| Item 1.01. | Entry Into a Material Definitive Agreement |
Indenture
On November 26, 2021, Red Rock Resorts, Inc.’s consolidated subsidiary, Station Casinos LLC (the “Company”), issued $500 million aggregate principal amount of 4.625% Senior Notes due 2031 (the “Notes”) pursuant to an indenture, dated as of November 26, 2021 (the “Indenture”), among the Company, the guarantors party thereto (the “Guarantors”) and Computershare Trust Company, N.A., as trustee. Interest on the Notes will be paid every six months in arrears on June 1 and December 1, commencing June 1, 2022.
The Notes and the guarantees are the Company’s and the Guarantors’ general senior unsecured obligations. The Notes and the guarantees rank equally in right of payment with all of the Company’s and the Guarantors’ existing and future senior debt and senior in right of payment to all of the Company’s and the Guarantors’ future subordinated debt. The Notes and the guarantees are effectively junior to any of the Company’s and the Guarantors’ existing and future debt that is secured by senior or prior liens on the collateral, including indebtedness under the Company’s existing credit facility and other secured debt permitted to be incurred pursuant to the terms of the indenture governing the Notes, to the extent of the value of the collateral securing such obligations. The Notes and the guarantees are structurally subordinated to all existing and future liabilities of the Company’s subsidiaries that do not guarantee the Notes.
On or after June 1, 2031 (the date that is six months prior to the maturity date of the Notes), the Company may redeem all or any part of the Notes, at a redemption price equal to 100% of the principal amount of Notes redeemed, plus accrued and unpaid interest, if any, to the date of redemption.
If the Company experiences certain change of control events (as defined in the indenture governing the Notes), it must offer to repurchase the Notes at 101% of their principal amount, plus accrued and unpaid interest to the applicable repurchase date.
If the Company sells assets under certain circumstances and does not use the proceeds for specified purposes, the Company must offer to repurchase the Notes at 100% of their principal amount, plus accrued and unpaid interest to the applicable repurchase date.
The Indenture governing the Notes contains certain covenants limiting, among other things, the Company’s and its restricted subsidiaries’ ability and the ability of its subsidiaries (other than its unrestricted subsidiaries) to:
| | • | | pay dividends or distributions (other than customary tax distributions) or make certain other restricted payments or investments; |
| | • | | incur or guarantee additional indebtedness or issue disqualified stock or create subordinated indebtedness that is not subordinated to the Notes or the guarantees; |
| | • | | transfer and sell assets; |
| | • | | merge, consolidate, or sell, transfer or otherwise dispose of all or substantially all of our assets; |
| | • | | enter into certain transactions with affiliates; |
| | • | | engage in lines of business other than its core business and related businesses; and |
| | • | | create restrictions on dividends or other payments by our restricted subsidiaries. |
These covenants are subject to a number of exceptions and qualifications as set forth in the Indenture governing the Notes. The Indenture governing the Notes also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on such Notes to be declared due and payable.
The Company intends to use the net proceeds of the sale of the Notes, together with borrowings under the Company’s revolving credit facility, to (i) make a distribution of approximately $344 million to holders of the Company’s outstanding limited liability company interests, including the Company’s parent, Red Rock Resorts, Inc. (ii) pay the purchase price for shares of Class A Common Stock tendered in Red Rock Resort, Inc.’s offer to purchase up to $350 million of its Class A Common Stock, (iii) pay fees and costs associated with such transactions and (iv) for general corporate purposes.
The foregoing description is qualified in its entirety by reference to the full text of the Indenture governing the Notes, filed as Exhibit 4.1 hereto and incorporated by reference herein.
