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Item 1.01.
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Entry into a Material Definitive Agreement.
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On May 31, 2016, Boyd Gaming Corporation (“Boyd”) announced it has entered into an Equity Purchase Agreement (the “Purchase Agreement”) to sell its 50% equity interest in Marina District Development Holding Company, LLC (“MDDHC”), the parent company of the Borgata Hotel Casino & Spa in Atlantic City, New Jersey (“Borgata”), to MGM Resorts International (“MGM”).
Borgata was developed as a 50%/50% joint venture between Boyd Atlantic City, Inc., a wholly-owned subsidiary of Boyd (“Seller”), and MAC, Corp., an indirect, wholly-owned subsidiary of MGM (“MAC”). Boyd will sell its interest in Borgata to MGM pursuant to a Purchase Agreement, entered into on May 31, 2016, by and among MGM, Boyd and Seller.
Pursuant to the terms and subject to the conditions of the Purchase Agreement, MGM will acquire from Seller 49% of its 50% membership interest in MDDHC and, immediately thereafter, MDDHC will redeem Seller’s remaining 1% membership interest in MDDHC (collectively, the “Transaction”). Following the Transaction, MDDHC will be a wholly-owned subsidiary of MGM.
In consideration for the Transaction, MGM will pay to Boyd $900 million, adjusted for outstanding indebtedness, cash, and working capital on the closing date. Boyd estimates that the initial net cash proceeds will be approximately $600 million, subject to adjustments. These initial proceeds do not include Boyd’s 50% share of potential future property tax settlement benefits. Borgata estimates that it is entitled to property tax refunds totaling $180 million, including amounts due under court decisions rendered in its favor, and estimates for open tax appeals.
The completion of the Transaction is subject to customary closing conditions and the receipt of all required regulatory approvals, including, among others, approval by the New Jersey Casino Control Commission and the New Jersey Division of Gaming Enforcement. Subject to the satisfaction or waiver of conditions in the Purchase Agreement, Boyd currently expects the Transaction to close during the third quarter of 2016.
The Purchase Agreement contains customary representations, warranties, covenants and termination rights, as well as indemnification obligations of each of Boyd and MGM. Seller has also agreed, during the period between the execution of the Purchase Agreement and the consummation of the Transaction, (i) to cause MDDHC to carry on its business in the ordinary course consistent with past practice and (ii) not to solicit proposals regarding alternate transactions and not to engage in discussions concerning, furnish information with respect to or enter into any agreement with any third party concerning such alternative transactions.
The foregoing description of the Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.