3 January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite With this report we are initiating coverage on the 7.5% Senior Unsecured Notes due 2025 ($99.3, 7.6% Y1W, 524bps STVV) with a Buy rating given our belief that these notes offer investors a strong total return opportunity versus the DB HY Gaming Index, currently trading at 4.6%. For 2017, we expect EVRI to report adjusted EBITDA of $213 million (+7.5% versus $198 million) on revenue of $963 million (+12.0% versus $859 million). After factoring in the impact from $112 million of capital expenditures, $85 million of interest expense, and S2 million of cash taxes we expect EVRI to generate $14 million of free cash flow in 2017. Using our forecast of $1.19 billion of debt and $35 million of net available cash, we estimate that EVRI will end 2017 with gross leverage of 5.6x and net leverage of 5.4x. For 2018, we expect EVRI to report adjusted EBITDA of $225 million (+6.0% versus $213 million) on revenue of $1.0 billion (+3.5% versus $963 million). After factoring in the impact from $100 million of capital expenditures, $65 million of interest expense, and $2 million of cash taxes we expect EVRI to generate $59 million of free cash flow in 2018. Using our forecast of S1.13 billion of debt and $35 million of net available cash, we estimate that EVRI will end 2018 with gross leverage of 5.0x and net leverage of 4.9x. [Exhibit 3: Evert Holdings (S Mill;ons) 2015 (A) 2018 (A) LIM 2017 (E) 2018 (E) 449laled EINIDA $200 $198 $211 $219 $226 Leas: Capital Expenditures $80 S92 $97 $112 $103 Lees: Cash Interest 98 93 98 85 65 Less: Cash (121 2 1 2 2 taxes LASS: Acquisitions 11 1 0 0 0 Plus: ONOOtillone 2 6 0 0 0 Free Cat Row $26 $15 $15 $14 $69 Total Debt $3175 $1,151 $1.193 $1,193 $1,134 Cash 7 9 38 35 35 Leverege 6.9x Sax 5.7x 5.6x 5.0x NM Leong. 6.8x 6.8x 5.5x 64x 4.9x Coverage 2.0x 2.1x 22x 2.5x 3.5x San