Everi Abandons Repurchase Scheme and May Distribute Exclusive Dividend
Gambling equipment manufacturer Everi (NYSE: EVRI) disclosed today that it's terminating a $130M share repurchase program and could potentially opt for a special dividend to use up the leftover funds. Formerly known as Global Cash Access, Inc., the Las Vegas-based corporation initially announced a $180M buyback scheme in late 2022, scheduled to last until November 3, 2024.
So far, Everi has recycled roughly $100M of its own shares, leaving $80M remaining from the now-scrapped plan. To manage the tax obligations associated with restricted stock units (RSUs) and performance stock units (PSUs), the company is currently evaluating a special dividend payout. This decision follows the implementation of a mandatory sell-to-cover policy for the affected shares.
Based on a statement, Everi stated, "The Company believes that the cash which may have otherwise been utilized under the Stock Repurchase Program or to facilitate the tax withholding obligations in connection with the settlement of RSUs and PSUs will be more appropriately allocated toward the Special Dividend."
Specifications concerning the purported special dividend, including its distribution timeframe and calculated amount, have yet to be disclosed.
Potential Special Dividend In relation to the Everi-IGT Merger
In the beginning of 2023, International Game Technology (NYSE: IGT) revealed their plans to fuse their national and PlayDigital business divisions into Everi, in a $6.2B deal – one of the largest mergers in the gaming realm this year. At the time, IGT mentioned that there was a chance a special dividend could be facilitated. Everi doesn't pony up a regular quarterly payout. Despite a surge in share prices following the announcement, the stock has since dropped by 12% in the previous month and 28% since the beginning of the year.
Regarding a possible special dividend, Everi revealed, "The Special Dividend is intended to reflect the cash flow generated by the Company through the merger date. The amount of the Special Dividend, if any, shall be calculated in accordance with the Separation Agreement, and shall be based on the Company’s cash and cash equivalents at closing in excess of a target of $30 million."
Comprising 83.47M shares, Everi would only have to divest a relatively minor sum to execute the special payout if the target of $30M is used.
Special Dividends on the Rise in the Gaming Sector
Should Everi proceed with offering a special dividend to shareholders, they would join an extensive roster of gaming firms previously making similar moves.
In early 2023, MGM China and Wynn Macau caught investors off guard with the news of potential payouts. Additionally, since November 2021, Red Rock Resorts, Inc. (NASDAQ:RRR) has provided three additional special dividends in addition to its usual quarterly payout. Santa Monica-based gaming companies Golden Entertainment (NASDAQ:GDEN), similarly based in Las Vegas, and Gaming and Leisure Properties (NASDAQ:GLPI) are also past recipients of special dividends.
Gaming enterprises releasing special dividends have become quite the trend.
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Source: www.casino.org
