A CHANGE in law has seen a gaming company file for bankruptcy after being over $600million in debt.
Georgia-based slot machine company Lucky Bucks made the filing in June and secured a deal to reduce its debt by $500million.
According to the filing, the company accrued huge amounts of debt due to increased interest rates and changes in customer habits where the use of slot machines reduced as people tried to save money.
Another major reason behind the struggles of the company was a crackdown on slot machine businesses by the state.
In the first five months of this year, Lucky Bucks was forced to remove 500 slot machines due to Georgia’s strict laws on the locations where such machines can be placed.
For example, under state law, no more than nine slot machines can be placed in certain locations like gas stations and convenience stores.
This law also applies if the machines derive over 50 percent of the stores’ revenues.
Lucky Bucks operates in 345 locations across the state with around 2,300 machines.
Under Georgia law, the gaming machines are defined as “skill-based” and they do not give out direct cash prizes.
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Instead, winners receive lottery tickets or can redeem their wins for non-cash merchandise.
The company’s executive vice president James Boyden has assured employees, partners, and players that the bankruptcy will not cause them disruption.
The bankruptcy court approved Lucky Bucks’ reorganization plan which included a recapitalization transaction to reduce the debt by over $500million.
According to the approved plan, the company’s capital structure will be strengthened and if it receives regulatory approval, it will also improve Lucky Bucks’ position in the market.
Following news of the initial approval, Boyden told Business Wire: “Through the collective efforts of our dedicated team and the overwhelming support from our secured lenders, today we celebrate a substantial milestone in our efforts to achieve a strengthened financial position that will create lasting value for our customers, employees, partners, and end-users.
“We are well-positioned to deliver strong future results as we prepare to enter a new and exciting chapter for Lucky Bucks.”
Due to the changes, a number of global investment firms will oversee Lucky Bucks and make a new investment into the business to support its future.
The U.S. Sun has reached out to Lucky Bucks for comment.
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