Investor presentation 17 April 2020 Covid-19 impact on the iGaming - - PowerPoint PPT Presentation

Investor presentation

17 April 2020

SUMMARY OF THE RECENT HAPPENINGS

• Due to the outbreak of Covid-19 in the beginning of 2020, almost all major sports events

have been put on hold and a significant part of the betting activity has been paused

• iGaming operators with an offering primarily focused on sports betting are facing severe

losses in betting volumes

• Operators focus on sports that are not cancelled yet, or ones that are still being played

without live audiences. However, alternative sports will not be enough to compensate for the significant drop in betting volumes

Covid-19 impact on the iGaming industry

THE AFFILIATE’S ROLE IN THIS EXTRAORDINARY EVENT

• As operators experience significant drops in betting volumes, revenue streams from

their complementary online casino offering grows in importance

• Affiliate companies with the ability to generate volumes of high quality casino leads

will therefore likely experience a increased demand during the coming months

Catena Media generates ~70% of its EBITDA from Casino

Share of EBITDA Jan-Feb ‘20

CASINO RELATED REVENUES

• Catena Media generated ~60% of its revenues and ~70% of its EBITDA from the Casino

segment in Jan – Feb 2020

• Following the outbreak of Covid-19, Catena Media has seen a significant increase in

demand for traffic to the operators’ casino sites

• In response, Catena Media's sites with sports related content have been pivoted to

marketing towards Casino SPORT BOOK & OTHER RELATED REVENUES

• Catena Media generated ~35% of its revenues and ~28% of its EBITDA from the Sports and

Financial Services segments in Jan – Feb 2020

• The Covid-19 virus outbreak has decreased the number of sport events and decreased the traffic

volumes to betting sites. This also affects the traffic on Catena Media’s sport sites. However, costs within Catena Media’s sport book segment can quickly be adjusted accordingly

• Catena Media has also seen a significant increase in betting on alternative events in response to

the cancelation of major sports

Ongoing initiatives in response to Covid-19

ORGANISATIONAL MEASURES TAKEN

• Catena Media closely monitors the spread of COVID-19 and follows the authorities’ recommendations in order to ensure the safety

and well-being of employees and partners

• Several measures have been taken to mitigate operational disruption. The staff is working remotely without any negative operational

impact

• A global travel ban has been implemented and physical meetings have been postponed pending further developments. Daily
• perations are running without obstruction

STRATEGIC MEASSURES TAKEN

• Cost savings in PPC thanks to better optimisation of spending
• Increased focus on the casino offering in order to help operators to mitigate lost sport betting volumes
• Catena Media finds it important to carefully maintain and update the sports sites despite the current headwinds within sports. In this

way, the sites remain relevant also post Covid-19 when the demand for sports goes back to normal. The long-term strategy remains to focus on diversification between casino and sports

• Focus is put on positioning Catena Media for further improved long-term relationships with large operators
• The company is proactively managing its financial risk with the aim to extend the outstanding unsecured bond in combination with a

partial amortisation

Catena Media’s shift in strategy

• From the second half of 2018, Catena Media has altered course

and commenced the process of shifting strategy from acquisition- intensive growth to organic growth

• The shift in focus has resulted in a clear decreasing trend in

investments in intangible assets from 2018 and onward and a significant reduction of total earn-out obligations. Asset purchase commitments totaled EUR 6.9m as per 29 February 2020, compared to EUR 81.9m in Q4 2018

• The new strategy allows for proper integration of previous

acquisitions and allows Catena Media to focus on further improving the existing business

OTHER ACTIONS ACTION POINTS TO IMPROVE THE LEGACY BUSINESS

Overview of current strategic direction

SPORTS EUROPE

• Focus on fewer products
• Development of a multilingual

“hero” sports brand proposition

• SEO over PPC
• Tactical growth of subscription

model where commercially sensible

• Cost reduction and efficiency

improvements for improved margins

ASK GAMBLERS

• Intensified geographical expansion by launching three new languages

during 2020

• Increased retention business

US

• Increased investments in the North American market to establish top

position in every new state expected to launch within the coming 6-24 months

OVERHEAD

• Cost improvement actions for improved margins

CASINO EUROPE

• Focus efforts on high-

performance core brands

• Continued focus on quality

improvements

• Rebuild non-improving

products from scratch (ongoing)

• Restructure sales and

marketing for efficiency improvement (ongoing)

• Expand relationships with key
• perators
• Leverage advanced BI

capability to maximize returns for partners

• Continued focus on cost control activities, where

costs are reduced to improve margins in our legacy business and reinvested into new growth markets

• Continued investments in the North American market

to establish topposition in every new state expected to launch within the coming 6-24 months

• Hero product AskGamblers prepared for multilingual

launch in several new markets worldwide

Near term initiatives

We will continue to execute on

• ur strategy to focus on few

brands, invest in new markets, and continue our focus on cost

• control. We are prepared for

continued improvements in 2020 and beyond

Per Hellberg - CEO

The current debt situation

• The previous M&A driven strategy has partly been financed with debt and

the company currently has a senior unsecured bond of EUR 150

• utstanding due in March 2021, resulting in a current senior net debt

position of EUR 143m as per Q1 2020

• In an effort to reduce the senior debt position and to enable more

attractive refinancing alternatives, Catena Media has evaluated several financing alternatives and concluded the best to be a rights issue of units, comprising subordinated perpetual capital securities and warrants with

• rdinary shares in the company as underlying asset
• In conjunction with the proposed rights issue of units, Catena Media will

also seek to amend the terms of the outstanding EUR 150m senior unsecured bond. Such proposed amendments include a 12 month extension

Introduction to the proposed transactions

Comments

• In order to create a more sustainable capital structure and to provide

Catena Media with operational head room, the following is announced: a) A fully guaranteed rights issue of approx. EUR 63m (SEK 684m) b) Proposed amendment of terms for the outstanding EUR 150m senior unsecured bond

• The proposed amendments of the bond includes a partial prepayment of

EUR 49.5m1) and an extension of the maturity on the remaining part by 12 months (revised maturity in March 2022)

• The proposed prepayment of the bond significantly strengthens Catena

Media’s capital structure:

• Senior net debt decreases from EUR 143 m to EUR 84m2)
• Senior Net debt / LTM EBITDA decreases from 3.2x to 1.9x

Sources and Uses for the contemplated transaction1

Senior net leverage following the Rights Issue1

A) Transaction overview of the rights issue

Comments

• Catena Media intends to raise approx. EUR 63 million by way of offering units consisting of perpetual capital securities (the “Hybrids”)

and warrants (the “Warrants”)

• The units will be offered with preferential right for existing shareholders through a rights issue
• Fully guaranteed by subscription undertakings and guarantee undertakings
• CEO and certain current board representatives: ~EUR 1.3 million
• Existing shareholders, including Öresund and Ruane, Cunnif & Goldfarb: ~EUR 35.6 million
• External guarantors: ~EUR 25.9 million
• It is envisaged that the rights issue shall entail:
• New capital raised of approx. SEK 684 million (equivalent of EUR 63 million)
• Issuance of Hybrids (treated as 100% equity under IFRS reporting standards)
• Issuance of Warrants with the ordinary share of Catena Media as underlying assets
• The proceeds from the rights issue will be used for a partial prepayment of the senior unsecured bond in the amount of EUR 49.5

million

A) How will the right issue be structured?

Comments

• 1 share will generate 1 unit subscription right
• 9 unit subscription rights + 100 SEK gives the shareholder
• ne unit
• One unit includes 1 Hybrid and 6 Warrants
• 1 Unit equals:
• 1 Hybrid with a nominal value of SEK 100 and STIBOR

+8% p.a. (quarterly interest payments in arrears)

• 6 Warrants with Catena Media’s ordinary share as

underlying asset, with a strike price of SEK 18.90

• Following the rights issue, the Hybrid and the Warrants will

be separately listed, to enable trading in each instrument separately

Unit subscription overview

• rdinary share as underlying asset. Strike

1 2

B) Transaction overview amendment of existing bonds

• In conjunction with the rights issue, Catena Media will also seek to amend the terms of its existing senior unsecured bond (See appendix for

detailed overview):

• To allow a partial prepayment of EUR 49.5 million at 100% of nominal value
• Extension of the final redemption date by 12 months (new maturity in March 2022)
• Enable interest payments under the Hybrid (dividends)
• No possibility to pay dividends on ordinary shares
• Inclusion of transaction security (all shares in directly owned subsidiaries to be pledged from 31 January 2021)
• Removal of possibility to incur external bank debt and possibility to provide security for such debt (from 31 January 2021)
• No possibility to issue subsequent bonds
• Certain adjustments to the redemption structure
• The company has received voting undertakings from bondholders representing 58% of the outstanding senior unsecured bonds to vote in

favour for these amendments in a proposed written procedure process

• For the amendments to be accepted, at least 20% of the bond holders must be represented in the voting and 2/3 of the votes must be in favor
• f the amendments

Q&A

Appendix

Ny bild

• Share pledge in Catena Operations Ltd and other directly owned subsidiaries of the Issuer (After

• EUR 100.5 million post partial amortisation of 33% of the Initial Nominal Amount
• Remove tap issue possibility

• Mandatory prepayment of 33% of the Initial Nominal Amount @100.0%
• Voluntary quarterly prepayment of up to 4% of the Initial Nominal Amount @Applicable call

• Callable at 101.375% from 2 March 2020
• Callable at 100.000% from 2 September 2020
• Final redemption at 100.000% at 2 March 2021
• Callable at 101.375% until 2 March 2021
• Thereafter callable at 102.75% from 2 March 2021 until 2 September 2021
• Thereafter callable at 105.0% from 2 September 2021 until 2 March 2022
• Final redemption at 105.0% at 2 March 2022

• Net Interest Bearing Debt / LTM Adjusted EBITDA <3.0x
• Interest Coverage Ratio >2.75x

• SS WCF of up to EUR 30m (EUR 12.5m drawn at 29 February 2020)
• Pari passu debt subject to Incurrence Test
• No Bank Debt or security for any Bank Debt allowed after 31 January 2021

• Allow dividends or interest payments under the Hybrid (subject to Net Interest Bearing Debt (

• Repurchase and redemption of Hybrid not permitted unless set-off against warrants issued in

• rdinary shares pursuant to the warrants
• No dividends for ordinary shares

Proposed amendments of the terms & conditions of the Senior Unsecured Bonds

• ptions per

Main terms for the Hybrid and the Warrants