Item 1.01 Entry into a Material Definitive Agreement.
New Credit Facility
In connection with the closing of the Main Event Acquisition, Dave &
Buster's, Inc., a wholly owned subsidiary of the Company (the "Borrower"),
entered into a senior secured credit agreement (the "Credit Agreement") by and
among the Borrower, as borrower, Dave & Buster's Holdings, Inc., as parent
guarantor ("D&B Holdings"), the other guarantors from time to time party
thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as
administrative agent and collateral agent and Deutsche Bank Securities, Inc.,
JPMorgan Chase Bank, N.A., BMO Capital Markets Corp., Wells Fargo Securities,
LLC, Truist Securities, Inc., Capital One, N.A. and Fifth Third Bank, National
Association, as joint lead arrangers joint bookrunners.
The Facility (as defined below) created by the Credit Agreement refinanced the
Borrower's $500 million existing revolving credit facility and term loan
facility (together, the "Existing Facility").
The Credit Agreement provides for a (i) 5-year revolving credit facility in the
aggregate principal amount of $500 million (the "Revolving Facility" and loans
made thereunder the "Revolving Loans") and (ii) a 7-year Term Loan B facility in
the aggregate principal amount of $850 million (the "Term Facility" and loans
made thereunder the "Term Loans" and, together with the Revolving Facility, the
"Facility"). The proceeds of the loans made under the Facility will be used by
the Borrower to refinance the Existing Facility, pay the consideration for the
Main Event Acquisition and to pay related fees and expenses and for other
general corporate purposes of the Borrower and its subsidiaries, as shall be
determined by the Borrower from time to time. The Facility commenced on June 29,
2022. The Revolving Facility expires by its terms on the earlier of (i) the date
occurring ninety-one (91) days prior to the final stated maturity of the
Borrower's 7.625% senior secured notes due 2025 (the "Senior Secured Notes") if
the aggregate outstanding principal amount of the Senior Secured Notes exceeds
$100 million on such date and (ii) June 29, 2027, unless extended in accordance
with terms set forth in the Credit Agreement. The Term Facility expires by its
terms on June 29, 2029, unless extended in accordance with terms set forth in
the Credit Agreement. The Facility is secured on a pari passu basis with the
Senior Secured Notes.
A portion of the Revolving Facility not to exceed $35 million will be available
for the issuance of letters of credit by the letter of credit issuers
thereunder.
The Facility may be increased through incremental facilities, at the election of
the Borrower, by an amount equal to the greater of (i) $400 million and
(ii) 0.75 times the Borrower's trailing twelve-month Adjusted EBITDA (as defined
in the Credit Agreement and on a pro forma basis), plus additional amounts that
are (i) secured on a pari passu basis so long as after giving effect to such
additional amounts, the Borrower's pro forma net first lien leverage ratio does
not exceed 3.00:1.00, (ii) secured on a junior basis so long as after giving
effect to such additional amounts, the Borrower's pro forma net secured leverage
ratio does not exceed 4.00:1.00 and (iii) unsecured so long as after giving
effect to such additional amounts, either the Borrower's pro forma (a) net total
leverage ratio does not exceed 4.00:1.00 or (b) interest coverage ratio is not
less than 2.00:1.00. The Credit Agreement provides that the Borrower may net its
unrestricted cash for purposes of calculating the leverage ratios.
Certain subsidiaries of the Borrower will guarantee the Borrower's obligations
under the Credit Agreement, pursuant to the terms set forth in the Credit
Agreement.
The Term Loans will bear interest at Term SOFR (plus an additional credit spread
adjustment of 0.10%) or ABR (each, as defined in the Credit Agreement) plus
(i) in the case of SOFR loans, 5.00% per annum and (ii) in the case of ABR
loans, 4.00% per annum. The Revolving Loans will bear interest subject to a
pricing grid based on the Borrower's net total leverage, at Term SOFR (plus an
additional credit spread adjustment of 0.10%) plus a spread ranging from 4.25%
to 4.75% per annum or ABR plus a spread ranging from 3.25% to 3.75% per annum.
Unused commitments under the Revolving Facility incur commitment fees ranging
from 0.30% to 0.50%, based on the Borrower's net total leverage.
The Credit Agreement also contains certain affirmative and negative covenants
that the Borrower considers customary for facilities of this type applicable to
the Borrower, its restricted subsidiaries, and, in certain cases, D&B Holdings,
including, furnishing to lenders periodic financial information of the Borrower
or its parent entities and reports and registration statements filed with the
Securities and Exchange Commission; maintenance of corporate existence and
ability to do business; limitations on use of proceeds; limitations on business
activities; limitations on the ability to, among other things, incur additional
debt, pay dividends and make other restricted payments, create liens, make
investments and acquisitions, engage in sales of assets, enter into
sale-leaseback transactions, enter into transactions with affiliates, transfer
all or substantially all of our assets or enter into merger or consolidation
transactions. The Revolving Facility also requires the Borrower and its
restricted subsidiaries to maintain a maximum net total leverage ratio of
3.50:1.00 as of the end of each fiscal quarter, solely to the extent 35% of the
Revolving Facility (other than $30 million of undrawn letters of credit and any
letters of credit that have been cash collateralized) is drawn on such date.
. . .
Item 2.01. Completion of Acquisition or Disposition of Assets.
The description of the Main Event Acquisition set forth under "Introductory
Note" above is incorporated herein by reference.
In accordance with the Main Event Acquisition, the Company paid closing
consideration to Ardent, RedBird and certain minority sellers in cash in the
amount $686.0 million, which is net of preliminary and customary purchase price
adjustments and remains subject to final post-closing settlement between the
Company and Main Event. The Company funded the closing payment with borrowings
under the Facility.
The material terms of the Merger Agreement were previously disclosed in Item
1.01 of the Company's Current Report on Form 8-K filed on April 6, 2022, which
is incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On the Closing Date, Christopher Morris was appointed as Chief Executive Officer
of the Company and as a member of the Board of Directors (the "Board") of the
Company. There are no transactions between the Company and Mr. Morris that would
require disclosure under Item 404(a) of Regulation S-K. There are no family
relationships between Mr. Morris and any director, executive officer or person
nominated or chosen by the Company to become a director or executive officer of
the Company within the meaning of Item 401(d) of Regulation S-K. Further, there
is no arrangement or understanding between Mr. Morris and any other persons
pursuant to which Mr. Morris was selected as an officer and director. The
material terms of Mr. Morris' employment arrangement were previously disclosed
in Item 5.02 of the Company's Current Report on Form 8-K filed on April 6,
2022 , which is incorporated herein by reference.
Additionally, on the Closing Date, Kevin Sheehan completed his role as Interim
Chief Executive Officer and continued in his capacity as Chair of the Board and
as a member of the Finance Committee of the Board. The lead independent director
role of the Board was eliminated in connection with Mr. Sheehan's completion of
his Interim Chief Executive Officer duties.
Item 7.01. Regulation FD Disclosure.
On June 29, 2022, the Company issued a press release regarding the consummation
of the Main Event Acquisition. A copy of the press release is furnished as
Exhibit 99.1 hereto and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The Company intends to file the financial statements required to be filed
pursuant to Item 9.01(a) of Form 8-K by amendment to this report not later than
71 calendar days after the date this report is required to be filed.
(b) Pro Forma Financial Information.
The Company intends to file any pro forma financial information required by Item
9.01(b) of Form 8-K by amendment to this report not later than 71 calendar days
after the date this report is required to be filed.
(d) Exhibits.
Exhibit No. Description
10.1 Senior Secured Credit Agreement, dated June 29, 2022, by and among
the Dave & Buster's, Inc., as borrower, Dave & Buster's
Holdings, Inc., as parent guarantor, the other guarantors from time
to time party thereto, the lenders party thereto and Deutsche Bank
AG New York Branch, as administrative agent and collateral agent and
Deutsche Bank Securities, Inc., JPMorgan Chase Bank, N.A., BMO
Capital Markets Corp., Wells Fargo Securities, LLC, Truist
Securities, Inc., Capital One, N.A. and Fifth Third Bank, National
Association, as joint lead arrangers joint bookrunners.
99.1 Press Release of Dave & Buster's Entertainment, Inc., dated
June 29, 2022.
104 The cover page from this Current Report on Form 8-K, formatted in
Inline XBRL.
* Certain schedules and exhibits have been omitted in accordance with Item
601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will
be furnished to the Securities and Exchange Commission upon request.
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