UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement.
On June 30, 2021, MGM Resorts International (the “Company”) entered into (i) an Equity Purchase Agreement (the “EPA”) with MGM CC Holdings, Inc., a Nevada corporation and wholly owned subsidiary of the Company (“IW Purchaser”), and Infinity World Development Corp, a Nevada corporation (“Seller”), pursuant to which the Company, through IW Purchaser, will purchase the 50% membership interest in CityCenter Holdings, LLC (“Holdings”) held by Seller and (ii) a Master Transaction Agreement (the “MTA”) with CityCenter Land, LLC, a Nevada limited liability company and wholly owned subsidiary of Holdings (“MTA Seller”) and BCORE Ace Holdings LLC, a Delaware limited liability company and an affiliate of Blackstone Real Estate Income Trust, Inc. (“MTA Purchaser”), pursuant to which MTA Seller is to enter into a sale and leaseback transaction with MTA Purchaser.
Equity Purchase Agreement
Upon the terms and subject to the conditions set forth in the EPA, the Company, through IW Purchaser, will purchase the 50% membership interest in Holdings held by the Seller for cash consideration of $2.125 billion (the “Equity Purchase”). As a result of the Equity Purchase, Holdings will become an indirect wholly owned subsidiary of the Company. The EPA contemplates a reverse termination fee of $63.75 million payable by IW Purchaser to Seller in the event the EPA is terminated under certain circumstances. The transaction is expected to close at the end of the third quarter of 2021, subject to certain closing conditions.
The representations, warranties and covenants contained in the EPA were made only for purposes of the EPA and as of the specific date (or dates) set forth therein and were solely for the benefit of the parties to such agreement and are subject to certain limitations as agreed upon by the contracting parties. In addition, the representations, warranties and covenants contained in the EPA may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries of the EPA and should not rely on the representations, warranties and covenants contained therein, or any descriptions thereof, as characterizations of the actual state of facts or conditions of the Company, IW Purchaser or any other parties thereto.
This description of the EPA is qualified in its entirety by reference to the full text of the EPA attached hereto as Exhibit 2.1. Exhibits and schedules that have been excluded from the text of the EPA attached hereto will be supplementally furnished to the Commission upon request.
Master Transaction Agreement
On June 30, 2021, the Company and MTA Seller entered into the MTA with MTA Purchaser, which provides for, among other things, (i) the transfer by certain subsidiaries of the Company of the real estate assets related to the Aria Las Vegas (the “Aria Property”) to a wholly-owned subsidiary of MTA Seller (“Aria PropCo”) and (ii) the transfer by certain subsidiaries of the Company of the real estate assets related to the Vdara Las Vegas (the “Vdara Property” and, together with the Aria Property, collectively, the “Property”) to a wholly-owned subsidiary of MTA Seller (“Vdara PropCo” and, together with Aria PropCo, collectively, “PropCo” or the “Landlord”). Landlord will lease the Property to a newly formed wholly-owned subsidiary of the Company (the “Tenant”), and the Tenant will in turn sublease the Aria Property and the Vdara Property to the subsidiaries of Holdings that currently operate such properties.
Upon the terms and subject to the conditions set forth in the MTA, Buyer will acquire all membership interests in PropCo for total cash consideration of $3.89 billion. The transaction is expected to close at the end of the third quarter of 2021, subject to certain closing conditions.
Pursuant to the terms of the MTA, the Property will be leased by the Landlord to the Tenant pursuant to a lease (the “Lease”) with an initial base rent of $215 million per annum (the “Rent”) for a term of thirty years with three ten-year renewal options. The Rent will escalate annually throughout the term of the lease at a rate of 2% per annum for the first fifteen years and thereafter equal to the greater of 2% and the CPI increase during the prior year subject to a cap of 3%. In addition, the Lease will require that the Tenant be obligated to spend a specified percentage of net revenues over a rolling five-year period at the Property on capital expenditures and for the Tenant and the Company
to comply with certain financial covenants, which, if not met, will require the Tenant to maintain cash security or provide one or more letters of credit in favor of the Landlord in an amount equal to the rent for the succeeding one year period. The Company will provide a guarantee of Tenant’s obligations under the Lease.
The representations, warranties and covenants contained in the MTA were made only for purposes of the MTA and as of the specific date (or dates) set forth therein and were solely for the benefit of the parties to such agreement and are subject to certain limitations as agreed upon by the contracting parties. In addition, the representations, warranties and covenants contained in the MTA may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries of the MTA and should not rely on the representations, warranties and covenants contained therein, or any descriptions thereof, as characterizations of the actual state of facts or conditions of the Company.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
In connection with the Equity Purchase, on June 30, 2021, William Grounds executed a resignation letter to be effective upon the earlier of (i) the closing of the EPA Purchase and (ii) delivery of written notice from Mr. Grounds of an earlier effective date, resigning from his position as a member of the board of directors of the Company.
Item 8.01 Other Items.
On June 30, 2021, the Company issued a press release with respect to the transactions in connection with the EPA and the MTA. A copy of the press release is included as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
| (a) | Not applicable. |
| (b) | Not applicable. |
| (c) | Not applicable. |
| (d) | Exhibits: |
| Exhibit No. | Description | |
| 2.1 | Equity Purchase Agreement by and between MGM CC Holdings, Inc., Infinity World Development Corp and, solely for purposes of Article X thereof, MGM Resorts International, dated as of June 30, 2021* | |
| 2.2 | Master Transaction Agreement by and among MGM Resorts International, CityCenter Land, LLC and BCORE Ace Holdings LLC, dated as of June 30, 2021* | |
| 99.1 | Press Release | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
| * | Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. MGM Resorts International agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 1, 2021
| MGM Resorts International | ||
| By: |
/S/ Jessica Cunningham | |
| Name: Jessica Cunningham | ||
| Title: Senior Vice President, Legal Counsel and Assistant Secretary | ||