v3.25.4
Derivatives and Hedging Activities
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities

14. Derivatives and Hedging Activities

 

On November 12, 2025, the Company entered into two interest rate swap agreements with Macquarie Bank Limited designed to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on the current floating rate debt facilities. The swaps are effective from December 9, 2025, until maturity on December 9, 2027. The swaps fix the interest rate at 3.6208% on a notional amount of £250.0 million ($336.3 million), payable to Macquarie Bank Limited, with Macquarie Bank Limited paying an amount to the Company on the notional amount of £250.0 million ($336.3 million) at an interest rate equal to the floating amount due on the Senior Notes, subject to a floor of 3.00%.

 

Risk Management Objective of Using Derivatives

 

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

 

Cash Flow Hedges of Interest Rate Risk

 

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During the year ended December 31, 2025, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

 

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve-months, the Company estimates that an additional $0.3 million will be reclassified as a decrease to interest expense.

 

As of December 31, 2025, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

 

 Schedule of Cash Flow Hedges of Interest Rate Risk

Interest Rate Derivative   Number of Instruments   Notional
Interest rate swaps   2   £250.0 million ($336.3 million)

 

The Company did not have any derivatives as of December 31, 2024.

 

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet as of December 31, 2025 and December 31, 2024.

 

 Schedule of Derivative Liability

    December 31, 2025     December 31, 2024  
    (in millions)  
Other current liabilities   $ 0.2     $ —  
Other long-term liabilities     0.4       —  
Total derivatives designated as hedging instruments   $ 0.6     $ —  

 

There was no effect of offsetting of the derivative financial instruments at December 31, 2025.

 

The tables below present the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the year ended December 31, 2025 and December 31, 2024.

 Schedule of Fair Value of Cash Flow Hedge Accounting

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

 

    Year Ended
December 31,
2025		    

Year Ended

December 31,

2024

  
    (in millions)  
Interest rate products   $ (0.5 )    $ —  

 

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income

 

    Year Ended
December 31,
2025		     Year Ended
December 31,
2024		  
    (in millions)  
Interest expense, net   $ 0.1     $ —  

 

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 

The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the year ended December 31, 2025 and December 31, 2024.

 

    Year Ended
December 31,
2025		     Year Ended
December 31,
2024		  
    (in millions)  
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded      
Interest expense, net   $ (37.3 )    $ (29.4 )

 

    Year Ended
December 31,
2025		     Year Ended
December 31,
2024		  
    (in millions)  
Amount of gain (loss) reclassified from accumulated other comprehensive income into income      
Interest expense, net   $ 0.1     $ —  

 

Credit-risk-related Contingent Features

 

Each of Inspired Gaming (UK) Limited and Gaming Acquisitions Limited, wholly owned (indirect) subsidiaries of the Company, (each, a “Hedging Subsidiary”) has entered into an industry standard ISDA Master Agreement, with a negotiated Schedule thereto (each, an “ISDA Agreement”), with the counterparty to its derivative transactions and which ISDA Agreements set forth various provisions which govern the relationship between each such Hedging Subsidiary and its counterparty with respect to such derivative instruments. Such provisions include certain events which, if triggered by either party, may give rise to a termination of the relevant derivative instruments, which may trigger a requirement for the exchange of a breakage payment between the parties.

 

Each ISDA Agreement contains a provision whereby if any of the Company’s subsidiaries that has granted credit support in respect of such derivative transactions defaults on any of its indebtedness above a threshold amount, including default where repayment of such indebtedness has not been accelerated by the relevant creditor, then the relevant Hedging Subsidiary could also be declared in default on its derivative obligations. Each ISDA Agreement also contains a provision where the relevant Hedging Subsidiary could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the relevant Hedging Subsidiary’s default on its indebtedness.

 

As of December 31, 2025, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for non-performance risk, related to the ISDA Agreements was $0.5 million. As of December 31, 2025, no Hedging Subsidiary has posted any collateral related to the ISDA Agreement, as no collateral is required under the terms thereof. If the Hedging Subsidiaries had breached any of the provisions under the terms, which resulted in an acceleration of the ISDA Agreements, as at December 31, 2025, the Company could have been required to settle its obligations under the respective ISDA Agreements at their termination value of $0.5 million.