ITEM 1.01.
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ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
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Ryman Hospitality Properties, Inc., a Delaware corporation (Company or Ryman), entered into a purchase agreement dated
as of September 13, 2018 (Purchase Agreement) with Aurora Convention Center Hotel Partners, LLC (Seller), AREG Aurora CCH, LLC (AREG), and RIDA Aurora LLC (RIDA Member and together with Seller and
AREG and their affiliates, Seller Affiliates), to acquire from the Seller Affiliates additional interests in the joint venture that owns the Gaylord Rockies Resort & Convention Center near Denver, Colorado (Gaylord Rockies
joint venture). A subsidiary of Ryman and the Seller are the current owners of the Gaylord Rockies joint venture. The price of the additional interests to be purchased by Ryman will be approximately $242 million, payable in cash at
closing, subject to adjustment based on the amount of joint venture interest that is retained by Seller or its affiliates. Upon the closing of the transactions, which include the purchase of additional interests by RIDA Member, the ownership of the
Gaylord Rockies joint venture is expected to be as follows: Ryman will own approximately 62.3%, and RIDA Member, which is an affiliate of RIDA Development Corp., and the other Seller Affiliates will own approximately 37.7% (which may be increased,
at the election of the Seller Affiliates, up to 39.0%).
The Purchase Agreement contains various customary representations and warranties
and covenants, and the transaction is subject to conditions to closing including required joint venture lender consent, any approval required of Marriott Hotel Services, LLC under the hotel management agreement, the release of Seller from
construction loan guarantees and indemnities (which may involve the substitution of Ryman on such guarantees and indemnities), no material casualty to the hotel having occurred and other customary closing conditions.
Upon satisfaction of closing conditions, the transaction is expected to close by the end of 2018. As a result of increased interests and
rights, upon the closing, Ryman or its subsidiary will be the majority owner and the managing member of the Gaylord Rockies joint venture, and Ryman expects to consolidate the financial results of the Gaylord Rockies joint venture for accounting
purposes, with the other owners interests reflected as minority interests. The Company is currently evaluating the overall accounting impact of the transaction, and such impact has not yet been determined.
In connection with the Purchase Agreement, upon the closing, the parties will amend and restate the joint venture agreements of the Gaylord
Rockies joint venture to include the following terms:
Management
. A subsidiary of the Company will be the managing member and will
be responsible for
day-to-day
management, subject to the participation of RIDA Member as
co-managing
member with respect to
governmental relations and capital expenditure projects. Designated major decisions will be approved by a committee consisting of two individuals designated by Ryman and two individuals designated by RIDA Member. Major decisions include such matters
as refinancings that do not meet agreed parameters, future expansions of the hotel, transactions with affiliates, selling the hotel, and admitting additional members of the Gaylord Rockies joint venture. If Ryman and RIDA Member do not agree on a
designated major decision, an arbitration procedure or a
buy-sell
procedure may apply (including with respect to an impasse on a decision with respect to a proposed merger or sale of the hotel).
Capital and Cash Distributions
. The members will be obligated to contribute capital to the Gaylord Rockies joint venture and generally
will be entitled to distributions of cash amounts on a quarterly basis.
Seller Affiliate Rights
. After closing, Seller Affiliates
other than the RIDA Member will have no material rights other than protection relating to tax matters as described below; the right to receive distributions of cash in proportion to their ownership interests in the Gaylord Rockies joint venture; the
right to receive a payment in respect of infrastructure bonds of the hotel; the right to approve specified fundamental actions including amendments to the joint venture agreement that disproportionately and adversely affect the Seller Affiliates
other than the RIDA Member and an agreement that would make the Seller Affiliates other than the RIDA Member personally liable for joint venture debt, and the put right and
tag-along
rights described below.
Agreements with Affiliates
. The Gaylord Rockies joint venture will pay an affiliate of Ryman an annual asset management fee equal
to 1% of the gross revenues of the hotel. The Gaylord Rockies joint venture will pay an affiliate of RIDA Member a development fee equal to 1% of the development budget (excluding contingency) for certain capital expenditure projects and a capital
expenditure consulting fee equal to $250,000 per year.