tombgrt Posted November 26, 2015 Share Posted November 26, 2015 Awesome Phaceliacapital, TIA! Looks like Mittleman Brothers has taken a 5%+ position in Intralot. http://www.intralot.com/content/3467/announcement-regulated-information-accordance-l35562007 FWIW and if I'm not mistaken, their track record is pretty damn good! Link to comment Share on other sites More sharing options...
tombgrt Posted November 26, 2015 Share Posted November 26, 2015 http://www.intralot.com/sites/default/files/INTRALOT%20Press%20Release%209M15_final.pdf Link to comment Share on other sites More sharing options...
ContrarianNick Posted December 3, 2015 Share Posted December 3, 2015 Q3 results were underwhelming in terms of cash generation (these guys are working for bondholders and minorities) and management downgraded guidance for the year mainly due to Italy and Azerbaijan (given that the taxation in Italy has been operational since the beginning of the year I cannot understand why the EBITDA contraction was not in the initial guidance to start with). All is not lost however given management’s comments on a potential transformative deal is in the works (but it will not be announced before the end of fiscal year) and the bullish comments of the CEO in terms of cash generation for the next year (note that I still do not expect the company to generate any meaningful FCF in 2016 given the licence renewal expense linked to the sports betting in Italy which should amount to around Eur 20mln). The basic long story is intact (change of listing, call of 9% 2018 bond) but it is going to take more time than I had previously thought. Tombgrt sorry for the late response but I had a few issues with my account. I own some IGT equity as, to me, it looks like the most compelling stock in the sector given the geographical diversification, the extremely high cashflow generation, its low leverage and the generous dividend yield (roughly 5% yield) together with the low valuation (although not as low as Intralot). As for Snai it has recently closed its merger agreement with another local Italian player (Cogemat) which should lower leverage, create cost synergies (mgmt point towards Eur 10/15 mln cost synergies) and decrease the volatility of their earnings (VLTs and AWPs have significantly more predictable CF than Sports Betting which, by the way has been abysmal so far this year). I believe that, on a normalized basis, the stock is significantly undervalued but until clarity arrives on taxation (the Italian government is making a real mess on VLT and AWP taxation) I believe that the best way to participate is by buying the bonds (subs yield 13% and seniors 8%) and be senior in respect to the majority shareholders (Investindustrial) which should be able to support the company if further capital action is needed. Happy to discuss it further. Cheers Link to comment Share on other sites More sharing options...
Phaceliacapital Posted December 3, 2015 Share Posted December 3, 2015 - Listing still on the table but 1) there are costs associated (not eager to have extra costs these days), 2) would be dual listing and sometimes having a smaller float on another exchange creates a "drag" on the larger float (I interpreted this as "greece will remain our largest exchange", 3) not all shareholders are on board for relisting, 4) might do something like ADR (I did not understand completely and time ran out). - Consider Italy strategic and not selling/exiting. - Did not want to give clear answer on bond repurchasing even though I explained the financials quite clearly to him - FCF 2016 will be negative including renewals (breakeven excluding) - A lot of one offs caused negative cash flow this year, without exceptionals more normal figure would be EUR -10 mn. I have notes but I am going to rewrite them, and after that put them for sale at 5 a piece.. Link to comment Share on other sites More sharing options...
tombgrt Posted December 3, 2015 Share Posted December 3, 2015 No relisting, Italy, no bond repurchasing, ... Sjeez, any good news? No wonder the stock is down. ;( Thanks for the update. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted December 4, 2015 Share Posted December 4, 2015 BTW - They have known Mittleman Brothers for a long time as they have been steady buyers for the past 2.5 years. No activist policy for the moment... Link to comment Share on other sites More sharing options...
one-foot-hurdles Posted December 4, 2015 Share Posted December 4, 2015 Interesting that Mittleman bros are in this, they are quite concentrated with a decent track record. Also have a sizeable position in IGT/gtech Link to comment Share on other sites More sharing options...
tombgrt Posted December 15, 2015 Share Posted December 15, 2015 Replay from last year stock wise? Only with lesser fundamentals now imo. Down to 1.12€ like it's nothing. Given the money they also spend on the credit facility, are those relisting costs really that high? Link to comment Share on other sites More sharing options...
racemize Posted December 15, 2015 Share Posted December 15, 2015 I don't know what to make of this company these days. I guess I'll give it another year to play out, but they haven't shown any money in so long... Link to comment Share on other sites More sharing options...
investor-man Posted December 15, 2015 Share Posted December 15, 2015 Yeah I'm feeling the same as you guys. I was hopeful last year with the new CEO and the buybacks, but that that's dried up. I think I'll give it another year, but then I may call it. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted December 31, 2015 Share Posted December 31, 2015 Would you guys mind disclosing average purchase price? Do you guys trade around the stock like tom? I am becoming rather interested at these prices, especially given end of the year selling etc. Link to comment Share on other sites More sharing options...
redhots Posted March 23, 2016 Share Posted March 23, 2016 Intralot to merge Italian operations with Gamenet http://www.igamingbusiness.com/news/intralot-merge-italian-operations-gamenet Link to comment Share on other sites More sharing options...
Haasje Posted April 7, 2016 Share Posted April 7, 2016 http://www.igamingbusiness.com/news/intralot-acquires-strategic-stake-bulgaria-s-eurobet Link to comment Share on other sites More sharing options...
tombgrt Posted April 12, 2016 Share Posted April 12, 2016 Would you guys mind disclosing average purchase price? Do you guys trade around the stock like tom? I am becoming rather interested at these prices, especially given end of the year selling etc. To answer your question a few months after you asked: It's around 1.40€ now for me not including some gains I made. Obviously I'm not quite happy. Not sure what to do honestly. The company is doing poorish and the stock is doing worse but it's in a hated market making it cheap regardless and I'm in good company (Mittleman, Chou). What are others doing at this point? Phacelia did you end up buying? Packer are you still holding or slowly ready to throw in the towel after almost 2.5 years? Link to comment Share on other sites More sharing options...
Kiltacular Posted April 13, 2016 Share Posted April 13, 2016 Would you guys mind disclosing average purchase price? Do you guys trade around the stock like tom? I am becoming rather interested at these prices, especially given end of the year selling etc. To answer your question a few months after you asked: It's around 1.40€ now for me not including some gains I made. Obviously I'm not quite happy. Not sure what to do honestly. The company is doing poorish and the stock is doing worse but it's in a hated market making it cheap regardless and I'm in good company (Mittleman, Chou). What are others doing at this point? Phacelia did you end up buying? Packer are you still holding or slowly ready to throw in the towel after almost 2.5 years? I have the same questions as Tom. I'm still in this. I could never give an elevator pitch and made it a dink position. I'd say I bought it because it was in a relatively stable industry and getting pummeled because it was based in Greece. The accounting is beyond opaque. How is the debt trading? I listened to the recording of the latest call -- anyone want to post the transcript? In the call, they reference a presentation. I looked everywhere on the website and couldn't find it. One of the Mittleman brothers asked if/when dividends would be paid up to the group, as they had been in the past. Answer was along the lines of "not this year and can't tell you when". Not inspiring for equity holders. My concern is that this business is being run for the bond holders and, probably insiders that likely own stakes in the minority companies. (An insight mentioned previously by contrarian nick some months ago). If that's the case, it must to some extent be a change from the past? If it is a permanent change, then the story has changed. Opposing that is I don't want to cave on this if there's even a chance that the equity holders will get any love because, I think, if they do this will easily double and possibly much more. But, if it is dead for another 3 to 5 years, I should take my lumps. At least one or two sellers didn't like what they heard on the call and I suspect it was the same nugget I picked out above. So, I too am interested in thoughts of Packer and Nick and anyone else who wants to nudge me one way or another with some useful reasoning and experience in these types of companies. Link to comment Share on other sites More sharing options...
tombgrt Posted April 14, 2016 Share Posted April 14, 2016 Hi Kiltacular, thank you for your post. You (and Nick) certainly make a good point with your concern about the business being run for the bond holders and insiders. Based on the capital allocation decisions that have been made, it certainly looks like it sometimes... 2018 debt price can be found here for example: http://www.boerse-berlin.com/index.php/Bonds?isin=XS0947176631 Certainly damn expensive at 9,75% at par! Buying back or refinancing would save many millions. Link to comment Share on other sites More sharing options...
ContrarianNick Posted April 26, 2016 Share Posted April 26, 2016 Hey Guys, so for the late replies but I continue to have issues with my account not emailing me when new messages get posted. Anyways, here is a list of points which I think one should his attention: • As of today and, in my opinion for at least the next 12/18 months, the company will continue to be run for bondholders and minorities. However there are two small positives: o Intralot is very likely to call the 2018 bond in August using the existing credit line (which if I am not mistaken should cost them 4/5%) to repay it. This will increase FCF generation by roughly 15/16mln (although there are one-off costs related to the early retirement of debt equal to the premium call price at 104.875 but these are non-recurring in nature). o The merger of Italian operations with Gamenet solves the issue of being too small in a market where competition is becoming bigger and fixed costs are becoming more relevant. While I do not expect Gamenet to start paying dividends to Intralot any time soon, it certainly gives them a strategic stake in one of the leaders in the Italian market and it could become a source of cash if Gamenet gets sold or goes public. • Dividends to minorities have been simply underwhelming for ordinary shareholders and represent a significant hurdle for future value creation. Until more visibility is given on what really drives them each year (I suspect management itself has really no idea on what 2016 figure will look like as minorities shareholders are calling the shots), I do not think that the stock will perform well. • Intralot has a terrible cash conversion history and its leverage is significantly higher than what management reports once you adjust EBITDA for minorities (by my count Net Debt/EBITDA is around 4.4x). However: • On a SOTP basis the company is likely to be worth more than what is trading at today. However, disclosure is very low and complexity very high. Until management works on these two points (which I think are fixable) it will be hard for outside investors to truly calculate the intrinsic value of the company. I think that if management actively starts to realize value by selling down assets it will not be long until the market realizes that the true value of the company is higher than Eur1.02 per share. Also note that the recent appointment of a new CFO hopefully signals a change of direction from past ways... • Insiders own a substantial part of the company’s shares and that should act as a strong incentive in trying to maximize value in the mid-term (especially now that the stock is very near all time lows). However it is very hard to determine when this will happen and, for these kind of investments, patience is a must (Kiltacular I wouldn’t say as far as 3/4 years but I doubt we are talking about months either). • Unfortunately I to believe that, as of today, the best way to invest in the company is through bonds (the 2021 has a 8.5% YTM and the 2018 around 10% on the August call) and not equity. For those of you who do not mind waiting, then the stock is very likely going to offer substantial value in the mid term. Happy to discuss it further Nick Link to comment Share on other sites More sharing options...
tombgrt Posted April 29, 2016 Share Posted April 29, 2016 Thank you Nick, some great insights! Of course, if you mind waiting, you are playing the wrong game altogether. :) http://www.intralot.com/content/502/athex-announcements Looks like they restarted buyback of the stock but it might as well be just to keep the stock from becoming a penny stock. Link to comment Share on other sites More sharing options...
Kiltacular Posted April 29, 2016 Share Posted April 29, 2016 Thank you Nick, some great insights! Link to comment Share on other sites More sharing options...
tombgrt Posted May 17, 2016 Share Posted May 17, 2016 http://www.intralot.com/sites/default/files/INTRALOT%20Press%20Release%201Q16(eng).pdf We have in the past engaged in repurchases of our debt and may do so again in the future subject to market conditions. In particular, we are currently reviewing alternatives to refinance a portion of our debt (some or all of our 2018 notes and our syndicated credit facility) as part of our continuous strategy to maintain a strong financial profile and to extend the maturity of our indebtedness. There can be no assurance that any such refinancing may occur in the near future. Fingers crossed. Link to comment Share on other sites More sharing options...
tombgrt Posted June 14, 2016 Share Posted June 14, 2016 What a f*cking joke: http://www.intralot.com/content/3619/announcement-share-buy-back-program 27/05/2016 INTRALOT S.A. announces, according to article 16, Law 2190/1920, article 4,1,4,2 of the regulation of ATHEX and based on the resolution of the Shareholder’s Annual General Meeting which took place on the 26.05.2016, that a shares buy – back program by the company of up to 10% of its paid share capital each time, taking into account the shares which may have been acquired and held by the Company (in the amount of 560,648 shares as of today, that is 0.35% of its share capital), for a 24 months time period with effect from 11.06.2016 and until 11.06.2018, with a minimum price of €1 and maximum price of €12, is approved. Also it is approved that the own shares which will eventually be acquired may be held for future acquisition of shares of another company. And they bought some in the last couple of days at 1.00-1.01 EUR range. This is nothing more than a silly attempt to keep the stock price above the penny threshold. Well, now we finally broke that limit so no more buying anyway. ::) Let us hope they are not as retarded when it comes to buying back the bonds. But I'm not holding my breath for it... ::) Link to comment Share on other sites More sharing options...
tombgrt Posted August 2, 2016 Share Posted August 2, 2016 Interesting that Mittleman bros are in this, they are quite concentrated with a decent track record. Also have a sizeable position in IGT/gtech Anyone know what else they might have bought in Greece? Their half year update on their holdings is out: http://www.mittlemanbrothers.com/portfolio-characteristics/ It shows Greece holdings now at 4.7% where it used to be 2.2% (Intralot only). I'm assuming it to be another holding entirely? Link to comment Share on other sites More sharing options...
Phaceliacapital Posted August 3, 2016 Share Posted August 3, 2016 Maybe of interest, their Q2 letter: https://www.docdroid.net/SfhsV1W/mittleman-brothers-q2-2016.pdf.html Link to comment Share on other sites More sharing options...
tombgrt Posted August 3, 2016 Share Posted August 3, 2016 Thank you Phaceliacapital, good find! From the letter: The second biggest detractor from our performance in Q2 was Intralot SA (INLOT GA), the 2 nd largest lottery systems management company in the world, which suffers from a heavily discounted valuation due to its Greek domicile, even though 94% of its sales come from outside of Greece (a built-in currency hedge against a potential Grexit), it is still considered and valued like a Greek company. But it’s not just the Greece discount hindering the stock price now, they have also been coming in light on EBITDA production over the past few quarters, as more profitable contracts run off and newer contracts have lower profit margins. So even though this industry has very high barriers to entry, competition for lottery management contracts is significant. That said, it is almost an annuity-like business in terms of the predictability of free cash flow, regardless of GDP growth. And while Intralot is the #2 player globally, the stock is only followed by three brokerage firms in Greece, and none outside of Greece. We recently met with Intralot’s new CFO, George Koliastasis, who had been CFO at Vodafone Greece from 2008 to 2013, and came away from the meeting optimistic that more detailed disclosure, better engagement with Wall Street, and perhaps even an alternative listing venue in London might be forthcoming at some point. Insiders own about 30% of the stock, and a well-regarded Austrian gaming company, Novomatic AG, owns just over 5%. A smart credit-oriented hedge fund in London called Makuria Investment Management owns just over 5%, Mittleman Brothers controls 9.3% of the stock. Intralot won recent lottery contracts in the U.S. (MegaMillions, Powerball, etc) in Georgia, Ohio, and Wyoming, and other lotteries in countries like Chile and Nigeria. At the current price of €0.90 (USD 1.00) the stock is valued at only 5.5x EBITDA and 5x normalized free cash flow. We think the stock is worth at least 3x the current price. Given that they own 9.3% of the stock it should indeed be a 4% position for them. Meaning they bought more. Link to comment Share on other sites More sharing options...
tombgrt Posted September 5, 2016 Share Posted September 5, 2016 http://www.intralot.com/content/3661/2nd-quarter-2016-results-ebitda-growth-accelerates-2q-2016 Q2 results. Link to comment Share on other sites More sharing options...
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