UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 22, 2005
THE SPORTS CLUB COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-13290 95-4479735
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11100 Santa Monica Boulevard, Suite 300, Los Angeles, California 90025
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(310) 479-5200
Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (See General Instructions A-2 below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13 e-4(c)) Item 1.01 Entry into a Material Definitive
Agreement
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On October 28, 2005, The Sports Club Company, Inc. signed a definitive
asset purchase agreement to sell six of its nine sports and fitness Clubs to an
affiliate of Millennium Entertainment Partners ("Millennium"). As part of the
agreement, the Company had thirty days to elect to retain ownership of The
Sports Club/LA - New York in Rockefeller Center. On November 22, 2005, the
Company notified Millennium of its intent to retain the Rockefeller Center Club.
The remaining five Clubs to be sold include the Company's other two facilities
located in New York City and single Clubs in each of Boston, Massachusetts,
Washington D.C. and San Francisco, California. In addition, the management
agreement covering the Club in Miami, Florida will be assigned to Millennium.
Following the sale, the Company will continue to own and operate its three
Southern California Clubs: The Sports Club/LA - Los Angeles, The Sports Club/LA
- - Beverly Hills and The Sports Club/LA - Orange County along with The Sports
Club/LA - New York at Rockefeller Center.
The Company will receive approximately $72.2 million in cash from the sale
and will receive a note from Millennium for the remaining $7.8 million. The note
will be secured by a pledge of the Company's Series B and Series C Preferred
Stock owned by Millennium and will be guaranteed by an affiliate of Millennium.
Simultaneously with the consummation of the asset sale, the Company intends to
borrow approximately $60.0 million to be secured by a pledge of The Sports
Club/LA - Los Angeles. The proceeds from the asset sale and financing will be
used to retire the Company's $100.0 million Senior Secured Notes that are due in
March 2006 and for working capital purposes. The closing of the transactions is
anticipated to occur on or before December 31, 2005, however, because the
Company does not have a commitment for the refinance of The Sports Club/LA and
the closing of the Asset Purchase Agreement is subject to a number of
conditions, there can be no assurance that these transactions will be
consummated.
In order to complete the transaction prior to December 31, 2005, the
Company is having discussions with Millennium to amend the agreement to allow
Millennium to pay the Company $50.0 million in cash on the closing date and for
Millennium to issue a second note payable to the Company in the amount of $22.2
million. The second note would be due and payable on January 31, 2006.
Item 9.01 Financial Statements and Exhibits
(b) Pro forma financial information
Any required pro forma financial information required pursuant to article
11 of Regulation S-X shall be filed by amendment not later than 71 calendar
days after the date of filing the Company's November 3, 2005 Form 8-K that
originally discussed the agreement referred to in Item 1.01.
(c) Exhibits
99.1 Letter to Millennium Development Partners VIII LLC dated November 22, 2005.
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Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 30, 2005 THE SPORTS CLUB COMPANY, INC.
By: /s/ Timothy M. O'Brien
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Timothy M. O'Brien
Chief Financial Officer
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EXHIBIT 99.1
November 22, 2005
Millennium Development Partners VIII LLC
c/o Millennium Partners
1995 Broadway, 3rd Floor
New York, New York 10023
Re: Asset Purchase Agreement
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Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement (the "Purchase
Agreement") dated October 28, 2005, by and among The Sports Club Company, Inc.,
a Delaware corporation (the "Company"), certain of its subsidiaries (with the
Company, the "Sellers") and Millennium Development Partners VIII LLC, a Delaware
limited liability company ("Buyer"). Capitalized terms used herein without
definition shall have the meanings given to them in the Purchase Agreement.
In accordance with Section 2.6(b) of the Purchase Agreement, SCC hereby
exercises the Rock Center Option. Pursuant thereto, (i) the Rock Center Club
will not be deemed an Acquired Club or part of the Acquired Business, but will
instead be deemed a Retained Club and part of the Retained Business (and the
storage space lease related thereto will not be Leased Real Property); and (ii)
the Purchase Price is increased from $65,000,000 to $80,000,000.
Very truly yours,
THE SPORTS CLUB COMPANY, INC.
By: /s/ Rex A. Licklider
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Rex A. Licklider
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