| Item 1.01 | Entry into a Material Definitive Agreement. |
Purchase Agreement
On January 10, 2024, Hilton Grand Vacations Borrower Escrow, LLC (the “Escrow Issuer”), Hilton Grand Vacations Borrower Escrow, Inc. (the “Escrow Co-Issuer” and, together with the Escrow Issuer, the “Escrow Issuers”) and Hilton Grand Vacations Borrower LLC (the “Escrow Guarantor”), in its capacity as provider of the HGV Escrow Guarantee (as defined below), each a wholly-owned subsidiary of Hilton Grand Vacations Inc. (the “Company”), entered into a purchase agreement (the “Purchase Agreement”) with the several initial purchasers party thereto (collectively, the “Initial Purchasers”), in connection with the offer and sale of $900 million aggregate principal amount of the Escrow Issuers’ 6.625% Senior Secured Notes due 2032 (the “Notes”) in a private offering (the “Offering”) to persons reasonably believed to be “qualified institutional buyers” in the United States, as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons outside the United States in offshore transactions pursuant to Regulation S under the Securities Act.
The Purchase Agreement contains customary representations, warranties and covenants by the Escrow Issuers and the Escrow Guarantor, together with customary closing conditions. Under the terms of the Purchase Agreement, the Escrow Issuers and the Escrow Guarantor have agreed to indemnify the Initial Purchasers against certain liabilities. The Offering is expected to close on January 17, 2024, in accordance with the terms of the Purchase Agreement.
Upon the closing of the Company’s proposed acquisition (the “Acquisition”) of Bluegreen Vacations Holding Corporation (“BVH”), the Escrow Issuer and the Escrow Co-Issuer will merge with and into the Escrow Guarantor and Hilton Grand Vacations Borrower Inc., respectively, each a wholly-owned subsidiary of the Company, and, to the extent the Offering does not close concurrently with the Acquisition, the escrow proceeds will be released as described below. The Escrow Guarantor and Hilton Grand Vacations Borrower Inc. (together, the “Surviving Issuers”) will thereupon assume the obligations under the Notes. To the extent the Offering closes concurrently with the Acquisition, the Notes will be issued by the Surviving Issuers instead of the Escrow Issuers, and the escrow provisions described above will not apply. Upon the closing of the Acquisition, the Notes will be guaranteed by the Company, Hilton Grand Vacations Parent LLC, also a wholly-owned subsidiary of the Company, and certain of the Escrow Guarantor’s existing and future subsidiaries (collectively, the “Guarantors”). The Notes and the related guarantees will be secured on a first-priority basis by substantially all assets of the Surviving Issuers and the Guarantors, which assets also secure the Company’s senior secured credit facilities, subject to certain exceptions.
To the extent the Offering does not close concurrently with the Acquisition, the Escrow Issuers, which were created solely to issue the Notes, will deposit the gross proceeds of the Offering into a segregated escrow account until the date that certain escrow release conditions are satisfied and the Escrow Guarantor will agree to pay (the “HGV Escrow Guarantee”) an amount up to the amount necessary to fund the interest due on the Notes in connection with a special mandatory redemption of the Notes, if the escrow release conditions have not been satisfied by August 5, 2024 (the “Escrow End Date”) or prior to the Escrow End Date if the merger agreement with BVH is terminated or the Escrow Issuers notify the trustee under the Notes that the Company is no longer pursuing the Acquisition.
Upon the closing of the Acquisition and release of the net proceeds of the Offering from the escrow account (if applicable), the Company intends to use the net proceeds from the Offering to (i) finance the consummation of the Acquisition, (ii) repay certain outstanding indebtedness and (iii) pay related fees, costs, premiums and expenses in connection with these transactions.
This Current Report on Form 8-K shall not constitute an offer to sell, a solicitation to buy or an offer to purchase or sell any securities. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any offer, or solicitation to buy, if at all, will be made only by means of a confidential offering memorandum. This Current Report on Form 8-K does not constitute a notice of repayment of outstanding indebtedness.
