Bragg Gaming Group has secured a financing agreement with the Bank of Montreal (BMO), providing the company with access to new credit of up to $6 million. This significant development enhances Bragg’s financial standing and supports its ongoing expansion efforts in the United States, a key market for the iGaming technology provider.
This new financing deal, revealed earlier this week, replaces an existing promissory note linked to Bragg’s founder Doug Fallon. The company has stated that this move will not only strengthen its balance sheet but also reduce its overall cost of capital. By leveraging Bragg’s assets, the credit arrangement aims to address the company’s working capital requirements and other general corporate purposes.
The financing is structured as a demand facility, meaning that BMO can request repayment at any time, although it is set to mature one year after execution. There is a possibility for an extension, should BMO choose to grant one. The agreement includes standard financial covenants, with leverage and coverage ratio requirements subject to quarterly tests.
The agreement highlights the confidence in Bragg’s business and its long-term growth potential. The ability to secure funding from a major North American bank is a strong testament to the company’s financial health and promising future.
Bragg plans to draw most of the funds in Canadian dollars, with the interest rates projected between 5.9% and 7.9%, depending on market conditions and any changes in the company’s leverage profile. Management anticipates that the company will be paying less than half of the annual costs it previously incurred under its prior debt structure, thus releasing funds for other strategic opportunities.
This optimistic outlook on the company’s financial trajectory aligns with Bragg’s recent expansion into the U.S. market. In July, Bragg introduced its Remote Gaming Server technology in New Jersey, Michigan, and Pennsylvania. By partnering with Fanatics Casino, Bragg aims to deliver its exclusive game content to a broader audience across these three highly active iGaming states.
Matevž Mazij, CEO of Bragg, emphasized that the financing deal is a critical component of their broader strategy aimed at achieving profitable growth. He expressed confidence that the company is on course to reach a 20% adjusted EBITDA margin target by the second half of 2025, having already realized EUR 2 million ($2.35 million) in annualized synergies.
Securing this BMO facility is indeed a pivotal moment in Bragg’s strategic plan to fortify its financial base and enhance shareholder value. This development comes as the company moves on from a cybersecurity breach disclosed in August. Bragg, in collaboration with external security experts, has managed to contain the breach with no signs of compromised personal data or financial impact. With these challenges addressed and additional liquidity secured, Bragg continues to solidify its status as a key B2B supplier in the online gaming industry.
From another perspective, while the financing deal is a positive step for Bragg, it also signifies the high stakes involved in the iGaming industry, especially in the competitive U.S. market. The demand facility structure indicates that BMO retains significant control over the terms, and the potential for immediate repayment poses a risk if market conditions were to change unexpectedly. This highlights the importance for Bragg to maintain robust financial performance and adhere to the covenants to avoid any adverse outcomes.
As the iGaming industry continues to grow, with increasing regulatory scrutiny and technological advancements, companies like Bragg must navigate these complexities carefully. While the new credit facility provides a cushion, it is essential for the company to use these resources wisely, prioritizing strategic investments that align with its long-term objectives.
Ultimately, Bragg Gaming Group’s ability to secure this financing illustrates its resilience and adaptability in a rapidly evolving industry landscape. The strategic use of these funds, combined with effective risk management, will be crucial as the company seeks to capitalize on new opportunities and drive sustained growth in the years ahead.
David Garato is a luminary in gaming journalism, renowned for peeling back the curtain on the gaming world with his witty and insightful commentary. A decade into weaving stories from the pixelated edges of indie games to the expansive universes of AAA titles, David’s work is a thrilling blend of analysis and adventure. When not writing, he’s live-streaming, sharing his gaming exploits with an engaged and growing audience. David doesn’t just write about games; he lives them, making him a trusted guide in the gaming community.
