In the event that the business needs the money in the coming years, DraftKings has established a brand-new$ 500 million credit facility.
The new$ 500 million revolving credit facility, taken out this week with a syndicate led by Morgan Stanley, replaces a$ 125 million facility that the gaming company ( Nasdaq: DKNG ) entered into with Banc of California and Citizens Bank in December 2022. That ancient deal has been terminated.
As long as the payment is n’t left unused, the company saves money and has more flexibility at a lower price than it did before, at least based on current price ranges. Under the former agreement, DraftKings had to pay an interest rate of the Prime Rate—a rate banks charge creditworthy customers—plus 1 %, equal to 8.75 % as of this writing. The organization can choose the cheapest of two rates in order to decide how much interest it may give under the fresh service. They’re both complicated formulas, but the net result is cheaper borrowing for the business, provided it needs to use a notable portion of its$ 500 million. The company can borrow money at 7.07 % today based on DraftKing’s profitability and the new credit agreement’s words.

It’s unclear if the business has any specific strategies for the money, whether via acquisitions, product activities or another operating objectives. A DraftKings spokesman declined to comment. The company’s subsidiaries and its companies may use the funds for working capital and basic business purposes, according to an SEC filing that only states that.
The move comes amid a steady supply of M&amp, A for the business. DraftKings made the announcement in February that it would be purchasing Jackpocket, an online lottery game, for$ 750 million in cash and stock. It signed an agreement to buy Simplebet, signed in May, and completed the acquisition of Mustard Systems ‘ golfing sales company in August. These last three offers had no economic details disclosed.
The bank’s cash reserves have likewise shrunk. Lotto ended the third quarter of 2024 with cash and cash equivalents of$ 877.8 million, according to its SEC filings. That’s down from$ 1.1 billion at the same point last year, and down from$ 2.4 billion at the same point in 2021. The DraftKings board approved the company’s first buyback in July by approving up to$ 1 billion in its Class A shares.
” We’re keeping our eye on the industry, we expect to work responsibly”, CFO Alan Ellingson said Friday in a phone with economists when asked about the buybacks. However, as we expand into our free cash flow and have more cash, you really anticipate that we will be more effective with repurchases in upcoming quarters.
DraftKings is now receiving a higher payment service credit score because the bank pays the lender for the non-used portion of the credit line. The bank is required to pay the fee because it incurs costs when providing a corporation with still unused credit. As DraftKings ‘ profitability and interest charges currently stand, the final result is that borrowing nothing or only a small portion of the credit line may cost less than the old words, but borrowing a lot of it had cost it less.

As an example, if DraftKings borrowed$ 50 million under the old line, it would cost the company about$ 4.4 million in interest annually and about$ 188, 000 in unused credit line fees. Borrowing$ 50 million would cost about$ 3.5 million in annual interest and$ 1.7 million in credit line fees under the new credit line.
A$ 400 million draw would cost the company less under the new terms, however about$ 28.3 million in interest and$ 375, 000 in unused line fees. Under the old terms, a$ 400 million draw would cost about$ 35 million in interest and$ 250, 000 in unused credit fees, assuming the old line had the same$ 500 million limit.
The new payment center matures on November 7, 2029, at which point Lotto must repay all loans, accrued and paid attention.
Early this week, DraftKings announced next quarter results. CEO Jason Robins stated in a letter to shareholders that the business was revising its$ 250 million full-year revenue projections due to unfavorable NFL results. As of this writing, the property has increased by about 3 % in Friday investing. The stock is up about 16 % so far this year.