Slot machine giant International Game Technology announced Tuesday it acquired “substantially all of the assets” of Progressive Gaming International Corp., which was foreclosed and liquidated last week by one of its lenders.
No price was given.
Ed Rogich, a spokesman for the Reno-based slot machine manufacturer, said the company was still evaluating if the out-of-business technology provider’s 300 employees would be hired by IGT as part of the transaction. In January, IGT completed a staffing reduction that eliminated about 10 percent of the company’s work force. The layoffs were part of a cost reduction program that was expected to save IGT more than $100 million in annual expenses.
In a statement, IGT said the global operations of Progressive Gaming would be combined with IGT’s offices in Europe, Asia, Australia, Latin America, Canada and the United States.
Progressive Gaming, a Las Vegas-based provider of technology to the gaming industry, failed to meet a payment deadline last week for $17 million in obligations it owed to Private Equity Management Group of Irvine, Calif.
In August, IGT loaned Progressive Gaming $15 million through a convertible note; it had other technology-related joint ventures with the company.
The deal allowed IGT to convert its cash infusion into a 22.5 percent ownership stake.
Rogich said IGT entered into a purchase agreement Friday with Private Equity Management Group in an Article 9 foreclosure sale.
Progressive Gaming owned patents for casino management systems that are connected to 70,000 slot machines worldwide. The company also earns revenue through the sale of the software and hardware associated with the systems and through ongoing maintenance agreements.
Progressive also held patents for radio frequency identification technology, commonly referred to as RFID. Through a partnership in RFID chip recognition technology for table games with IGT, Progressive Gaming has approximately 7,500 table games in operation.
“(Progressive Gaming’s) system product line is designed for somewhat different market segments as compared to our current line,” IGT Executive Vice President of Product Strategy Rich Schneider said in a statement. “As such, the technology is an ideal complement to our current offering, allowing us to immediately increase our system install base, while providing us with a more complete product offering for future sales opportunities.”
The majority of Progressive Gaming’s upper management left the company in the past few months, including longtime CEO Russel McMeekin in September and CFO Heather Rollo, who resigned earlier this month to take a job with Ameristar Casinos. Sources said employees in several of Progressive Gaming’s divisions were laid off last week.
“Progressive Gaming was in violation of its terms of its debt agreement, both with a private equity fund as well as the terms of its convertible note with IGT,” Sterne Agee & Leach analyst Nicholas Danna told Reuters News Service. “It was basically forced into a liquidation.”
Progressive Gaming was formed in 1986 as the Mikohn Gaming Corp.
Despite the sales of its slot machine and table game businesses and the transition into a pure gaming technology company, Progressive Gaming never recovered from its financial meltdown in 2007. Its stock price fell almost 75 percent and wiped out some $200 million in market capitalization.
Danna said the deal will help IGT to bolster its systems business.
“Progressive Gaming had done a nice job, especially in the international markets,” Danna said. “I think it was a logical fit for IGT to pick up some of those assets.”
Shares of IGT, traded on the New York Stock Exchange, were down 95 cents or 7.94 percent to close at $11.02.
Contact reporter Howard Stutz at email@example.com or 702-477-3871.