Item 1.01 Entry into a Material Definitive Agreement
Revolving Credit Facility
On March 31, 2021, the Company entered into an agreement among the Company, as borrower, the lenders party thereto and Capital One, National Association, as administrative agent (the “Administrative Agent,” and such agreement, the “Credit Agreement”). The Credit Agreement provides for a $15.0 million senior secured five-year revolving credit facility and includes a letter of credit sub-facility (the “Credit Facility”). The Credit Facility may be used for working capital and other ongoing general purposes, excluding project costs for the Cripple Creek growth project, which was separately funded.
Until the completion of the Cripple Creek project, the interest rate per annum applicable to loans under the Credit Facility will be, at the Company’s option, either (i) LIBOR plus a margin equal to 3.50%, or (ii) a base rate plus a margin equal to 2.50%. After such completion (as defined in the agreement), the interest rate per annum applicable to loans under the Credit Facility will be, at the Company’s option, either (i) LIBOR plus a margin equal to 3.00%, or (ii) a base rate plus a margin equal to 2.00%. The commitment fee per annum payable is equal to 0.50% of the unused portion of the Credit Facility. The Company has also agreed to pay customary letter of credit fees. The Credit Facility is available, subject to the satisfaction of customary conditions, until March 31, 2026 (unless the Credit Facility is terminated and matures earlier pursuant to the terms thereof), at which time all amounts borrowed must be repaid. As of March 31, 2021, there are no drawn amounts under the Credit Facility.
The Credit Facility is equally and ratably secured by the same assets securing the Company’s 8.25% Senior Secured Notes due 2028 (the “Notes”) (other than the securities accounts and the deposit accounts established pursuant to the Cash Collateral and Disbursement Agreement, which shall be security solely for the Notes), and borrowings under the Credit Facility will be guaranteed by all of the Guarantors; provided that, pursuant to the terms of the Collateral Trust Agreement, the proceeds of any collateral securing the Credit Facility and the Notes (other than in respect of the securities accounts and the deposit accounts established pursuant to the Cash Collateral and Disbursement Agreement) and certain other amounts will be applied to borrowings under the Credit Facility prior to payments on the Notes.
The Company may make prepayments of any amounts outstanding under the Credit Facility (without any reduction of the revolving commitments) in whole or in part at any time without penalty, subject to reimbursement of breakage costs in the case of any prepayment of LIBOR contracts and such prepayments being in specified minimum amounts.
The Credit Facility contains a number of negative covenants that, subject to certain exceptions, are substantially similar to the covenants contained in the Notes restricting or limiting the Company’s and the Guarantors’ ability to, among other things: (i) make non-ordinary course dispositions of assets; (ii) participate in certain mergers and acquisitions; (iii) make dividends and stock repurchases and optional redemptions (and optional prepayments) of certain subordinated, junior lien or unsecured debt; (iv) incur indebtedness; (v) make certain loans and investments; (vi) create liens; (vii) transact with affiliates; and (viii) change our business and the business of our restricted subsidiaries. The Credit Facility includes a requirement that the Company maintain, for the quarters ending March 31, 2021 and June 30, 2021, minimum liquidity of $20.0 million. The Credit Facility also requires compliance with a financial covenant as of the last day of each fiscal quarter, such that Consolidated Cash Flow, as defined, must equal or exceed the utilized portion of the Credit Facility. For example, if the Company has utilized $5.0 million of its $15.0 million Credit Facility, then Consolidated Cash Flow for the trailing twelve-month period must be at least $5.0 million.
The Credit Facility contains a number of customary events of default (subject to certain grace periods and cure rights), including, among others, for the non-payment of principal, interest or other amounts; the accuracy of certain representations and warranties; the failure to perform or observe certain covenants; a cross-default to other indebtedness, including the Notes; certain events of bankruptcy or insolvency; certain ERISA events; the invalidity of certain loan documents; certain changes of control; and the loss of certain licenses to conduct gaming. If any event of default occurs, the lenders under the Credit Facility would be entitled to take various actions, including accelerating amounts due thereunder, terminating the revolving commitments thereunder and, subject to the Collateral Trust Agreement, taking all actions permitted to be taken by a secured creditor.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in entirety by reference to the full text of the Credit Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.
