| Item 1.01. | Entry into a Material Definitive Agreement. |
On April 25, 2023, Churchill Downs Incorporated (“CDI”) (NASDAQ: CHDN) issued $600 million in aggregate principal amount of 6.750% senior notes due 2031 (the “Notes”) in connection with its previously announced private offering that is exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”).
Indenture
The terms of the Notes are governed by that certain Indenture (the “Indenture”) entered into on April 25, 2023 by and among CDI, the guarantors named therein (the “Guarantors”), and U.S. Bank Trust Company, National Association, as trustee.
The interest payment dates are May 1 and November 1, commencing on November 1, 2023. CDI may redeem some or all of the Notes at any time prior to May 1, 2026, at a price equal to 100% of the principal amount of the Notes redeemed plus an applicable make-whole premium. On or after such date CDI may redeem some or all of the Notes at redemption prices set forth in the Indenture. In addition, at any time prior to May 1, 2026, CDI may redeem up to 40% of the aggregate principal amount of the Notes at a redemption price equal to 106.750% of the principal amount thereof, with the net cash proceeds of one or more equity offerings provided that certain conditions are met.
The terms of the Indenture, among other things, limit the ability of CDI to incur additional debt and issue preferred stock; pay dividends or make other restricted payments; make certain investments; create liens; allow restrictions on the ability of certain of its subsidiaries to pay dividends or make other payments to it; sell assets; merge or consolidate with other entities; and enter into transactions with affiliates.
Subject to certain limitations, in the event of a change of control triggering event (as defined in the Indenture), CDI will be required to make an offer to purchase the Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest to the date of repurchase.
The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest; breach of other agreements in the Indenture; failure to pay certain other indebtedness; failure to pay certain final judgments; failure of certain guarantees to be enforceable; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs, the Trustee or the holders of at least 30% in aggregate principal amount of the then outstanding series of Notes may declare all the Notes of such series to be due and payable immediately. The Indenture is filed as Exhibit 4.1 hereto and this description thereof is qualified by reference thereto.
Registration Rights Agreement
In connection with the issuance of the Notes, CDI and the Guarantors entered into a Registration Rights Agreement to register any Notes under the Securities Act for resale that are not freely tradable 366 days from April 25, 2023. The agreement is filed as Exhibit 4.2 hereto and this description thereof is qualified by reference thereto.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information included in Item 1.01 under “Indenture” is incorporated by reference into this Item 2.03.
