Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed, Peak Resorts, Inc. and its wholly owned subsidiaries Hidden Valley Golf and Ski, Inc., Paoli Peaks, Inc., Snow Creek, Inc., LBO Holding, Inc. and SNH Development, Inc. (together, the “Company”) are parties to the $20.0 million Credit Facility, Loan and Security Agreement (the “Line of Credit Agreement”) with Royal Banks of Missouri (the “Bank”), effective as of December 22, 2015. On January 6, 2017, pursuant to the terms of the Line of Credit Agreement, the Company elected to convert $10.0 million of the then outstanding amount to a term loan (the “Term Loan”). Approximately $9.71 million remains outstanding under the Term Loan, maturing on February 6, 2020, and $2.75 million remains outstanding under the Line of Credit Agreement, maturing on November 5, 2017 pursuant to the extension executed by the Company and the Bank on August 5, 2017.
Effective as of August 25, 2017, the Company entered into a conditional commitment with the Bank pursuant to which the Bank has agreed to provide the following: (i) a renewal of the Line of Credit Agreement in the form of a $15.0 million revolving acquisition line of credit (the “Acquisition Line of Credit”); and (ii) a new revolving working capital line of credit of up to $10.0 million (together with the Acquisition Line of Credit, the “Loans”). A portion of the Acquisition Line of Credit is to be used to pay off the $9.71 million outstanding under the Term Loan and the $2.75 million that remains outstanding under the existing Line of Credit Agreement. The remainder of the Acquisition Line of Credit may be used for future acquisitions.
The Bank’s obligation to provide the Loans pursuant to the Commitment Letter is subject to a number of customary conditions, including, without limitation, the Bank’s ability to secure participant lenders and the execution and delivery by the relevant parties of definitive documentation consistent with the Commitment Letter. The Bank’s obligations to provide the Loans expire if the Loans have not been closed by October 18, 2017.
The Loans will be payable in monthly installments of interest only, charged at the prime rate plus 1.0 percent per annum, due and payable in full within 14 months after the loan advance. The Company will be required to open a debt service account with the Bank and deposit into the account an amount equal to one-third of the estimated annual interest due in connection with the Loans, subject to adjustment by the Bank. The agreements evidencing the Loans shall generally contain the same covenants as those contained in the Line of Credit Agreement.
Amounts outstanding shall be secured by the assets of each of the subsidiary borrowers.
The foregoing summary of the Commitment Letter is qualified in its entirety by reference to such Commitment Letter filed hereto as Exhibit 10.1 and incorporated herein by reference.
On August 30, 2017, the Company issued a press release announcing entry into the Commitment Letter. A copy of this press release is filed as Exhibit 99.1 hereto and incorporated herein by reference.