NYX GAMING GROUP LTD 11 PCT DEBS V.NYX.DB

RE:Stocksnbonds...

[stocksnbonds]

NYX is actually in a much better position in one major respect, all its licensees have the legal right to operate. They do not operate in the grey markets as most licensees did over almost two decades ago. This being said, NYX is in worse shape financially. 

Worldgaming had to go bankrupt as it had too much debt and the major debt holder was SportingbetPLC or SBET,  SBT on the London exchange. SBT had first claim on  what was seen as the best software outside of Cryptologic. They had casino, sports, poker, bingo. It was great. SBT gobbled it all up as they were first in line creditors. 

NYX is in a very similar debt position to WH and Skybet Gaming as WG was to SBT. If NYX cannot pay off its debts, the debt holders get first dibs on intellectual property and assets in general. NYX would likely dilute shares by offering a major PP before declaring bankrupcy in a worse case situation. NYX has options. Highly unlikely but may happen if debt not looked after. 

To the crux of your question....... what made them all go up? The promise of licensees as well as underestimating guidance and exceeding on revenue and profit expectations quarter after quarter. Chartwell was seen as the weakest of the three and did not have as big a pop. Chartwell tried to stick with operators in legal markets. All three had huge crashes for various reasons. That's another story. 

In your post you mentioned they can cut anytime. I disagree. The longet it takes them to cut costs, the more is being spent on costs which should be allocated towards debt or other internal needs. If costs were chopped earlier, NYX would not have needed the most recent 15 million pound financing. They also did another 10.5 million pound financing in June as I recall. Neither would have been necessary if proper cuts were made. That's over 20 million in financings not needed IMO. Then again, I'm not at the decision making table so who am I really to comment but a frustrated shareholder upset at overly high costs.  

One quick comment and I'll take my fingers elsewhere this weekend. If NYX does not reduce costs or at least show that they are levelling off, NYX stock will decline even more. It's at risk of not being able to pay off its operating costs let alone debt. Burn rate is quite high. It's barely EBITDA positive (14 million as I recall?). That's not good enough at this point. Debt payments need to be made ASAP. I see hope but not blind to the potential downside. On the whole, the risk-reward is quite good at these levels. If Q4 numbers show a healthy profit with a good CC following, NYX will pop in the days following. 
 
Good luck,

sb