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Going into debt to acquire a company and then spinning them off but giving them some of that debt is stupid, but I don't think the plan is to just let Asmodee die. It didn't "kill off the remaining debt" for Embracer. They didn't load it up with nearly enough debt for that; "Embracer" still has a lot of debt that will have to get divvied up between Coffee Stain and Middle-Earth. I think it says something about the rest of Embracer that despite being loaded up with some debt, I think Asmodee is actually probably still in the best position to succeed out of all the companies. The fundamentals of that business are just far stronger. They have a much better market position than most of the video game studios that Embracer...assembled. They're like the EA or Activision Blizzard or T2 of tabletop, as opposed to...whatever Embracer is for video games.
I think the thinking is to let the market now value Asmodee fairly, as opposed to its value being dragged down by being included in a conglomerate that was showing less than stellar results.
Lars Wingefors is maintaining an ownership stake in Asmodee.
Each business needs to be set up with an appropriate capital structure. Asmodee has stable earnings and good margins; they are the most appropriate place to put leverage (for now). Putting leverage on Coffee Stain & Friends makes no sense; furthermore, it is the least leveragable because it has the smallest actual EBITDA. So even if you leverage it to 5x, you're not getting what you could by getting Asmodee to 4x.
The right way to think about this is not that they are "giving" Asmodee some of their debt. Lenders are willing to lend to Asmodee because it has leveragable assets. The proceeds will be dividended up to Embracer/Middle Earth & Friends because Middle Earth & Friends will own Asmodee when it does that debt raise. This is very common in spin world (you could look at GE Healthcare and GE or Solventum and 3M, for example). Otherwise Embracer is giving up earnings for nothing (though theoretically its shareholders are even to start...but maybe not immediately after).
This is not a bad business decision. It is effectively an unwinding of all the consolidation Embracer did over the last few years which I thought most people hated anyway. Lars is still a material equity owner in every business. It is not in his interest to sink any individual piece of the company.
The right way to think about this is not that they are "giving" Asmodee some of their debt. Lenders are willing to lend to Asmodee because it has leveragable assets. The proceeds will be dividended up to Embracer/Middle Earth & Friends because Middle Earth & Friends will own Asmodee when it does that debt raise. This is very common in spin world (you could look at GE Healthcare and GE or Solventum and 3M, for example). Otherwise Embracer is giving up earnings for nothing (though theoretically its shareholders are even to start...but maybe not immediately after).
This is not a bad business decision. It is effectively an unwinding of all the consolidation Embracer did over the last few years which I thought most people hated anyway. Lars is still a material equity owner in every business. It is not in his interest to sink any individual piece of the company.
And now Asmodee is forced to work off years worth of debt without any additional capital because that loan was given to pay for Lars' fucking idiotic business malpractices. I only see this leading to further layoffs in Asmodee which has already been thinning out its workforce for the last three years. Atomic Mass and FFG have already been looking anemic, and now their parent company is offloading a billion dollars worth of debt onto their shoulders.
The amount of people this piece of shit CEO has fired as results of his repeated bad decisions should be constitute criminal recklessness and complete forfeiture of every penny and asset he owns.
The amount of people this piece of shit CEO has fired as results of his repeated bad decisions should be constitute criminal recklessness and complete forfeiture of every penny and asset he owns.