Item 1.01 Entry into a Material Definitive Agreement.
On August 4, 2021, MGM Resorts International, a Delaware corporation (the
"Company" or "MGM") entered into a Master Transaction Agreement (the
"Transaction Agreement") by and among MGM Growth Properties LLC, a Delaware
limited liability company ("MGP"), MGM Growth Properties Operating Partnership
LP, a Delaware limited partnership (the "MGP LP"), VICI Properties Inc., a
Maryland corporation ("Parent"), Venus Sub LLC, a Delaware limited liability
company ("REIT Merger Sub"), VICI Properties L.P., a Delaware limited
partnership ("Parent OP") and VICI Properties OP LLC, a Delaware limited
liability company ("New Parent OP"). The Transaction Agreement provides that,
subject to the terms and satisfaction or waiver of certain customary conditions
set forth therein, (i) MGP will merge with and into REIT Merger Sub, with REIT
Merger Sub being the surviving entity (the "REIT Merger" and such surviving
entity, the "REIT Surviving Entity"), (ii) following the REIT Merger, the REIT
Surviving Entity will merge with and into MGP LP, with MGP LP being the
surviving entity (the "Partnership Merger" and, together with the REIT Merger,
the "Mergers") and (iii) following the Partnership Merger and immediately
following New Parent OP's consummation of certain financing transactions on the
date the Transaction (as defined below) closes (the "Closing Date"), New Parent
OP will redeem a certain number of units of New Parent OP (the "New Parent OP
Units") held by MGM and/or its subsidiaries for an aggregate cash amount equal
to $4.404 billion (the "Partial Redemption"). The Mergers and the other
transactions contemplated by the Transaction Agreement are collectively referred
to herein as the "Transaction."
Pursuant to the terms and subject to the conditions and limitations set forth in
the Transaction Agreement: (A) at the effective time of the REIT Merger, (i) the
class B common share of MGP, no par value per share, owned by MGM, will
automatically be cancelled for no consideration, (ii) each class A common share
of MGP, no par value per share (a "class A common share"), issued and
outstanding immediately prior to the effective time of the REIT Merger will
automatically be cancelled, retired and converted into the right to receive
1.366 shares of common stock, par value $0.01 per share, of Parent (the "Parent
Common Stock," and such consideration, the "REIT Per Share Merger
Consideration") plus cash in lieu of fractional shares less any applicable tax
withholdings and (iii) each limited partnership unit of MGP LP, all of which are
held by the Company and certain of its subsidiaries, will automatically be
canceled, retired and converted into the right to receive 1.366 units in New
Parent OP and (B) upon the consummation of the Partial Redemption, a certain
number of New Parent OP Units held by MGM and/or its subsidiaries (the "Redeemed
Units") will be redeemed for an aggregate redemption price of $4.404 billion
resulting in MGM retaining an approximate 1% interest in New Parent OP.
Pursuant to the terms and subject to the conditions and limitations set forth in
the Transaction Agreement, on the Closing Date, MGM Lessee, LLC, a subsidiary of
MGM, will enter into an Amended and Restated Master Lease (the "Amended and
Restated Master Lease") with MGP Lessor, LLC, a subsidiary of Parent ("MGP
Lessor"), pursuant to which properties owned by MGP Lessor, LLC will be leased
to MGM Lessee, LLC for an initial total annual rent of $860 million (or in the
event that the MGM Springfield property has not been acquired by MGP Lessor
prior to the Closing Date, such total annual rent will be reduced by an amount
equal to $30 million until the date the MGM Springfield property is included in
and governed by the Amended and Restated Master Lease) and an initial term of 25
years, with three 10-year renewal options. Rent under the Amended and Restated
Master Lease will escalate at a rate of 2.0% per annum for the first 10 years
and thereafter at the greater of 2.0% per annum or the consumer price index,
subject to a 3.0% cap. The Company will provide a guarantee of MGM Lessee, LLC's
obligations under the Amended and Restated Master Lease.
Pursuant to the terms and subject to the conditions and limitation set forth in
the Transaction Agreement, on the Closing Date, MGM, certain of its affiliates
that own New Parent OP Units immediately after the Partial Redemption and
certain of their transferees (the "Protected Parties") will enter into a Tax
Protection Agreement (the "Tax Protection Agreement") with Parent and New Parent
OP, pursuant to which New Parent OP will indemnify the Protected Parties against
a full or partial acceleration of any deferred tax liability for a period of 15
years (beginning on the Closing Date) incurred as a result of one or more
actions described in the Tax Protection Agreement that may be taken by New
Parent OP or its affiliates.
The consummation of the Transaction is subject to customary conditions,
including among others: (i) approval of the Transaction Agreement, the REIT
Merger and the other transactions contemplated by the Transaction Agreement by
the affirmative vote of the holders of at least a majority of the voting power
of the Outstanding Voting Shares of MGP (as defined in the Amended and Restated
Limited Liability Company Agreement of the Company, as amended) which condition
was satisfied by delivery of a written consent by MGM (the "MGM Written
Consent"), (ii) the approval of the issuance of Parent Common Stock in the REIT
Merger (the "Parent Stock Issuance") by the affirmative vote of a majority of
the votes cast at the meeting of Parent's shareholders (the "Parent Shareholder
Approval"), (iii) no temporary restraining order or other judgment, order or
decree issued by any governmental authority prohibiting consummation of the
Mergers or any other transactions contemplated in the Transaction Agreement and
no law having been enacted by any governmental authority after the date of the
Transaction
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Agreement that makes illegal the consummation of the Mergers, (iv) the
effectiveness of a registration statement related to the Parent Stock Issuance,
(v) the shares of Parent Common Stock to be issued in the REIT Merger have been
approved for issuance on the New York Stock Exchange, subject to official notice
of issuance, (vi) the receipt of applicable gaming approvals, (vii) the delivery
of certain tax opinions and (viii) certain other customary conditions relating
to the parties' representations and warranties and the performance of their
respective obligations in the Transaction Agreement.
The Transaction Agreement contains certain customary representations and
warranties from each of the Company, MGP, and Parent with respect to each party
and its business. The representations and warranties made by MGP and Parent are,
subject to certain exceptions, qualified by disclosures made in such party's
disclosure schedules and Securities and Exchange Commission ("SEC") filings.
The Transaction Agreement provides that either MGP's or Parent's board of
directors, and, in the case of MGP, the conflicts committee, may change its
recommendation in respect of the Transaction Agreement and the Transaction, in
which case the other party will have the ability to terminate the Transaction
Agreement and receive a termination fee. MGP may also terminate the Transaction
Agreement to enter into a superior proposal, in which case it would have to pay
a termination fee to Parent. The MGM Written Consent is irrevocable, except in
the event that MGP's board of directors and its conflicts committee change its
recommendation in respect of the Transaction Agreement and the Transaction in
response to a superior proposal or intervening event prior to the Parent
Shareholder Approval.
The foregoing description of the Transaction Agreement is included to provide
you with information regarding its terms. It does not purport to be a complete
description and is qualified in its entirety by reference to the full text of
the Transaction Agreement, which is filed as Exhibit 2.1 hereto and is
incorporated herein by reference. The representations, warranties and covenants
contained in the Transaction Agreement were made only for purposes of such
Transaction Agreement and as of specific dates, were made solely for the benefit
of the parties to the Transaction Agreement, may be subject to limitations
agreed upon by the parties and qualified by disclosures not reflected in the
text of the Transaction Agreement, are not intended to provide factual, business
or financial information about the parties, may be subject to a contractual
standard of materiality different from those generally applicable to
shareholders or may have been use for purposes of allocating risk between the
parties, rather than establishing matters as facts. Moreover, information
concerning the subject matter of the representations, warranties and covenants
may change after the date of the Transaction Agreement, which subsequent
information may or may not be fully reflected in the Company's public
disclosure. Accordingly, the representations, warranties and covenants contained
in the Transaction Agreement or any descriptions thereof should not be relied
upon as characterizations of the actual state of facts or condition of the
Company or any of the other parties to the Transaction Agreement.
CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
This Form 8-K contains forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995, including statements regarding
the completion of the Transaction. Forward-looking statements can be identified
. . .
Item 8.01 Other Items.
On August 4, 2021, MGM issued a press release announcing its entry into the
Transaction Agreement. 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 Master Transaction Agreement, by and among the Company, MGP,
MGP LP, Parent, REIT Merger Sub, Parent OP and New Parent OP,
dated as of August 4, 2021*
99.1 Press Release
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Certain schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation
S-K. MGM agrees to furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.
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