Item 1.01 Substantial definitive agreement signed.
MSG Sphere Credit Line
exist December 22, 2022, MSG Las Vegas LLC (“MSG LV”), an indirect wholly-owned subsidiary Madison Square Garden Entertainment (hereinafter referred to as the “Company”) and JPMorgan Chase Bank, North Americaas administrative agent and lender, for five years, $275 million Advanced Secured Term Loan Facility (“Sphere Facility”). All obligations under the Sphere Facility are governed by MSG Entertainment Group LLC (“MSGE Group”). All capitalized terms not defined herein have the meaning set forth in the Sphere Facility.
The company is currently implementing its MSG Sphere initiative – a state-of-the-art venue that combines cutting-edge technology with multi-sensory storytelling to deliver immersive experiences on an unparalleled scale.The first MSG Sphere is currently under construction las vegas (“Las Vegas Sphere”) and is expected to open in the second half of calendar year 2023. The Sphere Facility will enable the company to further fund the development of content, including original attractions, which the company expects will generate significant revenue in the MSG space.
The Sphere Facility includes financial covenants requiring MSG LV to maintain specified minimum debt service coverage ratios and requiring MSGE Group Maintain specified minimum liquidity levels.Debt-service coverage ratio covenant begins testing at fiscal quarter end December 31, 2023 On a historical basis, and also on a forward-looking basis, beginning with the first fiscal quarter following the date on which the Las Vegas Ball’s first ticketed performance or event opens to the public (the “Open Date”). History and Expectations The debt service coverage ratio is set at 1.35:1.In addition, among other conditions, MSG LV shall not submit MSGE Group Unless historical and projected debt service coverage ratios are at least 1.50:1.Minimum Liquidity Level MSGE Group set in $100 millionwith $75 million Must be held in cash or cash equivalents, the amount of which must be deposited in an account that is collateral to the Sphere Facility prior to the Liquidity Covenant Reduction Date (as defined below), until it is ”), before stepping down
$50 millionwith $25 million Required to be held in cash or cash equivalent once Las Vegas Circle is substantially complete and some of its systems are ready for live, immersive events (“Liquidity Covenant Reduction Date”).The minimum liquidity level is on the closing date and on the last day of each fiscal quarter thereafter according to MSGE Group’s
As of this date, unencumbered liquidity includes cash and cash equivalents and available lines of credit. Live Entertainment Company Retained Interest will be pledged to secure The security of the Sphere Facility until the pledge is released on the Liquidity Deed Reduction Date, and a portion of the value of the Live Entertainment Company Retained Interest may also be counted towards the Minimum Liquidity Level.
Sphere Facility will be December 22, 2027. The main obligations under the Sphere Facility are due when the facility is due and will not be amortized before the due date. Borrowing under the Sphere Facility bears interest at a floating rate, with MSG LV’s choice of (i) base rate plus a profit margin of 3.375% p.a. or (ii) adjusted term SOFR (i.e. term SOFR plus 0.10%) plus 4.375 per annum % profit margin.
All obligations under the Sphere Facility, including guarantees for these obligations, are secured by all assets and
MSGE Group (collectively referred to as “collateral”) including, but not limited to, MSG LV’s leasehold interest in the land where the Las Vegas Sphere is located, and the pledge of all equity directly held by it MSGE Group In MSG LV, and prior to the Liquidity Covenant Reduction Date, the Pledge Account and Live Entertainment Company’s Pledge retains interest after the completion of the MSGE spin-off. Under certain circumstances, MSG LV requires mandatory prepayment, including an advance payment equal to the net cash proceeds of casualty insurance and/or scrapping recovery (subject to certain reinvestment, repair or replacement rights), subject to certain conditions exception.
—————————————————- ————————–
In addition to the covenants set forth above, the Sphere Facility and related guarantees and guarantee and pledge agreements contain certain customary representations and warranties, affirmative and negative covenants and events of default. The Sphere Facility includes certain restrictions on the following capabilities MSG LV and MSGE Group To take certain actions (and subject to the various exceptions and baskets specified therein) set forth in the Sphere Facility and related guarantee, guarantee and pledge agreements, including the following: (i) incur additional indebtedness; (ii) in Las Vegas Sphere, Live Entertainment Company Retained Interest, or real property intended to be developed as MSG Sphere London; (iii) make investments, loans or advances to others; (iv) pay dividends and distributions (which would limit MSG LV’s ability to make cash distributions to the company); (v) change the scope of its business; enter into certain transactions; (vii) amend organizational documents; (viii) merge or consolidate; (ix) make certain dispositions.
Manages the credit agreement for the Sphere Facility, managed by MSGE Group and related guarantee and pledge agreements are filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, of this report on Form 8-K. The description of the protocols contained herein is fully qualified by reference to the protocols, which are incorporated by reference into this item 1.01.
Item 2.03 Creation of Direct Financial Obligations or Obligations Under Subscriber Off-Balance Sheet Arrangements.
The information contained in Item 1.01 above is hereby incorporated by reference into Item 2.03.
Item 9.01 Financial Statements and Appendices.
(d) Exhibits
Exhibit
Number Description
10.1 Credit Agreement, dated as of December 22, 2022, among MSG Las
Vegas, LLC, the lenders party thereto and JPMorgan Chase Bank, N.A.,
as administrative agent.
10.2 Pledge and Security Agreement, dated as of December 22, 2022, by and
between MSG Las Vegas, LLC and JPMorgan Chase Bank, N.A.
10.3 Guaranty Agreement, dated as of December 22, 2022, by MSG
Entertainment Group, LLC in favor of JPMorgan Chase Bank, N.A. on
behalf of the lenders.
10.4 Pledge Agreement, dated as of December 22, 2022, by MSG
Entertainment Group, LLC in favor of JPMorgan Chase Bank, N.A. on
behalf of the lenders.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
—————————————————- ————————–
© Edgar Online, source glimpse
