Item 5. Other Information
ITEM 5. OTHER INFORMATION
Second Amended and Restated Credit Agreement
On May 3, 2022, the Company entered into a Second Amended and Restated Credit Agreement, by and among the Company, certain subsidiaries of the Company from time to time party thereto, as guarantors (the “Guarantors”), the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and as collateral agent, and the other parties party thereto (the “Second Amended and Restated Credit Agreement”).
The Second Amended and Restated Credit Agreement provides for a $1,000.0 million revolving credit facility (the “Revolving Credit Facility”), a $550.0 million term loan A facility (the “Term Loan A”) and a $1,000.0 million term loan B facility (the “Term Loan B”) (together, the “Credit Facilities”).
Interest Rate and Fees
The interest rates per annum applicable to loans under the Credit Facilities are, at the Company’s option, equal to either a secured overnight financing rate plus a 0.10% credit spread adjustment (“Term SOFR”) or a base rate, in each case, plus an applicable margin. The applicable margin for each of the Revolving Credit Facility and the Term Loan A is initially 1.75% for Term SOFR loans and 0.75% for base rate loans until the Company provides financial reports for the first full fiscal quarter following closing and, thereafter, will range from 2.25% to 1.50% per annum for Term SOFR loans and 1.25% to 0.50% per annum for base rate loans, in each case depending on the Company’s total net leverage ratio. The applicable margin for the Term Loan B is 2.75% per annum for Term SOFR loans and 1.75% per annum for base rate loans. The Term Loan B is subject
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to a Term SOFR “floor” of 0.50% per annum and a base rate “floor” of 1.50% per annum. The Term Loan A and Revolving Credit Facility are subject to a Term SOFR “floor” of 0.00% per annum and a base rate “floor” of 1.00%. In addition, the Company will pay a commitment fee on the unused portion of the commitments under the Revolving Credit Facility at a rate that is initially 0.25% per annum, until the Company provides financial reports for the first full fiscal quarter following closing, and thereafter, will range from 0.35% to 0.20% per annum, depending on the Company’s total net leverage ratio.
Amortization
The Term Loan A amortizes in quarterly installments equal to 1.25% of the aggregate principal amount outstanding thereof, with the remaining balance payable on the date that is five years from the date of the closing of the Second Amended and Restated Credit Agreement.
The Term Loan B amortizes in quarterly installments equal to 0.25% of the aggregate principal amount outstanding thereof, with the remaining balance payable on the date that is seven years from the date of the closing of the Second Amended and Restated Credit Agreement.
The Revolving Credit Facility is not subject to amortization and the commitments thereunder will terminate on the date that is five years from the date of the closing of the Second Amended and Restated Credit Agreement.
Prepayments
The Credit Facilities require the Company to prepay outstanding loans, subject to certain exceptions (including a right of reinvestment of asset sale proceeds and casualty proceeds in the Company’s business) with a percentage of the proceeds of certain asset sales and casualty events (which percentage ranges from 0% to 100% depending on the Company’s total net leverage ratio), the incurrence of certain indebtedness and a percentage of annual excess cash flow (which percentage ranges from 0% to 50% depending on the Company’s total net leverage ratio). The Company may prepay all or any portion of the loans and terminate commitments under the Credit Facilities prior to maturity without premium or penalty, subject to reimbursement of any breakage costs of the lenders and subject, in the case of certain prepayments of the Term Loan B with lower priced credit facilities during the period of six months following the closing, to a 1% premium.
Guarantee and Security
All obligations under the Credit Facilities are unconditionally guaranteed by each of the Company’s existing and future direct and indirect wholly owned material domestic subsidiaries, subject to certain exceptions. All obligations of the Company under the Credit Facilities and the guarantees of those obligations are secured by a first priority pledge of substantially all of the assets of the Company and of the Guarantors, subject to certain exceptions. The property pledged by the Company and the Guarantors includes, but is not limited to, a first priority pledge of the leasehold interests of Penn Tenant, LLC in real property subject to lease from GLP Capital, L.P. (the “Penn Master Lease”) under long term lease arrangements and of Pinnacle MLS, LLC in real property subject to lease from Gold Merger Sub, LLC (the “PNK Master Lease”, and together with the Penn Master Lease, the “Master Leases”) under long term lease arrangements; a first priority pledge in certain material fee-owned real property of the Company and the Guarantors; a first priority pledge of all of the equity interests owned by the Company and the Guarantors in their respective domestic subsidiaries; and a first priority pledge of the equity interests owned by the Company and the Guarantors in their respective first-tier foreign subsidiaries (not to exceed 65% of the voting equity interests and 100% of the non-voting equity interests of each of such first-tier foreign subsidiaries), in each case, subject to certain exceptions.
Certain Covenants and Events of Default
The Credit Facilities contain customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and certain of its subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, pay dividends and make other restricted payments and prepay certain indebtedness that is subordinated in right of payment to the obligations under the Credit Facilities. The Credit Facilities contain two financial covenants: a maximum total net leverage ratio of 4.50 to 1.00, which is subject to a step up to 5.00 to 1.00 in the case of certain significant acquisitions, and a minimum interest coverage ratio of 2.00 to 1.00. The Credit Facilities also contain certain customary affirmative covenants and events of default, including the occurrence of a change of control (as defined in the documents governing the Credit Facilities), termination of the Master Leases and certain defaults under the Master Leases.
The foregoing description is only a summary and is qualified in its entirety by the Second Amended and Restated Credit Agreement, which is filed herewith as Exhibit 10.3 is incorporated herein by this reference.
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ITEM 6. EXHIBITS
Exhibit
Number Description of Exhibit
10.1 Ninth Amendment to the Penn Master Lease between GLP Capital L.P. and Penn Tenant LLC dated January 14, 2022 (“Penn Master Lease”) is hereby incorporated by reference to Exhibit 10.14(i) to the Company’s Current Report on Form 10-K, filed for the fiscal year ended December 31, 2021. (SEC File No. 000-24206)
10.2 Fifth Amendment to PNK Master Lease, dated as of January 14, 2022, by and between Pinnacle MLS, LLC and Gold Merger Sub, LLC is hereby incorporated by reference to Exhibit 10.15(e) to the Company’s Current Report on Form 10-K, filed for the fiscal year ended December 31, 2021. (SEC File No. 000-24206)
10.3*† Second Amended and Restated Credit Agreement, dated as of May 3, 2022, by and among Penn National Gaming, Inc., as borrower, the guarantors from time to time party thereto, the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and as collateral agent.
31.1* CEO Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* CFO Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1** CEO Certification pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2** CFO Certification pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Inline XBRL File (included in Exhibit 101)
* Filed herewith.
** Furnished herewith.
† Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PENN NATIONAL GAMING, INC.
Dated: May 5, 2022 By: /s/ Christine LaBombard
Christine LaBombard
Senior Vice President and Chief Accounting Officer
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.