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): January 13, 2006
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))
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Item 2.01 Completion of Acquisition or Disposition of Assets
On January 13, 2006, The Sports Club Company, Inc. (the "Company")
completed the sale of five of its nine sports and fitness Clubs to an affiliate
of Millennium Entertainment Partners ("Millennium") for $80 million. Concurrent
with the asset sale, the Company also completed a $60 million financing of The
Sports Club/LA - Los Angeles property. Proceeds from these transactions were
used to retire the Company's $100 million Senior Secured Notes that were due to
mature in March 2006.
The Clubs sold to Millennium include the Company's interest in Reebok
Sports Club/NY, and The Sports Club/LA in Washington D.C., Boston, San Francisco
and the Upper East Side in New York. The Company's management agreement covering
the Club in Miami was also terminated. The Company received $50.0 million in
cash from the sale (before transaction related costs) and received two Notes
from Millennium for the remaining $30.0 million. The first note of $22.2 million
is due on January 31, 2006 and is secured by the two Clubs in New York that were
sold to Millennium. The second Note of $7.8 million is due in 2013 and is
secured by a pledge of the Company's Series C and Series D Preferred Stock owned
by Millennium. Both Notes are also guaranteed by an affiliate of Millennium.
Following the sale, the Company continues to own and operate four Clubs: The
Sports Club/LA - Los Angeles, The Sports Club/LA - Beverly Hills, The Sports
Club/LA - Orange County and The Sports Club/LA - New York at Rockefeller Center.
Millennium and its affiliates hold approximately 37% of the Company's
outstanding Common Stock, 40% of the Company's outstanding Series C Preferred
Stock and approximately 15% of the Company's outstanding Series D Preferred
Stock. Chris Jeffries, a director of the Company, is the founder and managing
partner of Millennium.
The financing of The Sports Club/LA - Los Angeles was provided by Bank of
America, N.A. The mortgage note, which matures in January 2016, is secured by
all of the real estate and other assets at The Sports Club/LA - Los Angeles,
bears interest at 6.48% and requires monthly payments of principal and interest
over a twenty-five year amortization period.
The information in this report and the exhibit hereto may contain
"forward-looking statements" that are made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995 and otherwise
may be protected. Such statements are made based on the current beliefs and
expectations of the Company's management and are subject to significant risks
and uncertainties that could cause actual results to differ materially. Please
refer to the Company's annual report on Form 10-K filed on September 30, 2005
with the Securities and Exchange Commission for information concerning risks,
uncertainties, and other factors that may affect future results.
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Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off Balance Sheet Arrangement of Registrant
As described in Item 2.01, on January 13, 2006, the Company entered into a
Loan Agreement with Bank of America, N.A., pursuant to which the Company
borrowed $60 million. The Company is required to make monthly principal,
interest and escrow payments of $490,806. Rex Licklider, the Company's Chief
Executive Officer and D. Michael Talla, a founder and Chairman of the Board of
the Company, executed limited guarantees under which the lender would have
recourse to Messrs. Talla and Licklider in certain circumstances. The Company,
Millennium and Kayne Anderson, a principal shareholder of the Company, have
agreed to indemnify Messrs. Licklider and Talla under certain circumstances for
losses under their guarantees.
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 to this Form 8-K.
(c) Exhibits
99.1 Press Release dated January 16, 2006.
Various agreements signed to complete these two transactions will be filed
by amendment to this Form 8-K.
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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: January 20, 2006 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
NEWS RELEASE
For Immediate Release CONTACT: Rex Licklider
Chief Executive Officer
The Sports Club Company, Inc.
(310) 479-5200
THE SPORTS CLUB COMPANY, INC. ANNOUNCES
ASSET SALE AND DEBT REFINANCING
LOS ANGELES, CA (January 16, 2006) - The Sports Club Company, Inc. (Stock
Symbol: SCYL) today announced that it has completed the sale of five of its nine
sports and fitness Clubs to an affiliate of Millennium Entertainment Partners
("Millennium") for $80 million. Concurrent with the asset sale, the Company also
completed a $60 million financing of the Sports Club/LA - Los Angeles property.
Proceeds from these transactions were used to retire the Company's $100 million
Senior Secured Notes that were due to mature in March 2006.
The Clubs sold to Millennium include the Company's interest in Reebok Sports
Club/NY, and The Sports Club/LA in Washington D.C., Boston, San Francisco and
the Upper East Side in New York. The Company's management agreement covering the
Club in Miami was also terminated. The Company received $50.0 million in cash
from the sale (before transaction related costs) and received two Notes from
Millennium for the remaining $30.0 million. The first note of $22.2 million is
due on January 31, 2006 and is secured by the two Clubs in New York that were
sold
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to Millennium. The second Note of $7.8 million is due in 2013 and is secured by
a pledge of the Company's Series C and Series D Preferred Stock owned by
Millennium. Both Notes are also guaranteed by an affiliate of Millennium.
Following the sale, the Company continues to own and operate four Clubs: The
Sports Club/LA - Los Angeles, The Sports Club/LA - Beverly Hills, The Sports
Club/LA - Orange County and The Sports Club/LA - New York at Rockefeller Center.
The financing of The Sports Club/LA - Los Angeles was provided by Bank of
America, N.A. The mortgage note, which matures in January 2016, is secured by
all of the real estate and assets at The Sports Club/LA - Los Angeles, bears
interest at 6.48% and requires monthly payments of principal and interest over a
twenty-five year amortization period.
"These two transactions combined with the retirement of our Senior Secured Notes
place the Company in a substantially strengthened financial position and provide
the basis for our future growth and development," stated Rex A. Licklider, Chief
Executive Officer. "We continue to own and control The Sports Club/LA brand and
as part of our agreement with Millennium, have given our members continued
access to all ten Clubs for the foreseeable future. We plan on immediately
investing approximately $5.0 million to further enhance the four Clubs we
continue to own ensuring their position as the finest sports and fitness
complexes in the world," added Mr. Licklider.
All statements in this press release other than statements of historical fact
are forward looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and beliefs and are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in this press release. The forward
looking statements speak only as of the date of this press release, and the
Company expressly disclaims any obligations to release publicly any update or
revision to any forward looking statement contained herein if there are changes
in the Company's expectations or if any events, conditions or circumstances on
which any such forward looking statement is based.
The Sports Club Company, based in Los Angeles, California owns and operates
luxury sports and fitness complexes nationwide under the brand name "The Sports
Club/LA."
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