Progressive says investor buying 7 million shares

Financially troubled Progressive Gaming International said Tuesday a yet-to-be-named investor plans to purchase 7 million shares of the casino equipment provider, a deal that would give the company a much-needed boost of some $31 million in working capital.

Las Vegas-based Progressive didn't name the investor, saying in a filing with the Securities and Exchange Commission that the purchase was led by a large prominent mutual fund. The deal is expected to close Friday, according to Progressive.

The company, which has been slowly transforming from a slot machine maker and table game provider to a pure casino technology company, said it would use the proceeds from the financing to repay debt and as working capital.

Progressive also expects to close a deal with Shuffle Master by the end of the month in which the equipment-making rival will buy the company's table game division, which includes the Caribbean Stud game, for an undisclosed price. Gaming analysts expected the sale to net Progressive between $40 million and $50 million. Progressive Gaming said the proceeds from that sale would also be used to pay down debt and as working capital.

Progressive Gaming did not release an official comment on the investment.

CIBC World Markets gaming analyst David Katz said the stock acquisition amounted to about $4.50 a share, well below the current price of Progressive shares, which have taken a beating this year on the Nasdaq National Market. Progressive hit a 52-week high of $9.98 on Jan. 24 and a 52-week low of $3.55 on March 26.

On Tuesday, shares of Progressive closed at $5.32, down 10 cents, or 1.85 percent.

"The deal announcement is neutral for the shares," Katz said in a note to investors. "Although the reduction of debt reduces the risk profile of the company, we believe the initial dilution could offset upside in the shares."

Katz said it is more important for the health of Progressive shares that management fulfill its guidance predictions and offer more clarity on the deal with Shuffle Master. Another matter overhanging the company's stock price is $39 million judgment earlier this year in federal antitrust case that the company is appealing.

Last week, Progressive Gaming reported a net loss in the second quarter of $4.9 million, or 14 cents a share. That was an improvement over its net loss of $13.6 million, or 40 cents per share, for the same quarter a year ago.

Progressive said the stock sale was a private placement and the company would register the sale with SEC. It was unclear when the identity of the investors would be named.

Gaming Control Board member Mark Clayton said the investors would not face licensing by state gaming regulators. Only stock holders of 10 percent or more in a Nevada gaming company are required to submit for licensing.