The Tabcorp Holdings Limited (ASX: TAH) share price has tanked this morning, losing nearly 16% in early trade. Tabcorp shares have since recovered somewhat, and are only down around 10% at the time of writing.
The company is facing the closure of many of its venues from midday today following a Federal Government directive and made an ASX announcement this morning in response.
COVID-19 update
Last night, the Federal Government announced the closure of hotels and clubs from 12pm today in an effort to contain the coronavirus. This is also likely to impact TAB agencies which offer Tabcorp's wagering, Keno, and gaming services products.
Convenience stores and other such outlets which distribute the company's lottery products are not covered by the measures and will remain open. It is expected that newsagencies, which also distribute Tabcorp's lottery products, will remain open but this is not yet confirmed.
In addition, many national governments and sporting bodies have announced the cancellation and/or postponement of major sport events around the world and in Australia to slow the spread of coronavirus.
Thoroughbred, harness, and greyhound race meetings are still being conducted in Australia with restrictions on public attendance and otherwise, in accordance with social distancing rules imposed by the Government. Their ongoing status may, however, require further clarification from relevant State governments.
Tabcorp is continuing to offer customers wagering and Keno products through its digital channels. It has implemented its business continuity plans and has maintained continuity of service, even with the vast majority of employees now operating remotely.
Impact on financial results
In the first half, revenue from Australian licensed venues, TAB agencies, and on-course outlets accounted for ~28% of Tabcorp Group revenues. Sports betting revenues accounted for ~4% of Tabcorp Group revenues.
Given the evolving situation and high level of uncertainty regarding the impact of coronavirus on FY20 and even FY21, Tabcorp is unable to provide guidance on earnings or financial impacts.
The company is seeking to partially mitigate the impact of these changes by reducing operating and capital expenditure where it reasonably can. It is also encouraging customers to use digital alternatives and actively promoting remaining available products.
Tabcorp has undrawn banking facilities of $600 million. Other than a US Private Placement of $171.5 million (fully hedged) which matures in December 2020, there are no other debt maturities until April 2022.
Tabcorp CEO David Attenborough said, "we are working with governments, regulators, and our venue and racing industry partners to manage the impact on them, our customers, and our businesses during this unprecedented period."
