(AsiaGameHub) –   Gaming technology group Evolution AB has announced a significant share buyback programme valued at €2 billion ($2.3 billion).

The supplier, which made the announcement on Tuesday, also detailed a €300 million revolving credit facility. This facility is intended to maintain liquidity throughout the extensive repurchase process.

The buyback scheme follows shareholder approval obtained at Evolution’s Annual General Meeting on 24 April. The stated purpose was to “optimise the capital structure of the company by reducing the share capital, thereby creating added shareholder value”.

Evolution has been reassessing its strategic direction in recent months. The company recently reported in its Q1 earnings that growth was primarily being driven by North and Latin America, rather than Europe.

According to the company, 48% of its Q1 revenue was generated from regulated jurisdictions.

The details

The company’s board has since authorised the repurchase of shares up to a value of €2 billion on Nasdaq Stockholm or other regulated markets.

Repurchases will be carried out by an independent investment firm or credit institution appointed by Evolution. This appointed entity will determine the timing of transactions without direct input from the company.

The programme is permitted to continue until the full authorised amount has been utilized or until further notice. This could potentially involve multiple purchases and extend up to the 2027 annual general meeting.

Any shares repurchased will be paid for in cash and transacted within price limits that reflect prevailing market conditions.

Under Swedish regulations, Evolution is restricted from holding more than 10% of its issued shares at any given time. With 199,226,613 shares currently outstanding and no treasury shares held, the company is eligible to repurchase up to 19,922,661 shares within this limitation.

Evolution’s board has indicated the possibility of convening an extraordinary general meeting to potentially cancel repurchased shares if holdings approach the 10% threshold. This measure would enable the authorisation of a new buyback programme to continue share repurchases up to the authorised limit.

Looming legality

The company’s latest capital management plans emerge during a period of heightened regulatory and legal scrutiny for Evolution. The company remains involved in ongoing legal proceedings in New Jersey concerning allegations that its games were made available through unauthorized operators in restricted markets, claims the company has consistently denied. Earlier this year, the company sought to add Playtech to a defamation lawsuit connected to this long-standing dispute.

This action stems from allegations that Playtech orchestrated and funded a false and commercially motivated smear campaign designed to harm Evolution’s reputation and impede its entry into the North American online gaming market.

Playtech allegedly engaged Black Cube to conduct an investigation into Evolution’s activities in prohibited and unlicensed markets. However, the supplier assured investors that the investigation was conducted lawfully.

The Superior Court of New Jersey will make the decision on whether to permit the amended complaint to proceed.

Evolution is also under investigation by the UK Gambling Commission due to its games being linked to unlicensed sites in the market. The outcome of this multi-year review is still pending.

Backup financing facility

Concurrently with the buyback announcement, Evolution has established a €300 million senior unsecured revolving credit facility (RCF). This facility is with JP Morgan SE and Citibank Europe plc. The facility has a three-year bullet repayment schedule, with two optional one-year extensions. It will function as standby financing to preserve the company’s financial flexibility.

The decision to secure backup liquidity aligns with Evolution’s description of the buyback as a “material adjustment” to its capital structure, suggesting a prudent approach amidst significant capital deployment.