NetEnt to shed 120 jobs as Red Tiger integration accelerates
Supplier flags triple-digit redundancies in Stockholm and Malta while some technology roles move to India
NetEnt will make 120 full-time redundancies in Stockholm and Malta and relocate several company functions at a cost of SEK25m (£2.1m) as the supplier continues to integrate acquired slots studio Red Tiger.
EGR Intel understands the redundancies will be made in the Stockholm-based games production and technology teams, as well as across marketing teams in the Stockholm and Malta offices.
In addition, EGR has learned that at least 30 of the roles included in the restructuring will be relocated to offices in Malta and India will play host to the Stockholm technology roles being relocated.
The Malta-based supplier has said the redundancies are part of a major restructuring and reorganisation of the business as it accelerates the integration of Red Tiger.
According to NetEnt, the restructuring will generate annual cost savings of SEK150m (£12.5m), commencing from H2 2020.
NetEnt CEO Therese Hillman hailed the next phase of the Red Tiger acquisition, claiming it would unleash the full potential of the brand, which was first acquired in September 2019.
As well as the redundancies and restructuring, NetEnt will pay the earnout of £23m initially due to be repaid in 2022 through the issuing of new shares in NetEnt as well as a cash payment.
The early redemption will lead to an increase in financial costs of approximately SEK35m (£2.9m) in the first quarter of 2020 and, following the rights issue, the company’s net debt will decrease by SEK100m (£8.3m).
Half of the earnout amount (£11.5m) is to be paid through a directed issue of 6,327,175 new B-shares in Q2 2020, with the remaining £11.5m to be paid as cash in the second quarter of 2021.
At the time of the deal, NetEnt agreed this earnout would be paid if the company achieved certain financial targets over the two-year period. NetEnt has said the performance of the business to this point has “exceeded its expectations” by a wide margin.
Under the terms of the share purchase agreement, Red Tiger’s former owners, including new NetEnt COO Gavin Hamilton, have committed to not selling the newly issued shares until March 2022.
Updating investors, NetEnt said operations have so far not been negatively affected by the coronavirus pandemic, with first quarter 2020 revenue expected to be in the range of SEK490m-SEK500m.