Flutter Entertainment has abandoned plans to pay a cash dividend to help shore up finances for its merger with Canadian online gambling giant The Stars Group, as it warned on Friday that an earnings hit from Covid-19 will result in the combined group having a higher debt burden than originally envisaged.

Still, Flutter chief executive Peter Jackson said that he is “more convinced than ever” about the tie-up, which will deliver a more diversified group at a time when sporting events are being cancelled or postponed as government and health systems seek to contain spread of coronavirus and its devastating economic impact.

While the combined group was initially expected to have a debt burden of 3.5 times earnings, excluding synergies, Flutter the ratio is now likely to be higher than that, the company said as it published a prospectus and circular on the deal. Still, it remains committed to reducing its leverage to 1 to 2 times earnings “over the medium term”.

As a first move to keep the debt load in check, Flutter has decided not to proceed with its planned €112.7 million final 2019 dividend payout in cash, but will give shareholders the awards additional shares instead. It has also scrapped plans to pay a dividend to Flutter shareholders this year before the completion of the merger.