Item 1.01 Entry into a Material Definitive Agreement.
The information set forth under Item 2.03 of this Current Report on Form 8-K
regarding the DDTL Facilities, as defined below, is incorporated into this Item
1.01 by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On April 17, 2020, Madison Square Garden Sports Corp. (formerly The Madison
Square Garden Company, and referred to herein as the "Registrant") distributed
all of the outstanding common stock of Madison Square Garden Entertainment Corp.
(formerly MSG Entertainment Spinco, Inc., and referred to herein as "MSG
Entertainment") to its stockholders (the "Distribution"). MSG Entertainment
owns, directly or indirectly, the entertainment business previously owned and
operated by the Registrant through its MSG Entertainment business segment and
the sports booking business previously owned and operated by the Registrant
through its MSG Sports business segment (collectively, the "Spinco Business").
In the Distribution, (a) each holder of the Registrant's Class A common stock,
par value $0.01 per share, received one share of MSG Entertainment Class A
common stock, par value $0.01 per share, for every share of the Registrant's
Class A common stock held of record as of the close of business, New York City
time, on April 13, 2020 (the "Record Date") and (b) each holder of the
Registrant's Class B common stock, par value $0.01 per share, received one share
of MSG Entertainment Class B common stock, par value $0.01 per share, for every
share of the Registrant's Class B common stock held of record as of the close of
business, New York City time, on the Record Date.
Subsequent to the Distribution, the Registrant will no longer include the
financial results of the Spinco Business for the purpose of its own financial
reporting. After the date of the Distribution, the historical financial results
of the Spinco Business will be reflected in the consolidated financial
statements of the Registrant as discontinued operations for all periods
presented through the Distribution date, beginning with the financial statements
to be filed for the year ended June 30, 2020. Filed as Exhibit 99.1 to this
Current Report on Form 8-K are the unaudited pro forma consolidated balance
sheet of the Registrant as of December 31, 2019 and the unaudited pro forma
condensed consolidated statements of operations of the Registrant for the six
months ended December 31, 2019 and the years ended June 30, 2019, 2018 and 2017,
in each case giving effect to the Distribution.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On April 17, 2020, MSG NYR Holdings, LLC and MSG NYK Holdings, LLC, two indirect
wholly-owned subsidiaries of the Registrant, each entered into a separate
delayed draw term loan credit agreement with MSG Entertainment Group, LLC, a
wholly-owned subsidiary of MSG Entertainment, as lender (the "DDTL Lender"). The
credit agreement for MSG NYK Holdings, LLC (the "Knicks DDTL Facility Borrower")
provides for a $110 million senior unsecured delayed draw term loan facility
(the "Knicks DDTL Facility") and the credit agreement for MSG NYR Holdings, LLC
(the "Rangers DDTL Facility Borrower") provides for a $90 million senior
unsecured delayed draw term loan facility (the "Rangers DDTL Facility" and,
together with the Knicks DDTL Facility, the "DDTL Facilities").
The DDTL Facilities will mature and any unused commitments thereunder will
expire on October 17, 2021. Borrowings under the DDTL Facilities will bear
interest at a variable rate equal to either, at the election of the applicable
borrower, (i) LIBOR plus 2.00% per annum or (ii) a base rate plus 1.00% per
annum. Subject to the borrowing conditions, each of the DDTL Facilities may be
drawn in up to four separate borrowings of $10 million or more. Proceeds of
borrowings under the DDTL Facilities will be used for general corporate
purposes.
The availability of each of the DDTL Facilities to the respective borrowers is
subject to certain conditions, including (a) the liquidity (including cash on
hand and availability under revolving credit commitments) of the Registrant, MSG
Sports, LLC, the Knicks DDTL Facility Borrower and its subsidiaries and the
Rangers DDTL Facility Borrower and its subsidiaries must be (i) less than
$50.0 million immediately prior to giving effect to any borrowing, and (ii) less
than $75 million immediately after giving effect to any borrowing, and (b) with
respect to the Knicks DDTL Facility, the Knicks DDTL Facility Borrower and its
subsidiaries must have used commercially reasonable efforts to raise additional
financing ("New Third-Party Debt"), including additional commitments under
existing revolving facilities, prior to drawing on the Knicks DDTL Facility to
the extent permitted by the debt policies of the National Basketball Association
(the "NBA"). In addition, the commitments of the DDTL Lender to make advances
under the Knicks DDTL Facility will be permanently reduced and the Knicks DDTL
Facility will be subject to mandatory prepayments in an amount equal to the net
cash proceeds received by the Registrant, MSG Sports, LLC, the Knicks DDTL
Facility Borrower, or the subsidiaries of the Knicks DDTL Facility Borrower from
any New Third-Party Debt.
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Pursuant to the NBA debt policies, the NBA has consented (the "NBA Consent
Letter") to the incurrence of the indebtedness under the Knicks DDTL Facility.
The NBA Consent Letter provides that the Knicks DDTL Facility Borrower and its
subsidiaries (including the New York Knicks basketball team) will, among other
matters, (i) operate the team in a first class manner, consistent with the
manner in which NBA teams generally are operated, as determined by the NBA
Commissioner in his sole discretion, and (ii) maintain sufficient net working
capital and cash reserves to pay expenses, liabilities and obligations of the
team in the ordinary course and in a timely fashion. In addition, the Knicks
DDTL Facility Borrower and its subsidiaries (including the New York Knicks
basketball team) have agreed with the NBA to not transfer certain
basketball-related assets and to not make distributions to MSG Sports without
first providing the NBA with advance notice and not receiving the objection of
the NBA Commissioner.
The DDTL Facilities each contain certain customary representations and
warranties and affirmative and negative covenants, including, among others,
financial reporting, notices of material events, and limitations on
indebtedness, liens, investments, asset dispositions, restricted payments, and
affiliate transactions. In addition, each of the DDTL Facilities includes
certain customary events of default, including, among others, defaults based on
certain bankruptcy and insolvency events, nonpayment, cross-defaults to other
debt, breach of specified covenants, ERISA events, material monetary judgments,
change of control events and the material inaccuracy of the representations and
warranties. If an event of default occurs and is continuing under either of the
DDTL Facilities, the DDTL Lender may, subject in the case of the Knicks DDTL
Facility to the NBA Consent Letter, terminate the commitments under the
agreement, declare amounts outstanding, including principal and accrued interest
and fees, payable immediately, and enforce any and all of its rights and
interests. The above description does not purport to be complete and is
qualified in its entirety by reference to the Knicks DDTL Facility and Rangers
DDTL Facility, which are attached as Exhibit 10.1 and Exhibit 10.2,
respectively, to this Current Report on Form 8-K and incorporated into this Item
2.03 by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On April 17, 2020, the Registrant filed with the Secretary of State of the State
of Delaware an amendment (the "Amendment") to its amended and restated
certificate of incorporation to change its name from The Madison Square Garden
Company to Madison Square Garden Sports Corp. effective as of 11:59 p.m. on
April 17, 2020. The Registrant amended its by-laws to change its name from The
Madison Square Garden Company to Madison Square Garden Sports Corp. effective as
of 11:59 p.m. on April 17, 2020 (the "Amended By-Laws").
The above description does not purport to be complete and is qualified in its
entirety by reference to the Amendment and the Amended By-Laws, which are
attached as Exhibit 3.1 and Exhibit 3.2, respectively, to this Current Report on
Form 8-K and incorporated into this Item 5.03 by reference.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information
The unaudited pro forma consolidated balance sheet of the Registrant as of
December 31, 2019 and the unaudited pro forma condensed consolidated statements
of operations of the Registrant for the six months ended December 31, 2019 and
the years ended June 30, 2019, 2018 and 2017 are filed as Exhibit 99.1 to this
Current Report on Form 8-K.
(d) Exhibits
3.1 Amendment to the Amended and Restated Certificate of Incorporation of
Madison Square Garden Sports Corp., dated April 17, 2020.
3.2 Amended By-Laws of Madison Square Garden Sports Corp., dated April 17,
2020.
10.1 Delayed Draw Term Loan Credit Agreement, dated April 17, 2020, between
MSG NYK Holdings, LLC and MSG Entertainment Group, LLC.
10.2 Delayed Draw Term Loan Credit Agreement, dated April 17, 2020, between
MSG NYR Holdings, LLC and MSG Entertainment Group, LLC.
99.1 Unaudited pro forma consolidated balance sheet of Madison Square
Garden Sports Corp. as of December 31, 2019 and the unaudited pro forma
condensed consolidated statements of operations of Madison Square Garden
Sports Corp. for the six months ended December 31, 2019 and the years
ended June 30, 2019, 2018 and 2017.
104 Cover Page Interactive Data File (embedded within the inline XRBL
document).
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