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Embracer saddles Asmodee with €900 million debt, cuts it loose

Game industry investor Embracer Group has wiped old debts with a loan secured on Asmodee assets - now it’s splitting into three new companies.

The logo of the board game publisher Asmodee, its name against a white tile surrounded by rainbow colors, connected by a chain to an emoji of a money bag

Investment firm Embracer Group has announced plans to separate into three distinct companies; the industry-leading board game publisher and distributor Asmodee, which Embracer acquired in 2022, will be the kernel of one of these successors. However, Asmodee is leaving the investment group with some baggage: Embracer has secured $958 million (€900 million) of loans against Asmodee’s assets.

The loan will be used to refinance Embracer’s existing $733 million debts, which needs to be repaid by February 2025, and to shrink the group’s “revolving credit facilities” (the corporate equivalent of an overdraft) by $92 million. “The loan is ringfenced with no recourse to Embracer Group… it is only secured by Asmodee assets”, according to Embracer’s press release, meaning only the board game publisher will be liable for repayments.

Asmodee is an extremely significant player in the board game industry, operating a major international distribution platform, as well as owning many substantial tabletop brands. Most of the games on our best board games guide are published by an Asmodee brand  – even the legendary Catan, the flagship game that ignited interest for European designs in the Anglo-American board game market, is an Asmodee title.

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What consequences will the additional debt and separation from the rest of Embracer have for Asmodee? Embracer Group’s press release further notes that, going off the group’s financial performance in 2023, once the new loans are in place Asmodee will have a ‘Net Debt-to-Adjusted EBITDA’ factor of roughly 3.9x, while the rest of Embracer group will have a ‘Net Debt-to-Adjusted EBIT’ factor of around 0.6x.

In layman’s terms, both these statistics refer to the ratio between a firm’s debts and its annual earnings. A factor of 0.6x means Embracer will be carrying debt equivalent to roughly 0.6 years’ profits, while Asmodee will be carrying 3.9 years’ profits in debt.

We note that EBIT and EBITDA are different measures: EBIT means earnings before interest and tax are deducted, while EBITDA also excludes the cost of depreciation (fixed assets like machines and buildings wearing out and becoming less valuable) and amortization (when the cost of an asset is spread across more than one tax year). Unless Asmodee has negligible depreciation or amortization on its books, its Net Debt-to-Adjusted EBIT factor will be higher than 3.9.

Photograph by Embracer Group of board game publisher Asmodee's HQ in France - a modern venue with pastel pink and green lighting, plus shelves with example copies of games

Embracer Group began acquiring Asmodee on 15 December 2021, and announced it had completed the acquisition on March 8 2022. It was part of a spree of acquisitions that Embracer Group made from 2019-2022, with the group now containing over 100 studios. When a planned financing deal fell through in June 2023, Embracer began to make layoffs across its portfolio, including at Asmodee. It is currently selling Gearbox Entertainment and Saber Interactive.

The ‘restructuring’ into three separate companies is the latest step. Wargamer has asked Embracer to comment on the impacts that the debt burden will have on the newly liberated Asmodee, and why it took this decision.

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