Item 1.01
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Entry Into a Material Definitive Agreement.
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Credit Facilities
On May 23, 2019, TAO Group Operating LLC (the
Senior Borrower
) and TAO Group Intermediate Holdings LLC
(
Intermediate Holdings
), the parent of the Senior Borrower, entered into a credit agreement (the
Senior Credit Agreement
) with JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and a letter of
credit issuer, and the lenders party thereto. Together the Senior Credit Agreement and the Subordinated Credit Agreement described in Item 8.01 below replace the Senior Borrowers prior credit agreement dated January 31, 2017, which was
terminated on May 23, 2019 in its entirety in accordance with its terms in connection with the repayment of all obligations thereunder from the proceeds of the Senior Credit Agreement and the Subordinated Credit Agreement.
The Madison Square Garden Company (the
Registrant
) indirectly owns a 62.5% interest in TAO Group
Sub-Holdings
LLC (the
Subordinated Borrower
), which is the indirect parent company of the Senior Borrower. The Registrant consolidates the Subordinated Borrower and its subsidiaries, including the
Senior Borrower.
The Senior Credit Agreement provides the Senior Borrower at closing with senior secured credit facilities (the
Facilities
) consisting of: (a) an initial $40 million term loan facility (the
Term Loan Facility
) and (b) a $25 million revolving credit facility (the
Revolving Credit
Facility
), each with a term of five years. The proceeds from the Facilities were used by the Senior Borrower to refinance amounts outstanding under the existing credit agreement. Up to $5 million of the Revolving Credit Facility is
available for the issuance of letters of credit. All borrowings under the Revolving Credit Facility, including, without limitation, amounts drawn under the revolving line of credit are subject to the satisfaction of customary conditions, including
absence of a default and accuracy of representations and warranties.
Interest Rates and Fees
Borrowings under the Senior Credit Agreement bear interest at a floating rate, which at the option of the Senior Borrower may be either
(a) a base rate plus an additional rate ranging from 1.50% to 2.50% per annum (determined based on a total leverage ratio) (the
Base Rate
), or (b) a Eurocurrency rate plus an additional rate ranging from 2.50% to 3.50%
per annum (determined based on a total leverage ratio) (the
Eurocurrency Rate
), provided that for the period following the closing date until the delivery of the compliance certificate for the fiscal quarter of Intermediate
Holdings ending on or about June 30, 2019, the additional rate used in calculating the floating rate is (i) 1.50% per annum for borrowings bearing the Base Rate, and (ii) 2.50% per annum for borrowings bearing the Eurocurrency Rate. The Senior
Credit Agreement requires the Senior Borrower to pay a commitment fee of 0.50% in respect of the daily unused commitments under the Revolving Credit Facility. The Senior Borrower is also required to pay customary letter of credit fees, as well as
fronting fees, to banks that issue letters of credit pursuant to the Senior Credit Agreement.
Guarantees and Security
All obligations under the Senior Credit Agreement are guaranteed by Intermediate Holdings and Intermediate Holdings existing and future
direct and indirect domestic subsidiaries (other than (i) the Senior Borrower, (ii) domestic subsidiaries substantially all of whose assets consist of controlled foreign corporations and (iii) subsidiaries designated as immaterial
subsidiaries or unrestricted subsidiaries) (the
Subsidiary Guarantors
, and together with Intermediate Holdings, the
Guarantors
). All obligations under the Senior Credit Agreement, including the guarantees of
those obligations, are secured by substantially all of the assets of the Senior Borrower and each Guarantor (collectively,
Collateral
), including, but not limited to, a pledge of the equity interests in the Senior Borrower held
directly by Intermediate Holdings and the equity interests in each Subsidiary Guarantor held directly or indirectly by Intermediate Holdings.
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