Poydras Gaming Finance (TSXV:PYD)

Alpha Stox July 2, 2014 Comments Off
Poydras Gaming Finance (TSXV:PYD)

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Dear Alphastox Subscribers,

I wanted to introduce Poydras Gaming Finance (TSXV:PYD). Poydras supplies slot machines to licensed casinos in the US and is a very proftable business. I have taken a position in Poydras in the market because I love the business model and the massive growth opportunity. With the likes of Amaya Gaming (TSX:AYA) leading the space, the industry is extremely hot right now and its time we look at smaller deals that can give us the most leverage. Here is an exerpt from my initial Alphastox report on Poydras:

“The opportunity in the established gaming market is absolutely huge. Everyone knows that slot machines make money. US commercial casinos and tribal casinos generated US $65.2 billion in combined revenues and is expected to grow even more in 2015. Poydras has a proven ability to make profits. The historical business generated approximately $1.7 million EBITDA in 2012 from only $3.5 million in invested capital. With more than $11 million raised, Poydras is ready to take advantage of new opportunities as they look to generate their shareholders substantial returns. The basic business plan is very simple, Poydras either buys slot machines and places them on casino floors for a share of the revenue or they finance small start up vendors that are selling them to the same space.  These machines typically cost around $28K while they generate around $7-$14K a year in EBITDA…not a bad business. Poydras looks for a 2-3 year payback period on all investments while they usually look to get into casinos that give them a 7 year licensing agreement.  With substantial cash behind them, Poydras can now focus on deploying more machines and increase profitability.

Poydras currently has 312 machines deployed with an additional 187 machines committed to be deployed this year. Not only does Poydras’ key personnel have strong relationships with slot machines manufacturers, machine service operators and  gaming providers, but they also hold or have pending licenses in other jurisdictions which will help them expand their current operations.”

Meet the CEO, Peter Macy

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 What is Poydras?

Poydras Gaming Finance Corp. is focused on leasing and financing gaming machines — such as slot machines or electronic table games — and related capital expenditures for existing casinos, new casino developments and gaming machine manufacturers and distributors in the United States.

The company was founded by a team of experienced gaming industry investors and operators and works closely with a strong network of local partners in its target markets.  The company currently has investments in slot machines being operated by multiple Native American-owned casinos in Oklahoma and California and is currently pursuing opportunities in additional regional markets across the Midwest and Southeastern U.S.

Investment Highlights:

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For Gaming Operators:

Poydras Gaming is led by a team of experienced gaming professionals focused on providing flexible capital solutions based on the unique needs of Native American and privately held casinos.

We provide gaming equipment and related capital through a variety of transaction structures ranging from secured loans to direct long-term participation leasing agreements.

Through long-term relationships with all of the major slot machine manufacturers, and through purchasing agreements already in place with IGT, Bally, WMS, Aristocrat, Aruze and Multimedia, we are able to provide Class III gaming equipment solutions for casinos of any size and in order ranging from a bank of top performing specialty games, to outfitting the core products for an entire casino floor.

For Equipment Vendors: 

Poydras Gaming actively partners with gaming equipment vendors to expand their presence in participation based markets. 

We can act as a customer, distributors or financing source as the situation requires.  Indicative transactions include:

  • Direct purchase of games for deployment by Poydras in participation leases
  • Purchase of games currently leased by vendor, including a transfer of the contract or an addition of the games to an existing Poydras contract
  • Revenue split of participation leases where Poydras has acquired long-term contracts
  • Secured financing for vendor deploying machines under traditional or participation based leases

Symbol: TSX.V:PYD

Shares Outstanding: 130,932,197

Shares Fully Diluted: 172,836,628

Directors, Insiders and Officers: 28,893, 354

Institutions: 12,000,000

Corporate Presentation

Business Model – Windy Hill Case Study:

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I highly encourage all of you to keep Poydras Gaming (TSXV:PYD) on watch now. As always, if you have any questions, please do not hesitate to get in touch with me anytime, I look forward to hearing from you.

Best,

Etienne

Disclosure: Transcend Resource Group is a shareholder of Poydras Gaming Finance (TSXV:PYD)

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