Embracer to contribute $423 million towards Asmodee’s near $1bn debt repayment

• Embracer has set Asmodee the goal of an adjusted EBITDA margin over 18% in three to five years

Embracer Group plans to give its subsidiary Asmodee Group a €400 million ($423 million) equity investment after it completes the sale of mobile games developer Easybrain to Miniclip.

Embracer has said that proceeds from this equity investment should be predominantly spent on repaying the group's over $1.5 billion gross debt.

The move follows Embracer’s tumultuous 2023 which led to a decision to split into three separate companies this April. Named Asmodee Group, Coffee Stain & Friends and Middle-Earth Enterprises & Friends, all three companies are publicly listed, with Asmodee taking responsibility for tabletop publishing and distribution in addition to the bulk of said debt.

Bags to balance

Asmodee was saddled with nearly $1 billion to repay upon the breakup of Embracer and the parent company has now revealed plans for Asmodee to make repayments through a debt capital markets transaction. This will be led by BNP Paribas and J.P. Morgan.

Of the €400 million ($423 million) coming from Embracer’s Easybrain divestment, €300 million ($317.3 million) will go towards repaying some of that debt and the remainder will strengthen Asmodee’s balance sheet.

Embracer has also teased future M&A initiatives with these funds as part of an initiative to support Asmodee’s growth.

On a pro-forma basis for the equity investment, Asmodee’s net financial debt totalled €493 million ($521.4 million) as of September 30th, 2024.

Financial goals

With Asmodee’s capital markets day being held today, November 19th, Embracer has also unveiled new financial targets for the publisher. Among those targets, it expects to see mid-single-digit annual organic growth and an adjusted EBITDA margin of over 18% at Asmodee in the next three to five years.

Furthermore, Asmodee’s target leverage ratio on net debt is below three times adjusted EBITDA over that same period, while targets are two times in the longer term.

"Asmodee is well-positioned for the future and we are now setting financial targets to reflect our confidence in our growth trajectory," said Asmodee CEO Thomas Kœgler.

"Our aim is to achieve mid-single-digit organic revenue growth over the medium term and an adjusted EBITDA margin in excess of 18% in the medium term. With favourable market dynamics and our focus on innovation and operational efficiency, we are confident in our ability to enhance our products and deliver sustainable value to our stakeholders."