Item 1.01. Entry into a Material Definitive Agreement.
Equity Purchase Agreement
On October 27, 2021, Scientific Games Corporation, a Nevada corporation
("Scientific Games"), and BCP Acquisitions LLC, a Delaware limited liability
company ("Buyer") affiliated with Brookfield Capital Partners Ltd., entered into
an Equity Purchase Agreement (the "Purchase Agreement"). Pursuant to the terms
and subject to the conditions set forth in the Purchase Agreement, Buyer has
agreed to acquire from Scientific Games, and certain of its subsidiaries, all of
the issued and outstanding equity interests of the companies (the "Transaction")
which together constitute Scientific Games' Lottery business (the "Lottery
Business").
The total consideration to be paid to Scientific Games in connection with the
Transaction is $6.05 billion, consisting of $5.825 billion in cash, subject to
certain customary adjustments as set forth in the Purchase Agreement, and an
earnout payment of up to $225 million in cash based on the achievement of
certain adjusted EBITDA targets in 2022 and 2023.
The Purchase Agreement provides that completion of the Transaction is subject to
the satisfaction or waiver of customary closing conditions, including, among
other things, obtaining certain required regulatory approvals.
The Purchase Agreement contains customary representations, warranties and
covenants related to the Lottery Business and the Transaction. Between the date
of the Purchase Agreement and the completion of the Transaction, subject to
certain exceptions, Scientific Games agrees to, and to cause its subsidiaries
to, operate the Lottery Business in the ordinary course of business in all
material respects and to, among other things, use commercially reasonable
efforts to preserve intact the business organizations, retain current officers
and preserve relationships with customers, suppliers, employees and others.
The Purchase Agreement includes customary termination provisions for both
Scientific Games and Buyer. Both Scientific Games and Buyer will have the right
to terminate the Purchase Agreement if the closing has not occurred by July 27,
2022, subject to a three-month extension in the event that conditions relating
to regulatory approvals have not been satisfied as of that date.
The representations and warranties of Scientific Games and Buyer contained in
the Purchase Agreement have been made solely for the benefit of the parties to
the Purchase Agreement. In addition, such representations and warranties (a)
have been made only for purposes of the Purchase Agreement, (b) have been
qualified by confidential disclosures made to Buyer in connection with the
Purchase Agreement, (c) are subject to materiality qualifications contained in
the Purchase Agreement which may differ from what may be viewed as material by
investors, (d) were made only as of the date of the Purchase Agreement or such
other date as is specified in the Purchase Agreement, (e) have been included in
the Purchase Agreement for the purpose of allocating risk between Scientific
Games and Buyer rather than establishing matters as facts and (f) will not
survive consummation of the Transaction. Accordingly, the Purchase Agreement is
included with this filing only to provide investors with information regarding
the terms of the Purchase Agreement, and not to provide investors with any other
factual information regarding Scientific Games or Buyer or their respective
subsidiaries or businesses. Investors should not rely on the representations
and warranties or any descriptions thereof as characterizations of the actual
state of facts or condition of Scientific Games or Buyer or any of their
respective subsidiaries, affiliates or businesses. Moreover, information
concerning the subject matter of the representations and warranties may change
after the date of the Purchase Agreement, which subsequent information may or
may not be fully reflected in the Scientific Games' public disclosures.
The foregoing description of the Purchase Agreement is not complete and is
qualified in its entirety by reference to the Purchase Agreement, which is filed
as Exhibit 2.1 hereto and is incorporated herein by reference.
Item 8.01. Other Events.
On October 27, 2021, Scientific Games issued a press release announcing it had
entered into the Purchase Agreement. A copy of the press release is attached as
Exhibit 99.1 hereto and is incorporated by reference herein.
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Forward-Looking Statements
This communication contains "forward-looking statements" within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as "will," "may," and "should." These
statements are based upon Scientific Games' management's current expectations,
assumptions and estimates regarding the proposed Transaction between Scientific
Games and Buyer, the expected benefits of the proposed Transaction, the expected
timing of completion of the proposed Transaction and anticipated future
financial and operating performance and results. Forward-looking statements are
not guarantees of timing, future results or performance. Therefore, you should
not rely on any of these forward-looking statements as predictions of future
events. Actual results may differ materially from those contemplated in these
statements due to a variety of risks, uncertainties and other factors, including
(i) the risk that the conditions to the closing of the proposed Transaction may
not be satisfied, (ii) the risk that a material adverse change, event or
occurrence may affect Scientific Games and Buyer prior to the closing of the
proposed Transaction and may delay the proposed Transaction or cause the
companies to abandon the proposed Transaction, (iii) the possibility that the
proposed Transaction may involve unexpected costs, liabilities or delays, (iv)
the risk that the businesses of the companies may suffer as a result of
uncertainty surrounding the proposed Transaction and (v) the risk that
disruptions from the proposed Transaction will harm relationships with
customers, employees and suppliers or (vi) that Scientific Games may be unable
to achieve expected financial, operational and strategic benefits of the
proposed Transaction, and those factors described in Scientific Games' filings
with the Securities and Exchange Commission (the "SEC"), including Scientific
Games' current reports on Form 8-K, quarterly reports on Form 10-Q and its
latest annual report on Form 10-K filed with the SEC on March 1, 2021 (including
under the headings "Forward-Looking Statements" and "Risk Factors").
Forward-looking statements speak only as of the date they are made and, except
for Scientific Games' ongoing obligations under the U.S. federal securities
laws, Scientific Games undertakes no obligation to publicly update any
forward-looking statements whether as a result of new information, future events
or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
2.1 Equity Purchase Agreement, dated as of October 27, 2021, by and
between Scientific Games Corporation and BCP Acquisitions LLC*
99.1 Press Release, dated October 27, 2021, issued by Scientific Games
Corporation
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document
* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
The registrant agrees to furnish supplementally to the SEC a copy of any omitted schedule
or exhibit upon request by the SEC.
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