Continue Reading Below
Shares of lottery and interactive gaming company Scientific Games (NASDAQ: SGMS) jumped as high as 22.2% on Wednesday after the company announced its wholly owned interactive social gaming subsidiaries were designated as "unrestricted subsidiaries under its debt agreements, with the goal of maximizing growth for the company," the company said in a press release. At the time of this writing, the stock's gain on Wednesday had pulled back slightly to 20.1%.
Image source: Scientific Games.
By working out a debt agreement for Scientific Games' social gaming subsidiaries, including Dragonplay Ltd and Phantom EFX LLC, to be designated as unrestricted subsidiaries, Scientific Games can now profit from them without being required to pay off debt with all of their earnings. This means Scientific Games has positioned itself to better accelerate growth in its interactive business.
Specifically, Scientific Games said in a press release that it will "consider a range of options to solidify its leadership in this fast growing segment, including potential new joint ventures, acquisitions, IPO, and other growth options."
This is a notable step for the company, as its social gaming business is growing rapidly, generating "sequential double-digit growth in each of the most recent three quarters and a 68-percent increase in revenue year-over-year for the most recent quarter," Scientific Games explained.
Going forward, Scientific games will look for ways to build on its social gaming business' momentum.
"Following our company's third consecutive quarter of revenue growth, we see this as a perfect time to accelerate momentum and explore additional opportunities to deliver greater value from this strong and rapidly growing segment of our business," said Scientific Games CEO Kevin Sheehan.
A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early, in-the-know investors! To be one of them, just click here.
Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.