$250m (+37.5m) sen unsec coming tonight from JPM/BARC/WFC. 5 yr, 0.5-1% up 40-45%, full pctns. UOP = redeem 4.375% CB/gcp. We’d use 400 for 5 year. 2 yr 50/10ile = 38.7/25.9. Same strike Jan 2015 LEAPs = 32 bid. We’ll use 32. Theo = 96.75. 1.75% have long been a fav of o/r community and have held in during recent market weakness (xpar 64.5% prem). With upcoming GTA in Sept and new PS and xbox consoles in 2013, could see s-t vol pickup and improved rev and FCF. However reality = only FCF +ve in 4 of last 10 years (2x due to GTA releases), so co still had more to prove. More software paper coming to market than has been flushed. Optic rich, valuation rich, so don’t take two.
Publisher of interactive s/w games including Grand Theft Auto
PF Cash $508m
PF Debt $500m
LTM EBITDA $254m
LTM FCF -21m
Leverage 2x
Mkt Cap $1465m
TTWO has benefited recently from growing digital sales (22% FY 13 sales) & strong datalog sales (25%) leading to strong sales growth & good EBITDA. However, FCF was still – Co only had FCF+ve in 4 of last 10 years. Grand Theft Auto V to be released in Sept & likely to generate very strong Rev and FCF. It has been 6 yrs since IV creating pent-up demand & console install base has doubled. New consoles from MSFT & Sony will add more volatility to sector. $74m avail on secured revolver (mat 10/16). Our assigned spread L+400