") does not modify the Wire Act, violations of which may be subject to criminal prosecution. The specific comment regarding UIGEA implicates UIGEA's carve out
for "unlawful Internet gambling" and "intermediate routing" (i.e., the ancillary crossing of state lines of transmissions between intra-state communications points). In reliance on the prior
2011 opinion, several states legalized online gaming, and the proposed legislation in many jurisdictions, in response to the May 2018 PASPA decision, included online sports betting. The impact of the
2019 Opinion is currently unclear, and may implicate lottery, land-based, and online gaming as well as banks and payment processors that service these market segments. The New Hampshire Lottery
Commission and certain of its service providers challenged the 2019 Opinion in federal district court. Although the federal district court "set aside" the 2019 Opinion pursuant to the Administrative
Procedure Act, the court stated that the effects of its decision under the Declaratory Judgment Act were limited to the parties in the case. The Department of Justice has appealed the decision. In
light of the decision, the Deputy Attorney General of the United States delayed enforcement of the 2019 Opinion through the later of December 31, 2019 or 60 days after the final
resolution of the case. At this stage, the full effect of the 2019 Opinion and the New Hampshire decision remain uncertain. Interpretations and resultant enforcement of the Wire Act as may relate to
intermediate routing transactions could negatively impact our Wide Area Progressive games business as well as our FinTech cash access business and our interactive real money gaming business.
Moreover,
in addition to the risk of enforcement action, we are also at risk of loss of business reputation in the event of any potential legal or regulatory investigation, whether or not we are
ultimately accused of or found to have committed any violation.
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Many of the financial services that we provide are subject to extensive rules and regulations, which may harm
our business.
Our Central Credit gaming patron credit bureau and check verification and warranty services are subject to the Fair Credit Reporting Act ("FCRA"), the Fair and
Accurate Credit Transactions Act ("FACTA"), and similar state laws. The collection practices that are used by our third-party providers and us may be subject to the Fair Debt Collection Practices Act
("FDCPA") and applicable state laws relating to debt collection. All of
our cash access services and patron marketing services are subject to the privacy provisions of state and federal law, including the Gramm-Leach-Bliley Act. Our POS debit card cash access transactions
and ATM withdrawal services are subject to the Electronic Fund Transfer Act. Our ATM services are subject to the applicable state banking regulations in each jurisdiction in which we operate
ATMs. Our ATM services may also be subject to state and local regulations relating to the imposition of daily limits on the amounts that may be withdrawn from ATMs, the location of ATMs, our
ability to surcharge cardholders who use our ATMs, and the form and type of notices that must be disclosed regarding the provision of our ATM services. The cash access services we provide are subject
to record keeping and reporting obligations under the Bank Secrecy Act and the USA PATRIOT Act of 2001. We are required to file SARs with respect to transactions completed at all gaming establishments
where we provide our cash access services through a gaming establishment's cashier or financial services center. If we are found to be noncompliant in any way with these laws, we could be subject to
substantial civil and criminal penalties. In jurisdictions in which we serve as a check casher, we are subject to the applicable state licensing requirements and regulations governing check cashing
activities. We are also subject to various state licensing requirements and regulations governing money transmitters. We may be required to obtain additional licenses from federal or state financial
authorities in connection with our products and services. There can be no assurance that we will be able to obtain any such licenses, and, even if we were able to do so, there could be substantial
costs and potential product changes involved in maintaining such licenses, which could have a material and adverse effect on our business.
We
are subject to formal or informal audits, inquiries, examinations, or reviews from time to time by the regulatory authorities that enforce these financial services rules and regulations. Although
we have a compliance program that covers the laws and regulations that apply to our business, in the event that any regulatory authority determines that the manner in which we provide cash access,
patron marketing, or gaming patron credit bureau services is not in compliance with existing rules and regulations, or the regulatory authorities adopt new rules or regulations that prohibit or
restrict the manner in which we provide cash access, patron marketing, or gaming patron credit bureau services, then these regulatory authorities may force us to modify the manner in which we operate
or force us to stop processing certain types of cash access transactions or providing patron marketing or gaming patron credit bureau services altogether. We may also be required to pay substantial
penalties and fines if we fail to comply with applicable rules and regulations. For example, if we fail to file currency transaction reports ("CTRs") or suspicious activity reports ("SARs") on a
timely basis or if we are found to be noncompliant in any way with either the Bank Secrecy Act or the USA PATRIOT Act of 2001, we could be subject to substantial civil and criminal penalties. In
addition, our failure to comply with applicable rules and regulations could subject us to private litigation.
Gaming and financial services laws and regulations are subject to change and uncertain application.
Gaming and financial services laws and regulations are subject to change and evolving interpretations and application, including through legislative
amendments, new and proposed regulations, executive orders, and agency interpretations, and it can be difficult to predict how they may be applied to our business. We may not be able to respond
quickly or effectively to regulatory, legislative and other developments, and these changes may in turn impair our ability to offer our existing or proposed products and services and/or increase our
expenses in providing these products and services.
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USE OF PROCEEDS
We estimate that the net proceeds to us from the sale of our common stock offered hereby will be approximately $ (or approximately
$ if the underwriters exercise their option to purchase additional shares in full), after deducting estimated underwriting discounts and commissions and
estimated offering expenses
payable by us. We intend to use the net proceeds of this offering to refinance a portion of our existing indebtedness in one or more transactions, which may include the repayment of certain
outstanding borrowings under the Term Loan Facility and/or the redemption and/or repurchase of a portion of our outstanding 2025 Notes. Pending the deployment of the net proceeds for such refinancing
transactions, we may invest the net proceeds in short-term, interest-bearing, investment-grade securities.
As
of September 30, 2019, we had (i) $782.0 million of borrowings outstanding under the Term Loan Facility and (ii) no borrowings outstanding under the Revolving Credit
Facility. The interest rates on (a) the outstanding principal amount of the Term Loan Facility are (x) the Adjusted Eurodollar Rate + 3.00% for Eurodollar Rate Loans (with
a
1.00% LIBOR floor) and (y) the Base Rate + 2.00% for Base Rate Loans and (b) the outstanding principal amount of the Revolving Credit Facility are (x) the Adjusted
Eurodollar Rate + 4.50% for Eurodollar Rate Loans (with a 1.00% LIBOR floor) and (y) the Base Rate + 3.50% for Base Rate Loans. Pursuant to the Proposed 2019
Repricing Amendment, we expect to reduce the interest rate payable on the Term Loan Facility. The maturity date of the Revolving Credit Facility is May 9, 2022, and the stated date of the Term
Loan Facility is May 9, 2024. We are currently in discussions to amend our Credit Agreement. See "Summary Recent Developments Proposed
Amendment to Credit Facility."
As
of September 30, 2019, we had $375.0 million aggregate principal amount of 2025 Notes outstanding. Interest on the 2025 Notes accrues at a rate of 7.50% per annum and is payable
semi-annually in arrears on each June 15 and December 15. The 2025 Notes will mature on December 15, 2025.
The
Underwriters and/or their affiliates may be holders of our outstanding 2025 Notes and/or our existing Term Loan Facility and, as a result, may receive a portion of the proceeds from this offering.
See "Underwriting."
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CAPITALIZATION
The following table sets forth our capitalization as of September 30, 2019:
-
§
-
on an actual basis; and
-
§
-
on an as adjusted basis to give effect to the issuance and sale of our common stock
offered hereby and the application of the estimated net proceeds therefrom as set forth under "Use of Proceeds," after deducting the underwriting discount and estimated offering expenses payable by
us.
This
table should be read in conjunction with, and is qualified in its entirety by reference to, "Use of Proceeds" and our unaudited consolidated financial statements and the accompanying notes in our
Quarterly Report on Form 10-Q for the quarter ended September 30,
2019, which are incorporated by reference into this prospectus supplement.
|
|
|
|
|
|
|
|
|
|
AS OF
SEPTEMBER 30, 2019
|
|
($ in thousands)
|
|
ACTUAL
|
|
AS ADJUSTED(4)
|
|
|
|
(unaudited)
|
|
Cash and cash equivalents(1)
|
|
$
|
275,706
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
|
Senior secured revolving credit facility(2)
|
|
$
|
|
|
$
|
|
|
Senior secured term loan(2)
|
|
|
782,000
|
|
|
|
|
7.50% senior unsecured notes due 2025(3)
|
|
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
1,157,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit)
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 500,000 shares authorized and 97,279 shares issued at September 30, 2019; 500,000 shares authorized
and shares issued at September 30, 2019, as adjusted
|
|
$
|
97
|
|
$
|
|
|
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at September 30, 2019
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
316,356
|
|
|
|
|
Accumulated deficit
|
|
|
(208,796
|
)
|
|
(208,796
|
)
|
Accumulated other comprehensive loss
|
|
|
(2,187
|
)
|
|
(2,187
|
)
|
Treasury stock, at cost, 24,992 shares at September 30, 2019
|
|
|
(177,485
|
)
|
|
(177,485
|
)
|
|
|
|
|
|
|
|
|
Total stockholders' (deficit) equity
|
|
$
|
(72,015
|
)
|
$
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
1,084,985
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
We
provide cash settlement services to gaming establishments related to our cash access services, which involve the movement of funds between various
parties involved in these types of transactions. We receive reimbursement from the patron's credit or debit card issuing financial institution for the amount owed to the gaming establishment plus the
fee charged to the patron. These activities result in amounts due to us at the end of each business day that we generally recover over the next few business days, which are classified as settlement
receivables on our balance sheets. As of September 30, 2019, we had approximately $56.0 million in settlement receivables. In addition, cash settlement services result in amounts due to
gaming establishments for the cash disbursed to patrons through the issuance of a negotiable instrument or through electronic settlement for the face amount provided to patrons that we generally remit
over the next few business days, which are classified as settlement liabilities on our Balance Sheets. As of September 30, 2019, we had approximately $298.5 million in settlement
liabilities. As the timing of cash received from cash settlement services may differ, the total amount of cash held by us will fluctuate throughout the year.
-
(2)
-
As
of December 2, 2019, (i) we had $782.0 million outstanding under the Term Loan Facility and (ii) no borrowings
outstanding under the Revolving Credit Facility.
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-
(3)
-
As
of December 2, 2019, we had $375.0 million aggregate principal amount of 2025 Notes outstanding.
-
(4)
-
Assumes
that $ of the net proceeds of this offering are used to repay certain outstanding borrowings under the Term Loan Facility and/or
the remaining net proceeds are used to fund the redemption and/or repurchase of $ aggregate principal amount of our outstanding 2025 Notes.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
The
following is a general discussion of certain U.S. federal income tax considerations with respect to the ownership and disposition of shares of our common stock applicable to non-U.S. Holders who
acquire such shares in this offering and hold such shares as a capital asset (generally, property held for investment). For purposes of this discussion, a "non-U.S. Holder" generally means a
beneficial owner of our common stock that is not, for U.S. federal income tax purposes, any of the following:
-
§
-
an individual who is a citizen or resident of the United States;
-
§
-
a corporation, or other business entity treated as a corporation, created or organized in
the United States or under the laws of the United States, any state thereof or the District of Columbia;
-
§
-
an estate, the income of which is includible in gross income for U.S. federal income tax
purposes regardless of its source; or
-
§
-
a trust if (a) a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has in effect a valid
election to be treated as a U.S. person for U.S. federal income tax purposes.
This
discussion is based on current provisions of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), Treasury regulations promulgated thereunder, judicial opinions,
published positions of the Internal Revenue Service (the "IRS"), and other applicable authorities, all of which are subject to change or differing interpretations (possibly with retroactive effect).
This discussion does not address all aspects of U.S. federal income taxation that may be important to a particular non-U.S. Holder in light of that non-U.S. Holder's circumstances, including Medicare
taxes imposed on net investment income and the alternative minimum tax, nor does it address any aspect of U.S. federal taxation other than U.S. federal income taxation (such as U.S. federal estate and
gift taxation) or state, local, or non-U.S. taxation. This discussion does not address tax considerations applicable to investors that may be subject to special treatment under the U.S. federal income
tax laws, such as:
-
§
-
banks, insurance companies and other financial institutions;
-
§
-
tax-exempt entities;
-
§
-
brokers, dealers or traders in securities or foreign currencies;
-
§
-
controlled foreign corporations and corporations that accumulate earnings to avoid U.S.
federal income tax;
-
§
-
passive foreign investment companies;
-
§
-
persons that hold our common stock as part of a straddle, hedge, conversion transaction
or other integrated investment;
-
§
-
persons required to accelerate the recognition of any item of gross income with respect
to our common stock as a result of such income being included in an applicable financial statement;
-
§
-
entities or arrangements treated as partnerships for U.S. federal income tax purposes and
investors therein;
-
§
-
persons that own or are deemed to own, actually or constructively, more than 5% of our
common stock for U.S. federal income tax purposes; and
-
§
-
U.S. expatriates.
If
a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner will generally depend on the
status of the partner and the activities of the partnership. Partners of a partnership considering an investment in our common stock should consult their tax adviser as to the particular U.S. federal
income tax consequences applicable to them.
S-17
Table of Contents
We
have not sought, and will not seek, any ruling from the IRS or any opinion of counsel with respect to the tax consequences discussed herein, and there can be no assurance that the IRS will not take
a position contrary to the tax consequences discussed below or that any position taken by the IRS would not be sustained.
EACH NON-U.S. HOLDER SHOULD CONSULT ITS TAX ADVISER REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND NON-U.S. INCOME AND OTHER TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF
OUR COMMON STOCK.
Dividends
We do not currently intend to pay dividends on our common stock in the foreseeable future. However, if we do make distributions of cash or property on our
common stock, in general, any such distributions we make to a non-U.S. Holder that constitute dividends for U.S. federal income tax purposes will be subject to U.S. withholding tax at a rate of 30% of
the gross amount, unless the non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable tax treaty and the non-U.S. Holder provides proper certification of its eligibility
for such reduced rate (including providing a valid IRS Form W-8BEN or W-8BEN-E, as applicable (or other applicable documentation)). A distribution on a share of our common stock will constitute
a dividend for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any distribution not constituting a
dividend will be treated first as reducing the adjusted basis in the non-U.S. Holder's share(s) of our common stock to the extent thereof, determined separately for each share, and, to the extent such
distribution exceeds the adjusted basis in such share, as gain from the sale or exchange of such share.
Dividends
we pay to a non-U.S. Holder that are effectively connected with its conduct of a trade or business within the United States (and, if required by an applicable tax treaty, are attributable to
a U.S. permanent
establishment of such non-U.S. holder) will not be subject to U.S. withholding tax, as described above, if the non-U.S. Holder complies with applicable certification and disclosure requirements
(including providing a valid IRS Form W-8ECI). Instead, unless an applicable tax treaty provides otherwise, such dividends generally will be subject to U.S. federal income tax on a net income
basis, in the same manner as if the non-U.S. Holder were a United States person for U.S. federal income tax purposes. In addition, if the non-U.S. Holder is an entity treated as a corporation for U.S.
federal income tax purposes, such holder's earnings and profits (subject to adjustments) that are effectively connected with its conduct of a trade or business within the United States may also be
subject to an additional U.S. federal branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable tax treaty).
Any
distributions we make to a non-U.S. Holder with respect to its shares of our common stock will also be subject to the rules discussed below under the headings "Backup Withholding, Information
Reporting and Other Reporting Requirements" and "Foreign Account Tax Compliance Act."
Gain on Sale or Other Taxable Disposition of Common Stock
In general, subject to the discussions below under the headings "Backup Withholding, Information Reporting and Other Reporting Requirements" and "Foreign
Account Tax Compliance Act," a non-U.S. Holder will not be subject to U.S. federal income tax on any gain recognized upon the sale or other taxable disposition of the non-U.S. Holder's shares of our
common stock unless:
-
§
-
the gain is effectively connected with a trade or business carried on by the non-U.S.
Holder within the United States (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment of such non-U.S. Holder);
-
§
-
the non-U.S. Holder is an individual and is present in the United States for
183 days or more in the taxable year of disposition and certain other conditions are met; or
-
§
-
we are or have been a U.S. real property holding corporation (a "USRPHC") for U.S.
federal income tax purposes (which we believe we are not and have never been, and do not anticipate we will
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become)
at any time within the shorter of the five-year period preceding such disposition or such non-U.S. Holder's holding period in such shares (the "Relevant Period") of our common stock and, if
our common stock is treated as "regularly traded on an established securities market," only if the non-U.S. Holder owns or is treated as owning more than 5% of our common stock at any time within the
Relevant Period.
Unless
an applicable tax treaty provides otherwise, gain that is effectively connected with the conduct of a trade or business in the United States (or so treated) will generally be subject to U.S.
federal income tax on a net basis, in the same manner as if the non-U.S. Holder were a United States person for U.S. federal income tax purposes. In addition, if the non-U.S. Holder is a corporation,
the branch profits tax described above also may apply to such holder's effectively connected earnings and profits (subject to adjustments).
An
individual non-U.S. Holder who is subject to U.S. federal income tax because the non-U.S. Holder was present in the United States for 183 days or more during the year of sale or other
taxable disposition of our common stock will generally be subject to a flat 30% tax on the gain recognized on such disposition, which may be offset by certain U.S.-source capital losses (assuming
certain requirements are met, including timely filing of U.S. federal income tax returns with respect to such losses).
Non-U.S.
Holders should consult their tax adviser regarding the application of these rules to them, and any potentially applicable income tax treaties that may provide for different rules than those
set forth in this discussion. Any sale or other disposition with respect to a non-U.S Holder's shares of our common stock will also be subject to the rules discussed below under the heading "Backup
Withholding, Information Reporting and Other Reporting Requirements" and "Foreign Account Tax Compliance Act."
Backup Withholding, Information Reporting and Other Reporting Requirements
We must report annually to the IRS, and to each non-U.S. Holder, the amount of dividends paid to, and the tax withheld with respect to, each non-U.S. Holder.
These reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable tax treaty. Copies of this
information reporting may also be made available under the provisions of a specific tax treaty or agreement with the tax authorities in the country in which the non-U.S. Holder resides or is
established.
A
non-U.S. Holder will generally be subject to backup withholding for dividends on our common stock paid to such holder (currently at a rate of 24%), unless such non-U.S. Holder certifies under
penalties of perjury that among other things, it is a non-U.S. Holder (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person), and otherwise complies with
all applicable legal requirements.
Information
reporting and backup withholding generally are not required with respect to the amount of any proceeds from the sale or other disposition of our common stock by a non-U.S. Holder outside
the United States through a foreign office of a foreign broker that does not have certain specified connections to the United States. However, if a non-U.S. Holder sells or otherwise disposes its
shares of our common stock through a U.S. broker or the U.S. office of a foreign broker, the broker will generally be required to report the amount of proceeds paid to the non-U.S. Holder to the IRS
and also backup withhold on that amount, unless such non-U.S. Holder provides appropriate certification to the broker of its status as a non-U.S. person or otherwise establishes an exemption (and the
payor does not have actual knowledge or reason to know that such holder is a U.S. person). Information reporting will also apply if a non-U.S. Holder sells its shares of our common stock through a
foreign broker deriving more than a specified percentage of its income from U.S. sources or having certain other connections to the United States, unless such broker has documentary evidence in its
records that such non-U.S. Holder is a non-U.S. person and certain other conditions are met, or such non-U.S. Holder otherwise establishes an exemption (and the payor does not have actual knowledge or
reason to know that such holder is a U.S. person).
Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. Holder can be credited against the non-U.S. Holder's U.S. federal
income tax
S-19
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liability,
if any, or refunded, provided that the required information is furnished to the IRS in a timely manner. Non-U.S. Holders should consult their tax advisers regarding the application of the
information reporting and backup withholding rules to them.
Foreign Account Tax Compliance Act
Withholding taxes may be imposed under Sections 1471 to 1474 of the Code, the Treasury regulations promulgated thereunder and other official guidance
(commonly referred to as "FATCA") on certain
types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or gross proceeds from the sale or
other disposition of, our common stock paid to a "foreign financial institution" or a "non-financial foreign entity" (each as defined in the Code), unless those entities comply with certain
requirements under the Code and applicable Treasury regulations, which requirements may be modified by an "intergovernmental agreement" entered into between the United States and an applicable foreign
country. Future Treasury regulations or other official guidance may modify these requirements.
Pursuant
to recently proposed regulations, the Treasury Department has indicated its intent to eliminate the requirements under FATCA of withholding on gross proceeds from the sale or other
disposition of certain financial instruments (which would include our stock). The Treasury Department has indicated that taxpayers may rely on these proposed regulations pending their finalization.
FATCA
withholding tax will apply to all withholdable payments without regard to whether the beneficial owner of the payment would otherwise be entitled to an exemption from imposition of withholding
tax pursuant to an applicable tax treaty with the United States or U.S. domestic law. Prospective investors should consult their tax advisers regarding the potential application of withholding under
FATCA to their investment in our common stock.
The
U.S. federal tax discussion set forth above is included for general information only and may not be applicable depending upon a particular non-U.S. Holder's particular situation. Holders should
consult their tax advisers with respect to the tax consequences to them of the purchase, ownership and disposition of the stock, including the tax consequences under state, local, foreign and other
tax laws and the possible effects of changes in U.S. federal or other tax laws.
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Table of Contents
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement among us and Jefferies LLC and Stifel, Nicolaus & Company,
Incorporated, as the representatives of the underwriters named below and the joint book-running managers of this offering, we have agreed to sell to the underwriters, and each of the underwriters has
agreed, severally and not jointly, to purchase from us, the respective number of shares of common stock shown opposite its name below:
|
|
|
Underwriter
|
|
Number of Shares
|
Jefferies LLC
|
|
|
Stifel, Nicolaus & Company, Incorporated
|
|
|
Craig-Hallum Capital Group LLC
|
|
|
Raymond James & Associates, Inc.
|
|
|
SunTrust Robinson Humphrey, Inc.
|
|
|
|
|
|
Total
|
|
|
The
underwriting agreement provides that the obligations of the several underwriters are subject to certain conditions precedent such as the receipt by the underwriters of officers' certificates and
legal opinions and approval of certain legal matters by their counsel. The underwriting agreement provides that the underwriters will purchase all of the shares of common stock if any of them are
purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be
terminated. We have agreed to indemnify the underwriters and certain of their controlling persons against certain liabilities, including liabilities under the Securities Act, and to contribute to
payments that the underwriters may be required to make in respect of those liabilities.
The
underwriters have advised us that, following the completion of this offering, they currently intend to make a market in the common stock as permitted by applicable laws and regulations. However,
the underwriters are not obligated to do so, and the underwriters may discontinue any market-making activities at any time without notice in their sole discretion. Accordingly, no assurance can be
given as to the liquidity of the trading market for the
common stock, that you will be able to sell any of the common stock held by you at a particular time or that the prices that you receive when you sell will be favorable.
The
underwriters are offering the shares of common stock subject to their acceptance of the shares of common stock from us and subject to prior sale. The underwriters reserve the right to withdraw,
cancel or modify offers to the public and to reject orders in whole or in part.
Commission and Expenses
The underwriters have advised us that they propose to offer the shares of common stock to the public at the public offering price set forth on the cover page
of this prospectus and to certain dealers, which may include the underwriters, at that price less a concession not in excess of $ per share of common stock. The
underwriters may allow,
and certain dealers may reallow, a discount from the concession not in excess of $ per share of common stock to certain brokers and dealers. After the offering,
the public offering
price, concession and reallowance to dealers may be reduced by the representatives. No such reduction will change the amount of proceeds to be received by us as set forth on the cover page of this
prospectus supplement.
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Table of Contents
The
following table shows the public offering price, the underwriting discounts and commissions that we are to pay the underwriters and the proceeds, before expenses, to us in connection with this
offering. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
|
|
Total
|
|
|
|
Without
Option to
Purchase
Additional
Shares
|
|
With
Option to
Purchase
Additional
Shares
|
|
Without
Option to
Purchase
Additional
Shares
|
|
With
Option to
Purchase
Additional
Shares
|
|
Public offering price
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Underwriting discounts and commissions paid by us
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Proceeds to us, before expenses
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
We
estimate expenses payable by us in connection with this offering, other than the underwriting discounts and commissions referred to above, will be approximately
$ .
Listing
Our common stock is listed on the New York Stock Exchange under the trading symbol "EVRI".
Stamp Taxes
If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the
country of purchase, in addition to the offering price listed on the cover page of this prospectus.
Option to Purchase Additional Shares
We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase, from time to time, in whole or in
part, up to an aggregate of 1,500,000 shares of common stock from us at the public offering price set forth on the cover page of this prospectus, less underwriting discounts and commissions. If the
underwriters exercise this option, each underwriter will be obligated, subject to specified conditions, to purchase a number of additional shares proportionate to that underwriter's initial purchase
commitment as indicated in the table above. This option may be exercised only if the underwriters sell more shares than the total number set forth on the cover page of this prospectus.
No Sales of Similar Securities
We
and our officers and directors have agreed, subject to specified exceptions, not to directly or indirectly:
-
§
-
sell, offer to sell, contract to sell or lend, effect any short sale or establish or
increase a "put equivalent position" (within the meaning of Rule 16a-1(h) under the Exchange Act) or liquidate or decrease any "call equivalent position" (within the meaning of
Rule 16a-1(b) under the Exchange Act), pledge, hypothecate or grant any security interest in, or in any other way transfer or dispose of any shares or any options or warrants or other rights to
acquire shares or any securities exchangeable or exercisable for or convertible into shares, or to acquire other securities or rights ultimately exchangeable or exercisable for or convertible into
shares (collectively, "Related Securities") currently
S-22
Table of Contents
This
restriction terminates after the close of trading of the common stock on and including the 90th day after the date of this prospectus. However, subject to certain exceptions,
in the event that either:
-
§
-
during the last 17 days of the 90-day restricted period, we issue an earnings
release or discloses material news or a material event relating to us occurs, or
-
§
-
prior to the expiration of the 90-day restricted period, we announce that we will release
earnings results during the 16-day period beginning on the last day of the 90-day restricted period,
then
in either case the expiration of the 90-day restricted period will be extended until the expiration of the 18-day period beginning on the date of the issuance of an earnings release or the
disclosure of the material news or occurence of the material event, as applicable, unless the representatives waive, in writing, such an extension.
The
representatives may, in their sole discretion and at any time or from time to time before the termination of the 90-day period release all or any portion of the securities subject to lock-up
agreements. There are no existing agreements between the underwriters and any of our shareholders who will execute a lock-up agreement, providing consent to the sale of shares prior to the expiration
of the lock-up period.
Stabilization
The underwriters have advised us that they, pursuant to Regulation M under the Securities Exchange Act of 1934, as amended, certain persons
participating in the offering may engage in short sale transactions, stabilizing transactions, syndicate covering transactions or the imposition of penalty bids in connection with this offering. These
activities may have the effect of stabilizing or maintaining the market price of the common stock at a level above that which might otherwise prevail in the open market. Establishing short sales
positions may involve either "covered" short sales or "naked" short sales.
"Covered"
short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares of our common stock in this offering. The underwriters may close out any
covered short position by either exercising their option to purchase additional shares of our common stock or purchasing shares of our common stock in the open market. In determining the source of
shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they
may purchase shares through the option to purchase additional shares.
"Naked"
short sales are sales in excess of the option to purchase additional shares of our common stock. The underwriters must close out any naked short position by purchasing shares in the open
market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares of our common stock in the open market
after pricing that could adversely affect investors who purchase in this offering.
A
stabilizing bid is a bid for the purchase of shares of common stock on behalf of the underwriters for the purpose of fixing or maintaining the price of the common stock. A syndicate covering
transaction is the bid
S-23
Table of Contents
for
or the purchase of shares of common stock on behalf of the underwriters to reduce a short position incurred by the underwriters in connection with the offering. Similar to other purchase
transactions, the underwriter's purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in
the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. A penalty bid is an arrangement permitting
the underwriters to reclaim the selling concession otherwise accruing to a syndicate member in connection with the offering if the common stock originally sold by such syndicate member are purchased
in a syndicate covering transaction and therefore have not been effectively placed by such syndicate member.
Neither
we, nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common
stock. The underwriters are not obligated to engage in these activities and, if commenced, any of the activities may be discontinued at any time.
Electronic Distribution
A prospectus in electronic format may be made available by e-mail or on the web sites or through online services maintained by one or more of the underwriters
or their affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of
shares of common stock for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations. Other than
the prospectus in electronic format, the information on the underwriters' web sites and any information contained in any other web site maintained by any of the underwriters is not part of this
prospectus, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by investors.
Other Activities and Relationships
The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading,
commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriter and certain of its
affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for us and our affiliates, for which they
received or will receive customary fees and expenses.
In
the ordinary course of their various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities
activities may involve securities and/or instruments issued by us and our affiliates. If the underwriters or their respective affiliates have a lending relationship with us, they routinely hedge their
credit exposure to us consistent with their customary risk management policies. The underwriters and their respective affiliates may hedge such exposure by entering into transactions which consist of
either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the common stock offered hereby. Any such
short positions could adversely affect future trading prices of the common stock offered hereby. The underwriters and certain of their respective affiliates may also communicate independent investment
recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend
to clients that they acquire, long and/or short positions in such securities and instruments. In particular, Jefferies Finance LLC is a lender under the Revolving Credit Facility, under which there
are no borrowings outstanding at September 30, 2019. In addition, Jefferies LLC owns an immaterial amount of the 2025 Notes, and we may use some of our net proceeds to repurchase a portion of
the 2025 Notes.
S-24
Table of Contents
Disclaimers Relevant to Non-U.S. Jurisdictions
Canada
-
(A)
-
Resale
Restrictions
The
distribution of shares in Canada is being made only in the provinces of Ontario, Quebec, Alberta and British Columbia on a private placement basis exempt from the requirement that we prepare and
file a prospectus with the securities regulatory authorities in each province where trades of these securities are made. Any resale of the shares in Canada must be made under applicable
securities laws which may vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the securities.
-
(B)
-
Representations
of Canadian Purchasers
By
purchasing shares in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received
that:
-
§
-
the purchaser is entitled under applicable provincial securities laws to purchase the
shares without the benefit of a prospectus qualified under those securities laws as it is an "accredited investor" as defined under National
Instrument 45-106 Prospectus Exemptions,
-
§
-
the purchaser is a "permitted client" as defined in National
Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations,
-
§
-
where required by law, the purchaser is purchasing as principal and not as agent, and
-
§
-
the purchaser has reviewed the text above under Resale Restrictions.
-
(C)
-
Conflicts
of Interest
Canadian
purchasers are hereby notified that the underwriters are relying on the exemption set out in section 3A.3 or 3A.4, if applicable, of National
Instrument 33-105 Underwriting Conflicts from having to provide certain conflict of interest disclosure in this
document.
-
(D)
-
Statutory
Rights of Action
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if the prospectus supplement (including any amendment thereto) such
as this document contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the
purchaser's province or territory. The purchaser of these securities in Canada should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for
particulars of these rights or consult with a legal advisor.
-
(E)
-
Enforcement
of Legal Rights
All
of our directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process
within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy
a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.
-
(F)
-
Taxation
and Eligibility for Investment
Canadian
purchasers of shares should consult their own legal and tax advisors with respect to the tax consequences of an investment in the shares in their particular circumstances and about the
eligibility of the shares for investment by the purchaser under relevant Canadian legislation.
S-25
Table of Contents
Australia
This prospectus supplement is not a disclosure document for the purposes of Australia's Corporations Act 2001 (Cth) of Australia, or Corporations Act, has not
been lodged with the Australian Securities & Investments Commission and is only directed to the categories of exempt persons set out below. Accordingly, if you receive this prospectus
supplement in Australia:
-
a)
-
You
confirm and warrant that you are either:
-
§
-
a "sophisticated investor" under section 708(8)(a) or (b) of the
Corporations Act;
-
§
-
a "sophisticated investor" under section 708(8)(c) or (d) of the
Corporations Act and that you have provided an accountant's certificate to the Company which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and
related regulations before the offer has been made;
-
§
-
a person associated with the Company under Section 708(12) of the Corporations
Act; or
-
§
-
a "professional investor" within the meaning of section 708(11)(a) or
(b) of the Corporations Act.
To
the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made to you under
this Offering Memorandum is void and incapable of acceptance.
-
b)
-
You
warrant and agree that you will not offer any of the securities issued to you pursuant to this prospectus supplement for resale in Australia within
12 months of those securities being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.
European Economic Area
In relation to each member state of the European Economic Area (each, an "EEA Member State"), an offer to the public of any securities which are the subject of
the offering contemplated by this prospectus supplement and the accompanying prospectus may not be made in that EEA Member State except
that an offer to the public in that EEA Member State of any securities may be made at any time under the following exemptions under the Prospectus Regulation:
-
a)
-
to
any legal entity which is a "qualified investor" as defined in the Prospectus Regulation;
-
b)
-
to
fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), as permitted under the Prospectus Regulation,
subject to obtaining the prior consent of the underwriters or the underwriters nominated by us for any such offer; or
-
c)
-
in
any other circumstances falling within Article 1(4) of the Prospectus Regulation,
provided
that no such offer of securities shall require us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus
pursuant to Article 23 of the Prospectus Regulation.
For
the purposes of this provision, the expression "offer to the public" in relation to any securities in any EEA Member State means the communication in any form and by any means of sufficient
information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, and the expression "Prospectus Regulation" means
Regulation (EU) 2017/1129.
Hong Kong
No securities have been offered or sold, and no securities may be offered or sold, in Hong Kong, by means of any document, other than to persons whose ordinary
business is to buy or sell shares or debentures, whether as principal or agent; or to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong ("SFO") and
any rules made under that Ordinance; or in other circumstances which do not result in the document being a "prospectus" as defined in the Companies
S-26
Table of Contents
Ordinance
(Cap. 32) of Hong Kong ("CO") or which do not constitute an offer or invitation to the public for the purpose of the CO or the SFO. No document, invitation or advertisement relating
to the securities has been issued or may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the
contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to securities which are or are
intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the SFO and any rules made under that Ordinance.
This
prospectus supplement has not been registered with the Registrar of Companies in Hong Kong. Accordingly, this prospectus supplement may not be issued, circulated or distributed in Hong Kong, and
the securities may not be offered for subscription to members of the public in Hong Kong. Each person acquiring the securities will be required, and is deemed by the acquisition of the securities, to
confirm that he is aware of the restriction on offers of the securities described in this prospectus supplement and the relevant offering documents and that he is not acquiring, and has not been
offered any securities in circumstances that contravene any such restrictions.
Israel
This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968, or the Securities Law, and has not been filed with or approved by
the Israel Securities Authority. In Israel, this prospectus is being distributed only to, and is directed only at, and any offer of the Shares is directed only at, (i) a limited number of
persons in accordance with the Israeli Securities Law and (ii) investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment
in trust funds, provident funds, insurance companies, banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange, underwriters, venture capital funds, entities with equity
in excess of NIS 50 million and "qualified individuals," each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors (in each case,
purchasing for their own account or, where permitted under the Addendum, for the accounts of their clients who are investors listed in the Addendum). Qualified investors are required to submit written
confirmation that they fall within the scope of the Addendum, are aware of the meaning of same and agree to it.
Japan
The offering has not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948 of Japan, as
amended), or FIEL, and the underwriters will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term
as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in
Japan or to, or for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEL and any other applicable
laws, regulations and ministerial guidelines of Japan.
Singapore
This Prospectus Supplement has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this
prospectus supplement and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may
the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional
investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person
pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of,
any other applicable provision of the SFA.
S-27
Table of Contents
Where
the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
-
a)
-
a
corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire
share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
-
b)
-
a
trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an
accredited investor,
securities
(as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months
after that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA except:
-
(i)
-
to
an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in
Section 275(1A) or Section 276(4)(i)(B) of the SFA;
-
(ii)
-
where
no consideration is or will be given for the transfer;
-
(iii)
-
where
the transfer is by operation of law;
-
(iv)
-
as
specified in Section 276(7) of the SFA; or
-
(v)
-
as
specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.
Switzerland
The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated
trading facility in Switzerland. This prospectus supplement has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of
Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in
Switzerland. Neither this prospectus supplement nor any other offering or marketing material relating to the securities or the offering may be publicly distributed or otherwise made publicly available
in Switzerland.
Neither
this prospectus supplement nor any other offering or marketing material relating to the offering, the Company or the securities have been or will be filed with or approved by any Swiss
regulatory authority. In
particular, this prospectus supplement will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of
securities has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ("CISA"). The investor protection afforded to acquirers of interests in collective
investment schemes under the CISA does not extend to acquirers of securities.
United Kingdom
This prospectus supplement is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning
of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the "Order") and/or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order and other persons to whom it may lawfully
be communicated (each such person being referred to as a "relevant person").
This
prospectus supplement and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United
Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.
S-28
Table of Contents
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed upon for us by Gibson, Dunn & Crutcher LLP. Certain gaming regulation
matters in connection with this offering will be passed upon for us by Greenberg Traurig, LLP. Certain legal matters in connection with this offering will be passed upon for the underwriters by
White & Case LLP.
EXPERTS
The consolidated financial statements as of December 31, 2018 and 2017 and for each of the three years in the period ended December 31, 2018 and
management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2018 incorporated by reference in this Prospectus have been so incorporated in
reliance on the reports of BDO USA, LLP, an independent registered public accounting firm, incorporated herein by reference, given on the authority of such firm as experts in accounting and
auditing.
S-29
Table of Contents
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file with it, which means that we can disclose important information to you by referring
you to documents previously filed with the SEC. The information incorporated by reference is an important part of this prospectus, and the information that we later file with the SEC will
automatically update and supersede this information. The following documents that we filed with the SEC pursuant to the Exchange Act, are incorporated herein by
reference:
-
§
-
our Annual Report on Form 10-K for the fiscal year ended
December 31, 2018;
-
§
-
our Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2019,
June 30, 2019 and
September 30,
2019;
-
§
-
our Current Reports on Form 8-K filed with the SEC on
January 24, 2019,
May 21, 2019 and
November 5, 2019;
-
§
-
the description of our common stock contained in our registration statement on
Form 8-A filed with the SEC on September 16, 2005, including any
amendment or report filed for the purpose of updating that description; and
-
§
-
our Definitive
Proxy Statement on Schedule 14A filed on April 22, 2019, in
connection with our 2019 Annual Meeting of Stockholders, only to the extent incorporated by reference in our
Annual Report on Form 10-K for the year ended December 31,
2018.
We
also incorporate by reference into this prospectus additional documents that we may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this
prospectus until the termination of the offering. These documents may include Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well
as proxy statements. We are not incorporating by reference any information furnished under items 2.02 or 7.01 (or corresponding information furnished under item 9.01 or included as an
exhibit) in any past or future Current Report on Form 8-K that we may file with the SEC, unless otherwise specified in such Current Report.
Any
information in any of the foregoing documents will automatically be deemed to be modified or superseded to the extent that information in this prospectus or in a later filed document that is
incorporated or deemed to be incorporated herein by reference modifies or replaces such information.
You
may request and we will provide to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of any document incorporated by reference in this prospectus, including
the exhibits thereto, at no cost, by writing or telephoning us at the following address or telephone number:
Everi
Holdings Inc.
7250 S. Tenaya Way, Suite 100
Las Vegas, Nevada 89113
Attention: Harper H. Ko, EVP, Chief Legal Officer General Counsel, and Corporate Secretary
www.everi.com
S-30
Table of Contents
PROSPECTUS
EVERI HOLDINGS INC.
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
We may, from time to time, offer to sell common stock, preferred stock, debt securities, warrants or units, either individually or in combination.
This
prospectus provides you with a general description of the securities that may be offered. Each time we offer and sell securities hereunder, we will provide a supplement to this prospectus that
contains specific information about such offering and the terms of the securities being offered. The prospectus supplement may also add, update or change information contained or incorporated in this
prospectus. You should carefully read this prospectus, the applicable prospectus supplement and any related free writing prospectus, as well as any documents incorporated by reference, before buying
any of the securities being offered. This prospectus may not be used to offer or sell securities without a prospectus supplement describing the method and terms of the offering.
The
securities may be offered directly by us, through agents designated from time to time by us or to or through underwriters or dealers. If any agents, dealers or underwriters are involved in the
sale of any securities, their names, any over-allotment and any applicable purchase price, fee, commission or discount arrangement between or among them will be set forth, or will be calculable from
the information set forth, in the applicable prospectus supplement. See the section entitled "Plan of Distribution" for more information.
Our
common stock trades on the New York Stock Exchange, or NYSE, under the symbol "EVRI".
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD REVIEW CAREFULLY THE RISKS AND UNCERTAINTIES DESCRIBED UNDER THE HEADING "RISK FACTORS" CONTAINED HEREIN
ON PAGE 3 AND IN ANY APPLICABLE PROSPECTUS SUPPLEMENT AND IN ANY OTHER DOCUMENT INCORPORATED BY REFERENCE HEREIN OR THEREIN.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of
this prospectus. Any representation to the contrary is a criminal offense. No gaming or regulatory agency has approved or disapproved of these securities, or passed upon the adequacy or accuracy of
this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is December 4, 2019
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We have not authorized any person to provide you with any information or represent anything about us other than what is contained in this prospectus, any prospectus supplement
and any pricing supplement. We do not take any responsibility for, and can provide no assurance as to the reliability of, any information that others may provide to you. You should not assume that the
information in this prospectus or any document incorporated by reference is accurate as of any date other than the date on its front cover. Our business, financial condition, results of operations and
prospects may have changed since the date indicated on the front cover of such documents. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities
other than the securities offered hereunder, nor does this prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we have filed with the Securities and Exchange Commission (the "SEC") using a
"shelf" registration process. Under this shelf registration process, we may, from time to time, offer and sell securities described in this prospectus in one or more offerings. This prospectus
provides you with a general description of us and the securities offered under this prospectus.
Each
time we offer and sell securities with this prospectus, we will provide a prospectus supplement and, if applicable, a related free writing prospectus that will describe the specific terms of the
offering. Such prospectus supplement and free writing prospectus may include or incorporate by reference a discussion of any risk factors or other special considerations applicable to those securities
or to us. The prospectus supplement and related free writing prospectus may also add to, update or change the information contained in this prospectus, and accordingly, to the extent inconsistent, the
information in this prospectus will be superseded by the information in
the prospectus supplement or the related free writing prospectus. Please carefully read this prospectus, the prospectus supplement and any related free writing prospectus issued by us, in addition to
the information contained in the documents we refer to under the headings "Where You Can Find More Information" and "Incorporation of Certain Information by Reference."
Unless
otherwise indicated or the context otherwise requires, the terms "we," "us," "our," the "Company," "Everi," "Everi Holdings" and similar terms refer to Everi Holdings Inc., a Delaware
corporation, and its consolidated subsidiaries.
ABOUT EVERI HOLDINGS INC.
Everi is a leading supplier of entertainment and technology solutions for the casino, interactive, and gaming industries, with a focus on both casino operators
and their players. We provide casino operators with a diverse portfolio of products including innovative gaming content and gaming machines that power the casino floor, and casino operational and
management systems that include comprehensive end-to-end payments solutions, critical intelligence offerings, gaming operations efficiency technologies, and self-service loyalty tools and
applications. Everi reports its results of operations based on two operating segments: Everi Games and Everi FinTech.
Everi
Games provides gaming operators products and services, including: (a) gaming machines primarily comprised of Class II and Class III slot machines placed under participation
or fixed fee lease arrangements or sold to casino customers, including TournEvent® that allows operators to switch from in-revenue gaming to out-of-revenue tournaments; (b) system
software, licenses, ancillary equipment, and maintenance; and (c) business-to-consumer and business-to-business interactive activities. In addition, Everi Games develops and manages the central
determinant system for the video lottery terminals ("VLTs") installed in the State of New York and it also provides similar technology in certain tribal jurisdictions.
Everi
FinTech provides gaming operators cash access and related products and services, including: (a) access to cash at gaming facilities via Automated Teller Machine ("ATM") cash withdrawals,
credit card cash access transactions, point of sale ("POS") debit card cash access transactions, and check verification and warranty services; (b) equipment that provides cash access and
efficiency-related services; (c) self-service enrollment, loyalty, and marketing equipment and services; (d) products and services that improve credit decision making, automate cashier
operations, and enhance patron marketing activities for gaming establishments; (e) compliance, audit, and data solutions; and (f) online payment processing solutions for gaming operators
in states that offer intrastate, Internet-based gaming, and lottery activities.
Everi
Holdings was formed as a Delaware limited liability company on February 4, 2004 and was converted to a Delaware corporation on May 14, 2004. Our principal executive offices are
located at 7250 South Tenaya Way, Suite 100, Las Vegas, Nevada 89113. Our telephone number is (800) 833-7110. Our website address is www.everi.com. The information on our website is not
part of this prospectus.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference herein contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform
Act of 1995. Forward-looking statements provide our current expectations and forecasts about future events.
These
forward-looking statements include, among other things, statements regarding the following matters: trends in gaming establishment and patron usage of our products; benefits realized by using
our products and services; product development, including the release of new game features and additional game and system releases in the future; regulatory approvals; gaming regulatory, card
association, and statutory compliance; the implementation of new or amended card association and payment network rules; consumer collection activities; future competition; future tax liabilities;
future goodwill impairment charges; international expansion; resolution of litigation; dividend policy; new customer contracts and contract renewals; future results of operations (including revenue,
expenses, margins, earnings, cash flow and capital expenditures); expected key improvements in free cash flow; expectations regarding our improved credit profile; future interest rates and interest
expense; future borrowings; and future equity incentive activity and compensation expense. In some cases these statements are identifiable through the use of words such as "anticipate," "believe,"
"estimate," "expect," "intend," "plan," "project," "target," "can," "could," "may," "will," "should," "would," "likely," and similar expressions. In addition, any statements that refer to projections
of our future financial performance, our anticipated growth, and trends in our business and other characterizations of future events or circumstances are forward-looking statements. We caution you not
to place undue reliance on these forward-looking statements. These forward-looking statements are not a guarantee of future performances and are subject to assumptions and involve known and unknown
risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results,
performance, or achievement implied by such forward-looking statements. These risks, uncertainties and important factors include, but are not limited to, market and economic forces; our substantial
leverage; our ability to compete in the gaming industry, manage competitive pressures, navigate gaming market contractions, and continue operating in Native American gaming markets; expectations
regarding our existing and future installed base and win per day, our product portfolio, and development and placement fee arrangements; expectations regarding customers', gaming establishments', and
patrons' preferences and demands for future gaming offerings; our ability to comply with the Europay, MasterCard, and Visa global standard for cards equipped with security chip technology; changes in
gaming regulatory, card association, and statutory requirements, as well as regulatory and licensing difficulties; and our ability to maintain our current customers; uncertainty of the timing and
closing of acquisitions, if any; and our ability to successfully access the capital markets to raise funds.
No
assurance can be given that the actual future results will not differ materially from the forward-looking statements that we make for a number of reasons including those described above and in the
"Risk Factors" section of our Annual Report on Form 10-K for the year ended
December 31, 2018, as well as in any future filings we may make that may be incorporated by reference herein. For information on the documents we are incorporating by reference
and how to obtain a copy, please see the "Where You Can Find More Information" section in this prospectus. Unless required by law, we undertake no obligation to publicly update or revise any
forward-looking statements to reflect new information or future events or otherwise.
You
should read this prospectus with the understanding that our actual future results may be materially different from what we expect.
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RISK FACTORS
Investing in our securities involves a high degree of risk. Before making an investment decision, you should consider carefully the risks, uncertainties and
other factors described in our most recent Annual Report on Form 10-K, as supplemented and updated by subsequent quarterly reports on Form 10-Q and current reports on Form 8-K
that we have filed or will file with the SEC, which are incorporated herein by reference, as well as the risk factors and other information contained in or incorporated by reference into the
applicable prospectus supplement and any related free writing prospectus.
If
any of these risks were to occur, our business, affairs, prospects, assets, financial condition, results of operations and cash flows could be materially and adversely affected. If this occurs, the
trading price and/or value of our securities could decline, and you could lose all or part of your investment. For more information about our SEC filings, please see "Where You Can Find More
Information."
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USE OF PROCEEDS
We intend to use the net proceeds we receive from the sale of securities by us for general corporate purposes unless otherwise set forth in the applicable
prospectus supplement.
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DESCRIPTION OF CAPITAL STOCK
The following is a summary of the material terms of our capital stock, including our restated certificate of incorporation and amended and restated bylaws. You
are strongly encouraged, however, to read our restated certificate of incorporation, amended and restated bylaws and any other relevant agreements, each of which is filed or will be filed as an
exhibit to the registration statement of which this prospectus is a part. Additionally, copies of these documents are available from us upon request. Please also refer to "Where You Can Find More
Information" to find out where copies of these documents may be obtained.
General
Our authorized capital stock consists of 50,000,000 shares of preferred stock, of which there are no shares outstanding, and 500,000,000 shares of common
stock, of which 72,730,634 shares were outstanding on November 22, 2019, held by eight (8) holders of record.
Common Stock
The holders of common stock are entitled to one vote per share on all matters, including the election of directors. Our Certificate of Incorporation and Bylaws
provide that the directors shall be divided into three classes constituting the entire board of directors (the "Board"). The members of each class of directors serve staggered three-year terms. Given
that only a portion of the total number of directors is elected each year, a greater number of shares is required to ensure the ability to elect a specific number of directors than would be required
if the entire Board were elected each year.
Holders
of common stock are entitled to receive ratably such dividends as may be declared by the Board from funds legally available therefore. In the event of liquidation, dissolution or winding up of
the Company holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and satisfaction of any preferential rights of the holders of the preferred
stock. Holders of common stock have no preemptive, subscription or conversion rights. There are no redemption or sinking fund provisions, and there is no liability for further calls or assessments by
the Company.
Preferred Stock
The Board has the authority, without any further action by stockholders, to issue 50,000,000 shares of preferred stock in one or more series with dividend
rights, conversion rights, voting rights, redemption terms, liquidation preferences and other rights or preferences that could be senior to those of holders of common stock. There are no shares of
preferred stock outstanding.
Anti-Takeover Provisions
We are subject to Section 203 of the Delaware General Corporation Law, or DGCL. Subject to certain exceptions, Section 203 prevents a publicly
held Delaware corporation from engaging in a "business combination" with any "interested stockholder" for three years following the date that the person became an interested stockholder, unless the
interested stockholder attained such status with the approval of the Board or unless the business combination is approved in a prescribed manner. A "business combination" includes, among other things,
a merger or consolidation involving us, and the interested stockholder and the sale of more than 10% of our assets. In general, an "interested stockholder" is any entity or person beneficially owning
15% or more of our outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person. The restrictions contained in Section 203 are not
applicable to any of our existing stockholders.
In
addition, our restated certificate of incorporation and amended and restated bylaws include a number of provisions that may have the effect of discouraging persons from pursuing non-negotiated
takeover attempts. These provisions include:
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§
-
a classified Board;
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§
-
a requirement that directors may only be removed for cause and only by an affirmative
vote of the holders of a majority of the Company's voting stock; and
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§
-
the inability of stockholders to call special meetings and to act without a meeting.
Subject
to the exceptions set forth below, certain business combinations involving a "Related Person" require the approval of the holders of at least 80% of the outstanding shares entitled to vote
generally in the election of directors (which we refer to as "voting shares") and the approval of the holders of a majority of the voting shares not owned beneficially by the Related Person. The 80%
voting requirement does not apply if:
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§
-
the terms of the business combination meet certain fairness standards set forth in our
restated certificate of incorporation;
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§
-
the business combination is approved by the holders of a majority of the voting shares
not owned beneficially by the Related Person; and
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§
-
all other affirmative voting requirements imposed by applicable law or our restated
certificate of incorporation are met.
Alternatively,
the business combination can be approved by a majority of the "Continuing Directors" and such other vote as may be required by law or by our restated certificate of incorporation.
"Related
Person" means any person, entity or group that beneficially owns five percent or more of the outstanding voting stock (subject to certain exceptions) and affiliates and associates of any such
person, entity or group.
"Continuing
Director" means, as to any Related Person:
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§
-
a member of the Board who was a director of our company's predecessor prior to
June 9, 1987 or thereafter became a director of our company prior to the time the Related Person became a Related Person; and
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§
-
any successor of such a director who is recommended by a majority of such directors then
on the Board.
However,
to be a Continuing Director as to any Related Person, the director must not be the Related Person or an affiliate of the Related Person.
Options
As of September 30, 2019, options representing the right to purchase 12,681,502 shares of common stock were issued and outstanding at a weighted average
exercise price of $5.15. The outstanding options were granted to certain of our employees, officers, directors and consultants pursuant to our 2014 Equity Incentive Plan (as amended and restated) and
our 2012 Equity Incentive Plan (as amended).
Restricted Stock and Restricted Stock Units
As of September 30, 2019, there were no shares of restricted (unvested) stock awards outstanding and 3,405,682 restricted stock units outstanding, which
includes 2,378,682 time-based restricted stock units and 1,027,000 performance-based restricted stock units.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Broadridge Financial Solutions, Inc. ("Broadridge") and its telephone number is
(800) 353-0103.
New York Stock Exchange
Our common stock is listed on the NYSE under the symbol "EVRI."
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DESCRIPTION OF DEBT SECURITIES
The debt securities we may offer pursuant to this prospectus will be general unsecured obligations of Everi Holdings Inc. Our unsecured senior debt
securities will be issued under an indenture to be entered into by us and a trustee (the "Trustee") chosen by us, qualified to act as such under the Trust Indenture Act of 1939, as amended, or the
Trust Indenture Act, and appointed under such indenture. The form of unsecured senior debt indenture is filed as an exhibit to the registration statement of which this prospectus is a part. You should
refer to the applicable indenture for more specific information.
The
senior debt securities will rank equally with each other and with all of our other unsecured and unsubordinated indebtedness. Our senior debt securities will effectively be subordinated to any of
our secured indebtedness, including amounts we have borrowed under any secured revolving or term credit facility, and the liabilities of our subsidiaries.
We
will include the specific terms of each series of the debt securities being offered in a prospectus supplement.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase any combination of debt securities, common stock, preferred stock or other securities of our company or any other entity. We
may issue warrants independently or
together with other securities. Warrants sold with other securities may be attached to or separate from the other securities. We will issue warrants under one or more warrant agreements between us and
a warrant agent that we will name in the prospectus supplement.
The
prospectus supplement relating to any warrants we are offering will include specific terms relating to the offering. We will file the form of any warrant agreement with the SEC, and you should
read the warrant agreement for provisions that may be important to you. The prospectus supplement will include some or all of the following
terms:
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§
-
the title of the warrants;
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§
-
the aggregate number of warrants offered;
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§
-
the designation, number and terms of the debt securities, common stock, preferred stock
or other securities purchasable upon exercise of the warrants, and procedures by which those numbers may be adjusted;
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§
-
the exercise price of the warrants;
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§
-
the dates or periods during which the warrants are exercisable;
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§
-
the designation and terms of any securities with which the warrants are issued;
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§
-
if the warrants are issued as a unit with another security, the date, if any, on and
after which the warrants and the other security will be separately transferable;
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§
-
if the exercise price is not payable in U.S. dollars, the foreign currency, currency unit
or composite currency in which the exercise price is denominated;
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§
-
any minimum or maximum amount of warrants that may be exercised at any one time; and
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§
-
any terms, procedures and limitations relating to the transferability, exchange or
exercise of the warrants.
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DESCRIPTION OF UNITS
We may issue units of securities consisting of one or more of the following securities: common stock, preferred stock, debt securities, warrants or any
combination thereof. We may evidence each series of units issued by unit certificates that we will issue under a separate agreement. We may enter into unit agreements with a unit agent. Each unit
agent will be a bank or trust company that we select. You should read the particular terms of these documents, which will be described in more detail in the applicable prospectus supplement.
If
we offer any units, certain terms of that series of units will be described in the applicable prospectus supplement, including, without limitation, the following, as
applicable:
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§
-
the title of the series of units;
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§
-
identification and description of the separate constituent securities comprising the
units;
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§
-
the price or prices at which the units will be issued;
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§
-
the date, if any, on and after which the constituent securities comprising the units will
be separately transferable;
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§
-
if appropriate, a discussion of material United States federal income tax considerations;
and
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§
-
any other terms of the units and their constituent securities.
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PLAN OF DISTRIBUTION
We will set forth in the applicable prospectus supplement a description of the plan of distribution of the securities that may be offered pursuant to this
prospectus.
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LEGAL MATTERS
Certain legal matters in connection with the securities will be passed upon by Gibson, Dunn & Crutcher LLP, our counsel. Legal counsel to any
underwriters may pass upon legal matters for such underwriters and will be named in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements as of December 31, 2018 and 2017 and for each of the three years in the period ended December 31, 2018 and
management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2018 incorporated by reference in this prospectus have been so incorporated in
reliance on the reports of BDO USA, LLP, an independent registered public accounting firm, incorporated herein by reference, given on the authority of such firm as experts in accounting and
auditing.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file with it, which means that we can disclose important information to you by referring
you to documents previously filed with the SEC. The information incorporated by reference is an important part of this prospectus, and the information that we later file with the SEC will
automatically update and supersede this information. The following documents that we filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference:
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§
-
our
Annual Report on Form 10-K for the fiscal year ended December 31,
2018;
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§
-
our Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2019,
June 30, 2019 and
September 30, 2019;
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§
-
our Current Reports on Form 8-K filed with the SEC on
January 24, 2019,
May 21, 2019, and
November 5, 2019;
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§
-
the description of our common stock contained in our registration statement
on Form 8-A filed with the SEC on September 16, 2005, including any amendment or report filed for the purpose of updating that description; and
-
§
-
our Definitive Proxy Statement on Schedule 14A filed on
April 22, 2019, in connection with our 2019 Annual Meeting of Stockholders, only to the extent incorporated by reference in our
Annual Report on Form 10-K for the year ended December 31,
2018.
We
also incorporate by reference into this prospectus additional documents that we may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this
prospectus to the completion of the offering of the securities. These documents may include Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, as well as proxy statements. We are not incorporating by reference any information furnished under items 2.02 or 7.01 (or corresponding information furnished under
item 9.01 or included as an exhibit) in any past or future Current Report on Form 8-K that we may file with the SEC, unless otherwise specified in such Current Report.
Any
information in any of the foregoing documents will automatically be deemed to be modified or superseded to the extent that information in this prospectus or in a later filed document that is
incorporated or deemed to be incorporated herein by reference modifies or replaces such information.
You
may request and we will provide to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of any document incorporated by reference in this prospectus, including
the exhibits thereto, at no cost, by writing or telephoning us at the following address or telephone number:
Everi
Holdings Inc.
7250 S. Tenaya Way, Suite 100
Las Vegas, Nevada 89113
Attention: Harper H. Ko, EVP, Chief Legal Officer General Counsel, and Corporate Secretary
WHERE YOU CAN FIND MORE INFORMATION
We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site that
contains reports, proxy statements and other information about registrants, like us, that have been filed electronically with the SEC. You can access the SEC's Internet site at http://www.sec.gov. You
can also obtain information about us on our website at http://www.everi.com. Information on our website or any other website is not incorporated by reference into this prospectus.
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We
have filed a registration statement on Form S-3 with the SEC relating to the securities covered by this prospectus. This prospectus is a part of the registration statement and does not
contain all of the information in the registration statement. Whenever a reference is made in this prospectus to a contract or other document of ours, please be aware that the reference is only a
summary and that you should refer to the exhibits that are part of the registration statement for a copy of the contract or other document. The registration statement, exhibits and schedules are
available through the SEC's website at http://www.sec.gov.
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10,000,000 Shares
Everi Holdings Inc.
Common Stock
Prospectus Supplement
Joint Book-Running Managers
Jefferies
Stifel
Joint Lead Managers
Craig-Hallum Capital Group
Raymond James
Co-Manager
SunTrust Robinson Humphrey
, 2019
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