Investor presentation 17 April 2020
Covid-19 impact on the iGaming industry 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 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 2
Catena Media generates ~70% of its EBITDA from Casino CASINO RELATED REVENUES 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 3% • In response, Catena Media's sites with sports related content have been pivoted to marketing towards Casino 28% Share of EBITDA Jan- Feb ‘20 SPORT BOOK & OTHER RELATED REVENUES 69% • 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 3
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 • operations 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 4
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 5
Overview of current strategic direction ACTION POINTS TO IMPROVE THE LEGACY BUSINESS OTHER ACTIONS SPORTS EUROPE CASINO EUROPE ASK GAMBLERS • Focus on fewer products • Focus efforts on high- • Intensified geographical expansion by launching three new languages performance core brands during 2020 Development of a multilingual • “hero” sports brand proposition • Continued focus on quality • Increased retention business improvements • SEO over PPC • Rebuild non-improving • Tactical growth of subscription US products from scratch model where commercially (ongoing) sensible • Increased investments in the North American market to establish top • Restructure sales and position in every new state expected to launch within the coming 6-24 • Cost reduction and efficiency marketing for efficiency months improvements for improved improvement (ongoing) margins • Expand relationships with key operators OVERHEAD • Leverage advanced BI • Cost improvement actions for improved margins capability to maximize returns for partners 6
Near term initiatives • Continued focus on cost control activities, where We will continue to execute on costs are reduced to improve margins in our legacy our strategy to focus on few business and reinvested into new growth markets brands, invest in new markets, • Continued investments in the North American market to establish topposition in every new state expected to and continue our focus on cost launch within the coming 6-24 months control. We are prepared for • Hero product AskGamblers prepared for multilingual continued improvements in launch in several new markets worldwide 2020 and beyond Per Hellberg - CEO 7
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 outstanding 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 ordinary 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 8
Introduction to the proposed transactions Comments Sources and Uses for the contemplated transaction 1 Sources EURm eqv. Uses EURm eqv. • In order to create a more sustainable capital structure and to provide Catena Media with operational head room, the following is announced: Rights Issue of Units ~ 63.0 Partial redemption of 49.5 Senior Unsecured Bonds a) A fully guaranteed rights issue of approx. EUR 63m (SEK 684m) Excess cash and ~ 13.5 transaction costs 3) b) Proposed amendment of terms for the outstanding EUR 150m senior unsecured bond Total Sources ~63.0 Total Uses ~ 63.0 • The proposed amendments of the bond includes a partial prepayment of EUR 49.5m 1) and an extension of the maturity on the remaining part by Senior net leverage following the Rights Issue 1 12 months (revised maturity in March 2022) 3.2x 1.9x • The proposed prepayment of the bond significantly strengthens Catena 19.2 Media’s capital structure: 49.5 Senior net debt decreases from EUR 143 m to EUR 84m 2) o 150 9.0 162.5 143.3 Senior Net debt / LTM EBITDA decreases from 3.2x to 1.9x o 84.3 12.5 Senior Senior Gross senior Cash Net senior Amortisation Net cash PF Net Senior Secured RCF Unsecured debt debt from Debt bond transaction 1) Subject to the amendment being successful Senior net leverage / LTM Adjusted. EBITDA 2) Assuming EURSEK of 10.9 resulting in rights issue proceeds of EUR 63m 3) Including guarantor fees 9
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 o Existing shareholders, including Öresund and Ruane, Cunnif & Goldfarb: ~EUR 35.6 million o External guarantors: ~EUR 25.9 million o • It is envisaged that the rights issue shall entail: New capital raised of approx. SEK 684 million (equivalent of EUR 63 million) o o Issuance of Hybrids (treated as 100% equity under IFRS reporting standards) Issuance of Warrants with the ordinary share of Catena Media as underlying assets o • 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 10
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