Tabcorp axes final dividend, wins debt deal

Gaming giant Tabcorp has scrapped its final dividend and struck an agreement with lenders as it seeks debt flexibility.

CEO David Attenborough says Tabcorp “welcomes the support of our syndicate banks”. Picture: Stuart McEvoy

Gaming giant Tabcorp has scrapped its final dividend and has secured a waiver on its covenants as it enters “advanced talks” with US private placement holders to provide further debt flexibility to shield itself further from the coronavirus pandemic.

The changes to its structure come weeks after Tabcorp stood down 700 workers and applied for the Morrison government’s $130bn Jobkeeper subsidy - which requires companies with annual turnover of more than $1bn to prove a 50 per cent monthly fall in revenue - for those employees who remained.

The company has been battling shutdowns of hotels, clubs, TAB agencies and sport events, including the AFL and NRL. Meanwhile wagering on horse racing has continued, albeit without crowds, so racecourse TAB booths have been closed.

Chief executive David Attenborough said on Tuesday that the company has secured a deal from its bank lenders - which have loaned Tabcorp $2.2bn - for a waiver of leverage and interest cover covenants. It will apply to the next two testing dates on June 30 and December 31 this year.

As part of securing the waivers, Tabcorp’s board has resolved not to pay a final dividend this year.

Mr Attenborough said the company was also in advanced discussions with its US private placement holders, which represent fully hedged debt equivalent to $2.1 billion, to obtain changes to existing covenants to provide additional flexibility to accommodate the impacts of COVID-19.

He said Tabcorp’s total liquidity as of May 15 was $820m, compared with $749m on April 3.

“Other than the US private placement of $171.5m, fully hedged, which matures in December 2020 and a working capital facility of $225.8 million which matures in July 2021, there are no other debt maturities until April 2022,” Mr Attenborough said.

“We welcome the support of our syndicate banks during this challenging period. The waivers complement recent actions we have taken to preserve our liquidity and mitigate the financial and earnings impacts of COVID-19.

“Tabcorp continues to work proactively and collaboratively with all our stakeholders to emerge from the COVID-19 period as strongly as possible.”