Prospectus
Supplement Summary
This
summary highlights information contained in, or incorporated by reference into, this prospectus supplement and the accompanying prospectus
and in the documents incorporated by reference herein or therein. This summary may not contain all of the information that you should
consider before investing in the Units. You should carefully read this prospectus supplement and the accompanying prospectus, especially
the risks of investing in the Units discussed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and beginning on page S-19 of this prospectus supplement, along with our consolidated financial
statements and notes to those consolidated financial statements and the other information incorporated by reference in this prospectus
supplement and the accompanying prospectus, before making an investment decision. Unless we state otherwise or the context indicates
otherwise, references to “Bally’s,” “BALY,” the “Company,” “we,” “us,”
“our” and “ours” in this prospectus supplement and the accompanying prospectus refer to Bally’s Corporation,
a Delaware corporation, together with its consolidated subsidiaries.
Our Company
Our
objective is to be one of the leading omni-channel gaming and interactive entertainment companies in the United States.
We
are already a leading owner and operator of land-based casinos in eight states in the United States:
Property
|
|
Location
|
|
Type
|
|
Built/
Acquired
|
|
|
Gaming
Square
Footage
|
|
|
Slot
Machines
|
|
|
Table
Games
|
|
|
Hotel
Rooms
|
|
|
Food
and
Beverage
Outlets
|
|
|
Race-
book
|
|
|
Sports-
book
|
|
Twin
River Casino Hotel
|
|
Lincoln,
RI
|
|
Casino
and Hotel
|
|
2007
|
|
|
168,072
|
|
|
4,067
|
|
|
114
|
|
|
136
|
|
|
21
|
|
|
Yes
|
|
|
Yes
|
|
Hard
Rock Biloxi
|
|
Biloxi,
MS
|
|
Casino
and Resort
|
|
2007
|
|
|
50,984
|
|
|
983
|
|
|
55
|
|
|
479
|
|
|
18
|
|
|
No
|
|
|
Yes
|
|
Tiverton
Casino Hotel
|
|
Tiverton,
RI
|
|
Casino
and Hotel
|
|
2018
|
|
|
33,840
|
|
|
1,000
|
|
|
32
|
|
|
83
|
|
|
7
|
|
|
Yes
|
|
|
Yes
|
|
Dover
Downs Hotel and Casino
|
|
Dover,
DE
|
|
Casino,
Hotel and Raceway
|
|
2019
|
|
|
84,075
|
|
|
2,060
|
|
|
37
|
|
|
500
|
|
|
14
|
|
|
Yes
|
|
|
Yes
|
|
Black
Hawk Casinos(1)
|
|
Black
Hawk, CO
|
|
3 Casinos
|
|
Multiple
|
|
|
34,632
|
|
|
570
|
|
|
33
|
|
|
—
|
|
|
8
|
|
|
No
|
|
|
Yes
|
|
Casino
KC
|
|
Kansas
City, MO
|
|
Casino
|
|
2020
|
|
|
39,788
|
|
|
848
|
|
|
17
|
|
|
—
|
|
|
3
|
|
|
No
|
|
|
No
|
|
Casino
Vicksburg
|
|
Vicksburg,
MS
|
|
Casino
and Hotel
|
|
2020
|
|
|
32,608
|
|
|
499
|
|
|
8
|
|
|
89
|
|
|
4
|
|
|
No
|
|
|
Yes
|
|
Bally’s
Atlantic City
|
|
Atlantic
City, NJ
|
|
Casino
and Hotel
|
|
2020
|
|
|
83,569
|
|
|
1,481
|
|
|
93
|
|
|
1,214
|
|
|
10
|
|
|
No
|
|
|
Yes
|
|
Eldorado
Resort Casino Shreveport
|
|
Shreveport,
LA
|
|
Casino
and Hotel
|
|
2020
|
|
|
49,916
|
|
|
1,382
|
|
|
54
|
|
|
403
|
|
|
6
|
|
|
No
|
|
|
No
|
|
Mont
Bleu Casino & Spa
|
|
Lake Tahoe,
NV
|
|
Casino
and Hotel
|
|
2021
|
|
|
48,456
|
|
|
418
|
|
|
17
|
|
|
436
|
|
|
7
|
|
|
Yes
|
|
|
Yes
|
|
|
(1)
|
Includes
the Golden Gates, Golden Gulch and Mardi Gras casinos.
|
We
acquired the rights to the name “Bally’s” in 2020 as part of our strategy to become the leading U.S. full-service sports
betting/iGaming company with physical casinos and online gaming solutions united under a single, prominent brand. We took other key steps
to build our iGaming and sports betting business in the past year, including:
|
·
|
entering
into a strategic partnership with Sinclair Broadcast Group (“Sinclair”) to leverage
the Bally’s brand and combine our sports betting technology with Sinclair’s expansive
natural footprint, which includes 188 local TV stations, 19 regional sports networks, the
STIRR streaming service, the Tennis Channel and five stadium digital TV and internet sports
networks;
|
|
·
|
signing
a definitive agreement to acquire Bet.Works Corp. (“Bet.Works”), a sports betting
platform provider to operators in Colorado, New Jersey, Indiana and Iowa; and
|
|
·
|
acquiring
SportCaller, a leading B2B free-to-play game provider, and Monkey Knife Fight, the third-largest
fantasy sports platform in North America, in early 2021.
|
We
are a Delaware corporation with our global headquarters in Providence, Rhode Island.
Announced Combination
On
April 13, 2021, we announced the terms of a recommended offer pursuant to the Takeover Code to acquire all of the issued and to be issued ordinary share capital of Gamesys for a mixture of cash and shares of our common stock (the “Combination”).
Gamesys is a leading international online gaming operator that provides entertainment to a global consumer base. Gamesys currently offers bingo and casino games to its players using brands that include
Jackpotjoy, Virgin Games, Botemania, Vera&John, Heart Bingo, Megaways, Rainbow Riches Casino and Monopoly Casino, and focuses on building its diverse portfolio of distinctive and recognizable brands that deliver best-in-class player experience and
gaming content. Under the
terms of the Combination, Gamesys shareholders would have the option to receive, for each of their shares of Gamesys, 1,850 pence in
cash or shares of our common stock (at an exchange ratio of 0.343 for each Gamesys share) or a combination of both. Certain of
Gamesys’ current shareholders holding 25.6% of
Gamesys’ shares have agreed to receive shares of our common stock in the Combination. The maximum
cash consideration payable to Gamesys shareholders, if only the former Gamesys founders and Gamesys executives elect to receive
shares of our common stock, would amount to approximately £1.6 billion.
It
is intended that the Combination will be effected by means of a Court-approved scheme of arrangement between Gamesys and its
shareholders under part 26 of the Companies Act 2006 (the “Scheme”). The Combination is, among other things, subject to
Gamesys’ shareholder approval at (1) a Court of Justice in England and Wales (the “Court”)-convened meeting
of the Gamesys shareholders (the “Court Meeting”) and (2) a general meeting of the Gamesys’ shareholders (the
“General Meeting”).
In
order to be effective, among other things, the Scheme must be approved by a majority of the Gamesys
shareholders who are present and voting, whether in person or by proxy, at the Court Meeting and who represent 75% or more in value of
the votes cast at the Court Meeting. Additionally, a special resolution implementing the Scheme must be passed by Gamesys shareholders
representing at least 75% of votes cast at the General Meeting. The Combination is also conditioned upon our shareholders approving our
issuance of common stock to Gamesys shareholders, as well as regulatory approvals and other customary closing conditions.
Common Stock
Offering
Concurrently
with this offering, we are offering $600 million of our common stock (the “Common Stock
Offering”). We have also granted the underwriters, an option to purchase up to an additional $90 million of our common
stock from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus
supplement.
Our
common stock is listed on the NYSE under the symbol “BALY.” On April 9, 2021, the closing sale price of our common stock
on NYSE was $61.70 per share.
This
offering of Units is not contingent on the consummation of the Combination or the Common Stock Offering, and the consummation of the
Combination or the Common Stock Offering is not contingent on the consummation of this offering, and, as a result, it is possible that
this offering occurs and the Combination or the Common Stock Offering does not occur and vice versa, and we cannot give you any assurances
that the Combination will be consummated on the terms described herein or the time frame contemplated herein, if at all. See
“Use of Proceeds” and see “Risk Factors—Risks Related to Our Common Stock and this Offering—This offering
is not conditioned upon the completion of the Combination. If the Combination is not consummated, we will have broad discretion on the
use of the net proceeds of this offering.” and “—Risk Factors Relating to the Combination— We may fail to consummate
the Combination or may not consummate it on the terms described herein.” If the Combination is not consummated, we will have broad
discretion on the use of the net proceeds of this offering.
This
prospectus supplement is not an offer to sell or a solicitation of an offer to buy any securities offered in the Common Stock Offering.
Financing for
the Combination
We
have obtained a binding commitment pursuant to a commitment letter and an interim facilities agreement from Deutsche Bank AG, London
Branch, Goldman Sachs USA and Barclays Bank PLC (the "Lenders") to provide fully committed bridge term loan facilities up to
£1,435.0 million and €336.0 million (collectively, the “Bridge Commitment”) to fund the Combination. The
availability of the borrowings under the commitment letter (or if the commitments under the commitment letter are not funded on the
closing date, the interim facilities agreement) are subject to the satisfaction of certain customary conditions for the financing of
an acquisition of a public company formed under the laws of England & Wales. Proceeds from this offering and any proceeds
from this offering and any proceeds from the Common Stock Offering will be used to pay the fees, costs and expenses incurred in
connection with this offering and the Common Stock Offering and then to partially fund the cash portion of the purchase price of the
Combination. Upon the consummation of this offering and the Common Stock Offering, all or substantially all of the net proceeds may
be contributed to a newly formed subsidiary established for the purpose of consummating the Combination and may be converted into
pounds sterling and deposited into one or more escrow accounts with one or more of the banks that have committed to finance the
Combination, which escrow deposits will reduce the financing commitments under the Bridge Commitment, and any equity raise in
excess of $850 million will reduce the GLPI Commitment (as defined below) on a dollar-for-dollar basis. Any additional net proceeds
from this offering or the Common Stock Offering may, at our discretion, also be deposited into such escrow accounts and further
reduce the financing commitments under the Bridge Commitment.
We
have also entered into a commitment letter (the “GLPI Commitment Letter”) with Gaming & Leisure Properties, Inc.
(“GLPI”) pursuant to which GLPI has irrevocably committed to purchase shares of our common stock, or, subject to U.S. regulatory
requirements, warrants, with a value of up to $500 million (the “GLPI Commitment”), at a price per share based on volume-weighted
average price determined over a period of time prior to such issuance. We may use the proceeds to fund a portion of the aggregate cash
consideration for the Combination, acquisition costs and fees and expenses incurred by us and our affiliated entities related to the
Combination, or to refinance the existing indebtedness of Gamesys. The GLPI Commitment contemplates that Bally’s and GLPI will
effect one or more takeout sale and leaseback transactions, thereby reducing the number of Bally’s shares (or warrants) to be issued
to GLPI. Under certain circumstances, we may be required to obtain shareholder approval prior to the issuance of the entire amount of
shares or warrants issuable under the GLPI Commitment.
In
lieu of the Bridge Commitment and the GLPI Commitment, we may pursue one or more offerings of private placements of debt or equity securities,
sale and leaseback transactions and/or bank financings, in each case, to finance the Combination (including the refinancing of existing
indebtedness of Gamesys) and/or refinance our existing credit facilities and senior unsecured notes (the “Alternative Refinancing”).
Strategic Rationale
for Combination
Bally’s
and Gamesys believe that the online gambling and sports betting sector in the U.S. continues to exhibit many characteristics that are
structurally attractive with a steep anticipated growth trajectory as favorable regulatory progress throughout the U.S. leads to the
opening of new sports betting and iGaming markets. This opportunity is reflected in industry analysts estimating a potential total addressable
market size in excess of $45 billion. Bally’s and Gamesys believe that having a combination of both proven, developed technology
and land-based platforms across key U.S. states, with global brands, existing customer bases and complementary product offerings will
be key to taking advantage of these growth opportunities. The following factors have also been taken into consideration by Bally’s
and Gamesys in connection with the Combination:
|
·
|
Bally's believe that the Combination represents a compelling strategic and financial
opportunity to improve the offering and experience for customers;
|
|
·
|
the
Combination would accelerate Bally’s long-term growth strategy, the objective of which
is to become the premier, truly integrated, omni-channel U.S. gaming company with a B2B2C
business;
|
|
·
|
Gamesys’
existing platform would benefit from Bally’s fast-growing land-based and online gaming
platform in the U.S., providing market access through Bally’s operations in key states
as the nascent iGaming and sports betting opportunity develops at this pivotal moment in
the market’s evolution;
|
|
·
|
Bally’s
would benefit from Gamesys’ proven technology platform, expertise and highly respected
and experienced management team. These offerings, integrated with Bally’s online sports
betting platform via the pending Bet.Works acquisition and the transformational media partnership
with Sinclair Broadcast Group, would place the Combined Group in a strong position to capitalize
on the quickly developing U.S. online market;
|
|
·
|
the
Combination would create one of the broadest portfolios in market of omni-channel cross-sell opportunities with land-based gaming, online
sports betting, iCasino, poker, bingo, daily fantasy sports and free-to-play games;
|
|
·
|
the
Combination would create significant value for Bally’s by bringing in-house a technology
platform to further build out iGaming offerings and create a unified player development database;
|
|
·
|
the
Combined Group is expected to be highly cash flow generative, enabling it to pursue growth
opportunities through reinvestment and strategic M&A. The greater number of registered
accounts and monthly active customers that would result from the Combination, together with
a more diversified player community and an enhanced customer database, are expected to create
opportunities to increase growth and profitability and
|
|
·
|
the Combined Group will be committed to responsible gaming and industry leadership in environmental, social and corporate governance
efforts, including targeting carbon neutrality and good corporate governance.
|
Sources and
Uses
The following table outlines
the illustrative estimated sources and uses of funds. In the event that we consummate the Combination, the final dollar amounts of sources
and uses identified below will likely vary from the estimates reflected in the following table, in particular due to the terms of any
financing we obtain (and particularly if we pursue an Alternative Refinancing in lien of drawing on the Bridge Commitment, and/or the
GLPI Commitment), the timing of the possible closing of the Proposed Transactions and fluctuations in exchange rates. See “Use of
Proceeds.” Amounts in pounds sterling have been converted into U.S. dollars at the exchange rate of $11.3787 per pound. Amounts
in euros have been converted into U.S. dollars at the exchange rate of $1.1901 per euro.
Sources of Funds
(in millions):
|
|
|
Uses of Funds
(in millions):
|
|
This offering(1)
|
|
$
|
250
|
|
|
Gamesys cash purchase price(5)
|
|
$
|
2,143
|
|
Common Stock Offering(1)
|
|
|
600
|
|
|
Repayment of Gamesys debt(6)
|
|
|
693
|
|
Gamesys cash and cash equivalents(2)
|
|
|
248
|
|
|
Estimated fees and expenses(7)
|
|
|
300
|
|
GLPI Commitment(3)
|
|
|
500
|
|
|
Cash to balance sheet
|
|
|
25
|
|
Bridge Commitment (4)
|
|
|
1,563
|
|
|
|
|
|
|
|
Total Sources
|
|
$
|
3,161
|
|
|
Total Uses
|
|
$
|
3,161
|
|
|
(1)
|
Does not include up to approximately $127.5 million of additional
gross proceeds that may be received as a result of the underwriters’ exercise of their options to purchase additional shares and
Units.
|
|
(2)
|
Represents estimated cash and cash equivalents of Gamesys at
the time of the Combination that are anticipated to be used in connection with the Combination, the repayment of certain outstanding
indebtedness of Gamesys and costs and expenses.
|
|
(3)
|
Represents the gross commitment amount provided by GLPI.
|
|
(4)
|
Assumes initial bridge commitment of $2,378 million is reduced
by $815 million of proceeds from this offering. See “—Financing for the Combination” and “Risk Factors—The unaudited pro forma condensed combined financial information and other adjusted information included in this prospectus supplement
is unaudited and the actual financial condition and results of operations after the Combination may differ materially.”
|
|
(5)
|
Consistent with the “Unaudited Pro Forma Condensed Combined
Financial Information” set forth herein, Gamesys cash purchase price assumes the minimum number of Bally’s shares to be issued
in connection with the Combination per agreement with certain Gamesys shareholders is 9,605,201. Any increase in the portion of Gamesys
shareholders who elect to receive shares of our common stock will result in a decrease in the Gamesys cash purchase price.
|
|
(6)
|
Represents existing indebtedness of Gamesys as of December
31, 2020, all of which will be required to be repaid or amended upon consummation of the Combination.
|
|
(7)
|
Includes anticipated estimated fees and expenses, including
those relating to this offering, the Common Stock Offering, the Combination, the Bridge Commitment, the repayment of certain outstanding
indebtedness of Gamesys, and certain currency hedges relating to the anticipated Gamesys cash purchase price.
|
Recent Developments
Preliminary
Results for the First Quarter of 2021
Preliminary
estimates of our net revenue and Adjusted EBITDA for the quarter ended March 31, 2021 are presented below. We have not yet finalized
our operating results for this period, and our consolidated financial statements as of and for the quarter ended March 31, 2021
are not expected to be available until after this offering is completed. Consequently, our actual operating results for the quarter ended
March 31, 2021 will not be available to you prior to investing in this offering.
Our
actual operating results remain subject to the completion of our quarter-end closing process, which includes review by management and
our audit committee. While carrying out such procedures, we may identify items that would require us to make adjustments to the preliminary
estimates of our net revenue and Adjusted EBITDA set forth below. As a result, our actual net revenue and Adjusted EBITDA could be different
than the expectation set forth below and such differences could be material. Additionally, our estimates of our net revenue and Adjusted
EBITDA are forward-looking statements based solely on information available to us as of the date of this prospectus supplement and may
differ materially from our actual operating results as a result of developments that occur after the date of this prospectus supplement.
Therefore, you should not place undue reliance on these preliminary estimates of our operating results. See “Cautionary Note Regarding
Forward-Looking Statements.”
The
preliminary estimates of our net revenue and Adjusted EBITDA included below has been prepared by, and is the responsibility of, our management.
Our independent registered public accountants have not audited, reviewed or performed any procedures with respect to such preliminary
estimates of our net revenue and Adjusted EBITDA. Accordingly, Deloitte & Touche LLP expresses no opinion or any other form
of assurance with respect thereto. The information presented herein should not be considered a substitute for the financial information
to be filed with the SEC in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 once it becomes available.
We have no intention or obligation to update the preliminary estimates of our net revenue and Adjusted EBITDA set forth below prior to
filing our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. You should consider carefully the information
set forth in the section entitled “Risk factors” in this prospectus supplement and under “Part I. Item 1A. Risk
Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and all other information and
risk factors contained elsewhere in this prospectus supplement for additional information regarding factors that could result in differences
between the preliminary estimated net revenue and Adjusted EBITDA that is presented below and the actual financial results we will report.
We
currently estimate that for the three months ended March 31, 2021, our net revenue was greater than $185 million and Adjusted EBITDA
was greater than $50 million, compared to net revenue and Adjusted EBITDA of $109.1 million and $22.1 million, respectively, for the
quarter ended March 31, 2020.
Net
income is the most closely comparable GAAP measure to Adjusted EBITDA, but we are unable to present net income for the three months ended
March 31, 2021 at this time without unreasonable effort or expense given that, among other things, we are in the process of our
quarterly closing procedures.
Purchase of Topicana Las Vegas Hotel and
Casino
On April 13, 2021, we agreed to purchase the Tropicana Las Vegas, Nevada casino ("Tropicana") from GLPI, a publicly traded gaming focused
real estate investment. We estimate the transaction to be valued at approximately $300 million. The purchase price for the Tropicana property's
non-land assets is $150 million. In addition, we have agreed to lease the land underlying the Tropicana property from GLPI for an initial
term of 50 years at annual rent of $10.5 million, subject to increase over time. We and GLPI will also will enter into a sale-and-leaseback
transaction relating to our Black Hawk, CO and Rock Island, IL casino properties for a cash purchase price of $150 million payable by
GLPI. The lease will have initial annual fixed rent of $12 million, subject to increase over time. We and GLPI have agreed to use commercially
reasonable efforts to negotiate and enter into definitive documents with respect to these transactions as promptly as practicable in order
to fully reflect the contemplated terms.
Annual Meeting
Proposals
On
April 8, 2021, we filed a proxy statement (the “2021 Proxy Statement”) with the SEC related to our 2021 annual shareholder
meeting (the “Annual Meeting”), which is scheduled to be held on May 18, 2021. Among other proposals, the proxy statement
includes proposals to (1) approve an increase in the total number of our authorized common shares from 100,000,000 to 200,000,000,
(2) authorize 10,000,000 shares of preferred stock and to provide that our board of directors is authorized to prescribe the series
and the number of the shares of each series of preferred stock and the voting powers, designations, preferences, limitations, restrictions
and relative rights of the shares of each series of preferred stock, and (3) approve an equity plan under which up to 4,250,000
common shares would be issuable, subject to adjustment, to directors, executives and employees. Only shareholders of record as of the
close of business on March 19, 2021 will be entitled to notice of and to vote at the Annual Meeting.
Corporate Information
Our
principal executive offices are located at 100 Westminster Street, Providence, Rhode Island 02903 and our telephone number is (401) 475-8474.
Our website is www.ballys.com. Information found on our website is not part of this prospectus supplement.
The
Offering
The summary below describes
the principal terms of the Units, the purchase contracts and the amortizing notes. Certain of the terms and conditions described below
are subject to important limitations and exceptions. The “Description of the Units,” “Description of the Purchase Contracts,”
and “Description of the Amortizing Notes” sections of this prospectus supplement, together with the “Description of
Debt Securities” section of the accompanying prospectus, contain a more detailed description of the terms and conditions of the
Units, the purchase contracts and the amortizing notes. As used in this section, the terms “we,” “us,” and “our”
mean Bally’s Corporation and do not include any subsidiary of Bally’s Corporation.
Issuer
|
|
Bally’s Corporation, a Delaware corporation.
|
|
|
|
Number of Units Offered
|
|
5,000,000 Units
|
|
|
|
Underwriters’ Option
|
|
We have granted the underwriters an option, exercisable within a 30-day period, to purchase up to an additional 750,000 Units at the public offering price less the underwriting discount.
|
|
|
|
Stated Amount of Each Unit
|
|
$50.00 per Unit
|
|
|
|
Components of Each Unit
|
|
Each Unit is comprised of two parts:
· a
prepaid stock purchase contract issued by us (a “purchase contract”); and
· a
senior amortizing note issued by us (an “amortizing note”).
Unless redeemed by us in connection with a
combination termination redemption or settled earlier at the holder’s option or at our option, each purchase contract will,
subject to postponement in certain limited circumstances, automatically settle on April 15, 2024 (such date, as so postponed
(if applicable), the “mandatory settlement date”). Upon any settlement on the mandatory settlement date, we will deliver
not more than shares and not less than shares of our common
stock per purchase contract, subject to adjustment, based upon the applicable settlement rate and applicable market value of our
common stock, as described below under “Description of the Purchase Contracts—Delivery of Common Stock.”
Each
amortizing note will have an initial principal amount of $ , will bear interest at the rate of % per annum and will have a final installment
payment date of April 15, 2024. On each January 15, April 15, July 15 and October 15, commencing on July 15,
2021, we will pay equal quarterly cash installments of $ per amortizing note (except for the July 15, 2021 installment payment, which
will be $ per amortizing note), which cash payment in the aggregate per year will be equivalent to % per year with respect to each $50.00
stated amount of Units.
The return to an investor on a Unit will
depend upon the return provided by each component. The overall return will consist of the value of the shares of our common stock delivered
upon settlement of the purchase contracts and the cash installments paid on the amortizing notes.
|
Each Unit May Be Separated Into Its Components
|
|
Each Unit may be separated by a holder into its
constituent purchase contract and amortizing note on any business day during the period beginning on, and including, the business day
immediately following the date of initial issuance of the Units to, but excluding, the second scheduled trading day immediately preceding
April 15, 2024 or, if earlier, the second scheduled trading day immediately preceding any “early mandatory settlement date”
or “combination redemption settlement date.” Prior to separation, the purchase contracts and amortizing notes may only be
purchased and transferred together as Units. See “Description of the Units—Separating and Recreating Units.”
|
|
|
|
A Unit May Be Recreated From Its Components
|
|
If you hold a separate purchase contract and a separate amortizing note, you may combine the two components to recreate a Unit. See “Description of the Units—Separating and Recreating Units.”
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Listing
|
|
We
have applied to list the Units on the NYSE under the symbol “BALX”, subject to satisfaction of its minimum listing
standards with respect to the Units. However, we cannot assure you that the Units will be approved for listing. If approved for listing,
we expect trading on the NYSE to begin within 30 calendar days after the Units are first issued. We will not initially apply to list the
separate purchase contracts or the separate amortizing notes on any securities exchange or automated inter- dealer quotation system, but
we may apply to list such separate purchase contracts and separate amortizing notes in the future as described under “Description
of the Units—Listing of Securities.” Prior to this offering, there has been no public market for the Units.
Our common stock is listed on the NYSE under the
symbol “BALY.”
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|
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Use of Proceeds
|
|
We intend to use the net proceeds from this offering
of Units and the Common Stock Offering (including any net proceeds resulting from the underwriters’ exercise of their option) to
partially fund the cash portion of the purchase price of our announced Combination.
Upon the consummation of this offering, all or
substantially all of the net proceeds may be contributed to a newly formed subsidiary established for the purpose of consummating the
Combination and may converted into pounds sterling and deposited into one or more escrow accounts with one or more of the banks that have
committed to finance the Combination, which escrow deposits will reduce the financing commitments under the Bridge Commitment, and
any equity raise in excess of $850 million will reduce the GLPI Commitment on a dollar-for-dollar basis. Any additional net proceeds
from this offering or the Common Stock Offering may, at our discretion, also be deposited into such escrow accounts and further reduce
the financing commitments under the Bridge Commitment. If the Combination is terminated, lapses or is withdrawn for any reason prior to
the consummation of the Combination, the amount in escrow will be released to us and, after payment of any cash redemption amount and/or repurchase price, used for general corporate purposes, which may include
repayment of debt, repurchases of our common stock, capital expenditures, acquisitions and investments. We cannot give you any assurances
that the Combination will be consummated on the terms described herein or the time frame contemplated herein, if at all. See “Risk
Factors.”
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Concurrent Common Stock Offering
|
|
Concurrently
with this offering of Units, we are offering $ 600 million of our common stock (or up to $90 million aggregate offering value if
the underwriters for that offering exercise their option to purchase additional shares of common stock) pursuant to a separate prospectus
supplement. This prospectus supplement is not an offer with respect to the concurrent Common Stock Offering. There can be no assurance
that the Common Stock Offering will be completed. The completion of this Units offering is not contingent on the completion of the Common
Stock Offering, and the completion of the Common Stock Offering is not contingent on the completion of this Units offering. Neither this
offering nor the Common Stock Offering is contingent on the consummation of the Combination or any debt financing.
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|
|
|
Risk Factors
|
|
Investing in our Units
involves significant risks. See “Risk Factors” in this prospectus supplement, as well as other information included in
or incorporated by reference into this prospectus supplement and the accompanying prospectus, including our Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of the factors you should carefully consider before deciding to
invest in the Units.
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|
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United States Federal Income Tax Considerations
|
|
There is no authority directly addressing the characterization of Units or instruments similar to Units for U.S. federal income tax purposes and therefore the characterization of Units for these purposes is not entirely free from doubt. We intend to take the position that each Unit will be treated as an investment unit composed of two separate instruments for U.S. federal income tax purposes: (1) a prepaid purchase contract to acquire our common stock and (2) an amortizing note that is our indebtedness. Under this treatment, a holder of Units will be treated as if it held each component of such Units for U.S. federal income tax purposes. By acquiring a Unit, you will agree to treat (1) a Unit as an investment unit composed of two separate instruments in accordance with its form and (2) the amortizing notes as indebtedness for U.S. federal income tax purposes. If, however, the components of a Unit were treated as a single instrument, or the amortizing notes were recharacterized as equity for U.S. federal income tax purposes (even if the components of a Unit are respected as separate instruments for U.S. federal income tax purposes), the U.S. federal income tax consequences could differ from the consequences described below. Prospective investors should consult their tax advisors regarding the tax treatment of an investment in Units and whether a purchase of a Unit is advisable in the investor’s particular tax situation and the tax treatment described under “Certain United States Federal Income Tax Considerations.”
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Governing Law
|
|
The Units, the purchase contract agreement, the purchase contracts, the indenture and the amortizing notes will all be governed by, and construed in accordance with, the laws of the State of New York.
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The Purchase Contracts
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|
|
|
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Mandatory Settlement Date
|
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April 15, 2024, subject to postponement in limited circumstances.
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Mandatory Settlement
|
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On the mandatory settlement date, unless such purchase contract has been redeemed by us in connection with a combination termination redemption or earlier settled at the holder’s option or at our option, each purchase contract will automatically settle, and we will deliver a number of shares of our common stock, based on the applicable settlement rate.
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Settlement Rate for the Mandatory Settlement Date
|
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The “settlement rate” for each
purchase contract will be not more than shares and not less
than shares of our common stock (each subject to adjustment
as described herein) depending on the applicable market value of our common stock, calculated as follows:
· if
the applicable market value is greater than the threshold appreciation price (as defined below), you will receive shares of common stock
per purchase contract (the “minimum settlement rate”);
· if
the applicable market value is greater than or equal to the reference price but less than or equal to the threshold appreciation price,
you will receive a number of shares per purchase contract equal to $50.00, divided by the applicable market value; and
· if
the applicable market value is less than the reference price, you will receive shares of common stock per purchase contract (the “maximum
settlement rate”).
Each
of the maximum settlement rate and the minimum settlement rate is subject to adjustment as described below under “Description
of the Purchase Contracts—Adjustments to the Fixed Settlement Rates.”
The “applicable market value” means
the arithmetic average of the “daily VWAPs” (as defined below under “Description of the Purchase Contracts—Delivery
of Common Stock”) of our common stock on each of the 20 consecutive trading days beginning on, and including, the 21st scheduled
trading day immediately preceding April 15, 2024, subject to any adjustment upon a market disruption event.
The
“reference price” is equal to $50.00 divided by the maximum settlement rate and is approximately equal to $ , which
is the public offering price of our common stock in the concurrent Common Stock Offering described above.
The
“threshold appreciation price” is equal to $50.00 divided by the minimum settlement rate. The threshold appreciation
price, which is initially approximately $ , represents an approximately % appreciation over the reference price.
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|
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No fractional shares of our common stock will
be issued to holders upon settlement or redemption of purchase contracts. In lieu of fractional shares, holders will be entitled to receive
a cash payment of equivalent value calculated as described herein. Other than cash payments in lieu of fractional shares or, under certain
circumstances, in the event of a combination termination redemption, holders of purchase contracts will not receive any cash distributions.
|
The following table illustrates the settlement rate per purchase contract
and the value of our common stock issuable upon settlement on the mandatory settlement date, determined using the applicable market value
shown, subject to adjustment.
Applicable
Market Value of Our
Common Stock
|
Settlement
Rate
|
Value of Common
Stock
Delivered (Based on the
Applicable Market Value
Thereof)
|
Less than the reference price
|
shares of our common stock
|
Less than $50.00
|
|
|
|
Greater than or equal to the reference price but less than or equal to the threshold appreciation price
|
A number of shares of our common stock equal to $50.00 divided by the applicable market value
|
$50.00
|
|
|
|
Greater than the threshold appreciation price
|
shares of our common stock
|
Greater than $50.00
|
Early Settlement at Your Election
|
|
At any time prior to 5:00 p.m., New York
City time, on the second scheduled trading day immediately preceding April 15, 2024, you may settle any or all of your purchase contracts
early, in which case we will deliver a number of shares of our common stock per purchase contract equal to the minimum settlement rate,
which is subject to adjustment as described below under “Description of the Purchase Contracts—Adjustments to the Fixed Settlement
Rates.” The market value of our common stock on the early settlement date will not affect the early settlement rate. Your right
to settle your purchase contracts prior to the second scheduled trading day immediately preceding April 15, 2024 is subject to the
delivery of your purchase contracts.
Upon early settlement at the holder’s election
of a purchase contract that is a component of a Unit, the corresponding amortizing note will remain outstanding and beneficially owned
by or registered in the name of, as the case may be, the holder who elected to settle the related purchase contract early.
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|
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Early Settlement at Your Election Upon a Fundamental Change
|
|
At any time prior to the second scheduled
trading day immediately preceding April 15, 2024, if a “fundamental change” (as defined herein) occurs, you may settle
any or all of your purchase contracts early. If you elect to settle your purchase contracts early in connection with such fundamental
change, you will receive a number of shares of our common stock per purchase contract equal to the “fundamental change early settlement
rate” as described under “Description of the Purchase Contracts—Early Settlement Upon a Fundamental Change.”
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|
|
Upon early settlement at the holder’s election
in connection with a fundamental change of a purchase contract that is a component of a Unit, the corresponding amortizing note will remain
outstanding and beneficially owned by or registered in the name of, as the case may be, the holder who elected to settle the related purchase
contract early upon such fundamental change.
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|
Early Mandatory Settlement at Our Election
|
|
On or after January 15, 2022, we may elect to settle all, but not less than all, outstanding purchase contracts early at the “early
mandatory settlement rate” (as described under “Description of the Purchase Contracts—Early Settlement at Our Election”)
on a date fixed by us (the "early mandatory settlement date") upon not less than five business days' notice to you.
The “early mandatory settlement rate”
will be the maximum settlement rate as of the relevant “notice date” (as defined under “Description of the Purchase Contracts -- Early Settlement at Our Election”).
If we elect to settle all the purchase contracts
early, you will have the right to require us to repurchase your amortizing notes, except in certain circumstances, on the repurchase date
and at the repurchase price as described under “Description of the Amortizing Notes—Repurchase of Amortizing Notes at the
Option of the Holder.”
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|
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Combination Termination Redemption
|
|
If the closing of the Combination has not occurred on or prior to April 13, 2022 (or as may be agreed by Bally's and Gamesys and, if required,
the Court, a later date, which later date shall not in any event be later than October 12, 2022) (the “Long
Stop Date”), or if, prior to such date, the Combination is terminated, we may elect to redeem all, but not less than all, of the
outstanding purchase contracts (a “combination termination redemption”), for the applicable redemption amount, as described
below under “Description of the Purchase Contracts—Combination Termination Redemption,” by delivering notice during
the five business day period immediately following the earlier of (1) the Long Stop Date if the closing of the Combination has not
occurred on or prior to the Long Stop Date and (2) the Termination Date. Prior to the Long Stop Date, the Combination will be deemed
terminated only when the Scheme has been finally terminated in accordance with its terms and the Combination has been abandoned by us,
as determined in good faith by our board of directors.
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|
|
If the “combination termination stock price”
is equal to or less than the reference price, the redemption amount will be an amount of cash as described under “Description of
the Purchase Contracts—Combination Termination Redemption.” Otherwise, the redemption amount will be a number of shares of
our common stock equal to the combination redemption rate, calculated in the manner described under “Description of the Purchase
Contracts—Combination Termination Redemption;” provided, however, that we may elect to pay cash in lieu
of delivering any or all of such shares in an amount equal to such number of shares multiplied by the redemption market value thereof.
The “redemption market value” means
the arithmetic average of the daily VWAPs of our common stock for 20 consecutive trading days beginning on, and including, the 21st scheduled
trading day immediately preceding the scheduled combination redemption settlement date.
In the event of a combination termination redemption,
you will have the right to require us to repurchase your amortizing notes, as described under “Description of the Amortizing Notes—Repurchase
of Amortizing Notes at the Option of the Holder.”
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The Amortizing Notes
|
|
|
|
|
|
Issuer
|
|
Bally’s Corporation, a Delaware corporation
|
|
|
|
Initial Principal Amount of Each Amortizing Note
|
|
$
|
|
|
|
Installment Payments
|
|
Each installment payment of $ per amortizing note (except for the July 15, 2021 installment payment, which will be $ per amortizing note) will be paid in cash and will constitute a partial repayment of principal and a payment of interest, computed at an annual rate of %. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Payments will be applied first to the interest due and payable and then to the reduction of the unpaid principal amount, allocated as set forth on the amortization schedule set forth under “Description of the Amortizing Notes—Amortization Schedule.”
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|
|
|
Installment Payment Dates
|
|
Each January 15, April 15, July 15 and October 15, commencing on July 15, 2021, with a final installment payment date of April 15, 2024.
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Ranking
|
|
The amortizing notes are our direct, unsecured
and unsubordinated obligations and will rank equally with all of our other existing and future unsecured and unsubordinated indebtedness
from time to time outstanding. See “Description of the Amortizing Notes—Ranking” in this prospectus supplement.
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As of December 31,
2020, we had $1,100 million of debt outstanding. As of December 31, 2020, our subsidiaries (1) had approximately
$503 million of outstanding liabilities and (2) as adjusted for this offering, would have had
$548 million of outstanding liabilities, in each case including trade payables, but excluding intercompany liabilities
and deferred gains.
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|
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Repurchase of Amortizing Notes at the Option of the Holder
|
|
If
we elect to settle the purchase contracts early or in the event of a combination termination redemption, holders will have the right
to require us to repurchase their amortizing notes for cash at the repurchase price as described under “Description of the Amortizing
Notes—Repurchase of Amortizing Notes at the Option of the Holder.”
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|
|
|
Sinking Fund
|
|
None.
|
|
|
|
Trustee
|
|
U.S. Bank National Association
|
Immediately
after the consummation of the Common Stock Offering, we will have shares of common stock outstanding ( shares if the underwriters for
the Common Stock Offering exercise their option to purchase additional shares in full). The number of shares to be outstanding after the
Common Stock Offering is based on 31,894,089 shares outstanding as of March 31, 2021, and an assumed offering of 8,914,100
shares (and 1,337,115 shares being issuable pursuant to the underwriters option to purchase additional shares), which does not include:
|
·
|
any shares (or warrants) that may be issued under the GLPI Commitment;
|
|
·
|
any shares that may be issued to Gamesys shareholders in the Combination;
|
|
·
|
shares of our common stock (or shares of our common stock
if the underwriters exercise their option with respect to this offering in full) issuable upon settlement of the purchase contracts,
assuming the maximum number of shares issuable upon automatic settlement of such purchase contracts;
|
|
·
|
60,000 shares of common stock issuable upon the exercise of outstanding stock options as of March 31,
2021, at a weighted-average exercise price of $4.31 per share;
|
|
·
|
600,411 shares of common stock underlying outstanding restricted stock units and other equity awards reserved
for future issuance under existing compensation plans;
|
|
·
|
417,572 shares of common stock available to be granted under our existing equity plans;
|
|
·
|
up to 9,834,732 shares of common stock that may become issuable upon exercise of option and warrants issued
in connection with our strategic partnership with Sinclair;
|
|
·
|
up to 6,687,722 shares of our common stock that may become issuable upon exercise of penny warrants issued
in connection with our acquisition of, Monkey Knife Fight and SportCaller, and our pending acquisition of Bet.Works; and
|
|
·
|
up to 300,000 shares of our common stock that may be issuable to SportCaller selling stockholders in connection
with achievement of certain post-closing performance targets in connection with our acquisition of SportCaller.
|
Summary
Consolidated Financial Data of Bally’s
The
following selected consolidated financial data should be read together with the historical consolidated financial statements and the
accompanying notes incorporated by reference in this prospectus supplement and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. We have derived the following summary historical consolidated financial data from our audited consolidated financial statements
as of December 31, 2020 and December 31, 2019 and for the fiscal years ended December 31, 2020, December 31, 2019
and December 31, 2018, which are incorporated by reference into this prospectus supplement, and our audited consolidated financial
statements as of December 31, 2018, which are not incorporated by reference into this prospectus supplement. Our historical results
are not necessarily indicative of results to be expected in any future period.
|
|
Years Ended December 31,
|
|
(In thousands, except per share data)
|
|
2020(a)
|
|
|
2019(b)
|
|
|
2018(c)
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
372,792
|
|
|
$
|
523,577
|
|
|
$
|
437,537
|
|
(Loss) income from operations
|
|
|
(18,386
|
)
|
|
|
114,626
|
|
|
|
120,649
|
|
(Loss) income before provision for income taxes
|
|
|
(74,811
|
)
|
|
|
75,180
|
|
|
|
97,797
|
|
Net (loss) income
|
|
|
(5,487
|
)
|
|
|
55,130
|
|
|
|
71,438
|
|
Net (loss) income applicable to common stockholders
|
|
|
(5,487
|
)
|
|
|
55,130
|
|
|
|
72,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share, basic
|
|
$
|
(0.18
|
)
|
|
$
|
1.46
|
|
|
$
|
1.95
|
|
Net (loss) income per share, diluted
|
|
$
|
(0.18
|
)
|
|
$
|
1.46
|
|
|
$
|
1.87
|
|
Cash dividends declared per share
|
|
$
|
0.10
|
|
|
$
|
0.20
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
123,445
|
|
|
$
|
182,581
|
|
|
$
|
77,580
|
|
Total assets
|
|
|
1,929,855
|
|
|
|
1,021,887
|
|
|
|
782,352
|
|
Long-term debt, net of current portion
|
|
|
1,094,105
|
|
|
|
680,601
|
|
|
|
390,578
|
|
Total stockholders’ equity
|
|
$
|
326,598
|
|
|
$
|
211,411
|
|
|
$
|
298,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(d)
|
|
|
70,402
|
|
|
|
167,150
|
|
|
|
165,697
|
|
(a) Includes the results of IOC – Kansas
City, Inc. and Rainbow Casino – Vicksburg Partnership, L.P. from the date of their acquisitions on July 1, 2020 and the
results of Eldorado Resort Casino Shreveport from the date of its acquisition on December 23, 2020.
(b) Includes the results of Dover Downs Gaming &
Entertainment, Inc. (Dover Downs Hotel and Casino) from the date of its acquisition on March 28, 2019.
(c) Includes the results of Twin River-Tiverton,
LLC (Twin River Casino Hotel) from its opening on September 1, 2018 and the results of Premier Entertainment II, LLC (Newport Grand
Casino) up until its closing on August 28, 2018.
(d) “Adjusted EBITDA” is
defined as earnings before interest expense, net of interest income, provision for income taxes, depreciation and amortization,
non-operating income, acquisition, integration and restructuring expense, expansion and pre-opening expenses, Newport Grand disposal
loss, goodwill impairment, share-based compensation, rebranding, change in fair value of naming rights liabilities, gain on bargain
purchases, professional and advisory fees associated with capital return program, credit agreement amendment expenses, storm related
losses, net of insurance recoveries, pension withdrawal expense and certain other gains or losses as well as, when presented for the
Company’s reporting segments, an adjustment related to the allocation of corporate cost among segments. Adjusted EBITDA margin
is measured as Adjusted EBITDA as a percentage of revenue. Below is a reconciliation of net income to Adjusted EBITDA for the
periods presented. For further discussion of Adjusted EBITDA and its limitations, see “Special Note Regarding Non-GAAP
Financial Measures.”
|
|
Year Ended December 31,
|
|
(In thousands)
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Net (loss) income
|
|
$
|
(5,487
|
)
|
|
$
|
55,130
|
|
|
$
|
71,438
|
|
Interest expense, net of interest income
|
|
|
62,636
|
|
|
|
37,926
|
|
|
|
22,852
|
|
(Benefit) provision for income taxes
|
|
|
(69,324
|
)
|
|
|
20,050
|
|
|
|
26,359
|
|
Depreciation and amortization
|
|
|
37,842
|
|
|
|
32,392
|
|
|
|
22,332
|
|
Non-operating income
|
|
|
-
|
|
|
|
(183
|
)
|
|
|
-
|
|
Acquisition, integration and restructuring expense
|
|
|
13,257
|
|
|
|
12,168
|
|
|
|
6,844
|
|
Expansion and pre-opening expenses
|
|
|
921
|
|
|
|
-
|
|
|
|
2,678
|
|
Newport Grand disposal loss
|
|
|
-
|
|
|
|
-
|
|
|
|
6,514
|
|
Goodwill and asset impairment
|
|
|
8,659
|
|
|
|
-
|
|
|
|
-
|
|
Share-based compensation
|
|
|
17,706
|
|
|
|
3,826
|
|
|
|
(1,474
|
)
|
Rebranding
|
|
|
792
|
|
|
|
-
|
|
|
|
-
|
|
Change in value of naming rights liability
|
|
|
57,660
|
|
|
|
-
|
|
|
|
-
|
|
Gain on bargain purchase
|
|
|
(63,871
|
)
|
|
|
-
|
|
|
|
-
|
|
Professional and advisory fees associated with capital return program
|
|
|
(17
|
)
|
|
|
3,510
|
|
|
|
-
|
|
CARES Act credit (1)
|
|
|
(3,928
|
)
|
|
|
-
|
|
|
|
-
|
|
Credit Agreement amendment expenses (2)
|
|
|
810
|
|
|
|
2,915
|
|
|
|
493
|
|
Storm related losses, net of insurance recoveries (3)
|
|
|
14,095
|
|
|
|
(1,333
|
)
|
|
|
-
|
|
Bet.Works and Sinclair expenses
(4)
|
|
|
1,248
|
|
|
|
-
|
|
|
|
-
|
|
Sports and iGaming Licensing (5)
|
|
|
226
|
|
|
|
-
|
|
|
|
-
|
|
Pension withdrawal expense (6)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,698
|
|
Other (7)
|
|
|
(2,823
|
)
|
|
|
749
|
|
|
|
3,963
|
|
Adjusted EBITDA
|
|
$
|
70,402
|
|
|
$
|
167,150
|
|
|
$
|
165,697
|
|
(1)
|
Amount represents the Employee Retention Credit under the CARES Act which provides us with a refundable tax credit of 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
|
(2)
|
Credit Agreement amendment expenses include costs associated with amendments made to the our credit agreement entered into on May 10, 2019 with Citizens Bank, N.A., as administrative agent, and the lenders party thereto.
|
(3)
|
Represents losses incurred from damage resulting from Hurricane Zeta at Hard Rock Biloxi in the fourth quarter of 2020 offset by insurance recovery proceeds received for a damaged roof at Arapahoe Park racetrack and insurance recoveries associated with damage from Hurricane Nate at Hard Rock Biloxi for the respective periods.
|
(4)
|
Expenses incurred to
establish the partnership with Sinclair and acquisition costs attributable to the pending SNIPBet.Works acquisition in the fourth
quarter of 2020.
|
(5)
|
Represents costs incurred to apply for and obtain sports and iGaming licenses in various jurisdictions.
|
(6)
|
Pension withdrawal expense represents the accrual for the New England Teamsters multi-employer pension plan withdrawal liability.
|
(7)
|
Other includes the
following non-recurring items for the applicable periods (i) expenses incurred associated with the Rhode Island State Police
investigation into a former tenant in the Lincoln property and one of our former employees, (ii) a pension audit payment
representing an adjustment to a charge for out-of-period unpaid contributions, inclusive of estimated interest and penalties, to one
of our multi-employer pension plans, (iii) expenses incurred associated with the campaign attempting to create an open bid
process for the Rhode Island Lottery Contract, (iv) non-routine legal expenses incurred in connection with certain litigation
matters (net of insurance reimbursements), and (v) costs incurred in connection with the implementation of a new human
resources information system.
|
Summary
Consolidated Financial Data of Gamesys
The following summary consolidated
financial data of Gamesys as of and for the years ended December 31, 2020 and 2019 has been extracted without material adjustment
from Gamesys’ audited consolidated financial statements, incorporated by reference into this prospectus supplement. This summary
should be read in conjunction with that information. The historical results presented here are not necessarily indicative of the results
to be expected in the future or if the Combination is consummated.
Gamesys’ consolidated
financial statements are prepared in accordance with IFRS whereas our consolidated financial statements are prepared in accordance
with U.S. GAAP. In reviewing Gamesys’ consolidated financial statements, you should consider the fact IFRS differs from U.S. GAAP
in a number of significant respects. See “IFRS and U.S. GAAP.”
|
|
Years Ended
December 31,
|
|
(In £ millions, except per share data)
|
|
2020
|
|
|
2019
|
|
Statement of Comprehensive Income Data:
|
|
|
|
|
|
|
|
|
Gaming revenue
|
|
|
727.7
|
|
|
|
415.1
|
|
Net income for the year before taxes from continuing operations
|
|
|
68.7
|
|
|
|
12.0
|
|
Net income for the year after taxes from continuing operations
|
|
|
67.2
|
|
|
|
9.1
|
|
Total comprehensive income for the year attributable to owners of the parent
|
|
|
60.1
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
Net income for the year per share, basic
|
|
|
61.8
|
p
|
|
|
10.1
|
p
|
Net income for the year per share, diluted
|
|
|
61.5
|
p
|
|
|
10.0
|
p
|
Dividend declared per share
|
|
|
40
|
p
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
Cash
|
|
|
212.6
|
|
|
|
100.3
|
|
Total assets
|
|
|
1,265.5
|
|
|
|
1,211.5
|
|
Long-term debt
|
|
|
508.1
|
|
|
|
530.3
|
|
Total equity
|
|
|
519.4
|
|
|
|
464.8
|
|
|
|
|
|
|
|
|
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(a)
|
|
|
206.2
|
|
|
|
117.7
|
|
(a) “Adjusted EBITDA” is net
income for the year after taxes from continuing operations before interest expense, net tax expense, amortisation and depreciation, impairment
of purchase price intangibles, fair value adjustments on contingent consideration, severance costs, one-off tax charges, transaction related
costs and foreign exchange (gain)/loss. Management believes that Adjusted EBITDA is an important indicator of the issuer’s ability
to generate liquidity to service outstanding debt and uses this metric for such purpose. The exclusion of impairment of purchase price
intangibles, fair value adjustments on contingent consideration, severance costs, one-off tax charges, transaction related costs and foreign
exchange (gain)/loss eliminates items which management believes are either non-operational and/or non-routine. Below is a reconciliation
of net income to Adjusted EBITDA for the periods presented:
|
|
Year Ended
December 31,
|
|
(In £ millions)
|
|
2020
|
|
|
2019
|
|
Net income for the year after taxes from continuing operations
|
|
|
67.2
|
|
|
|
9.1
|
|
Interest expense, net(1)
|
|
|
24.7
|
|
|
|
22.7
|
|
Taxes expense
|
|
|
1.5
|
|
|
|
2.9
|
|
Amortisation and depreciation
|
|
|
100.0
|
|
|
|
62.2
|
|
Impairment of purchase price intangibles
|
|
|
4.1
|
|
|
|
-
|
|
EBITDA
|
|
|
197.5
|
|
|
|
96.9
|
|
Severance costs
|
|
|
1.9
|
|
|
|
-
|
|
Fair value adjustments on contingent consideration
|
|
|
-
|
|
|
|
0.5
|
|
One-off tax charges
|
|
|
0.8
|
|
|
|
6.0
|
|
Transaction-related costs
|
|
|
1.8
|
|
|
|
15.8
|
|
Foreign exchange loss/(gain)
|
|
|
4.2
|
|
|
|
(1.5
|
)
|
Adjusted EBITDA
|
|
|
206.2
|
|
|
|
117.7
|
|
(1) Interest expense, net is comprised of
interest income, interest expense and accretion on financial liabilities.
Summary
Unaudited Pro Forma Condensed Combined Financial Information
On July 1, 2020, we closed
on the acquisition of the outstanding equity securities of each of IOC-Kansas City, Inc. (“Casino KC”) and Rainbow Casino-Vicksburg
Partnership, L.P. (“Casino Vicksburg”) from Caesars Entertainment, Inc., formerly Eldorado Resorts, Inc. (“Caesars”),
for an aggregate purchase price of $230 million in cash, subject to certain customary post-closing adjustments. On December 23, 2020,
we closed on the acquisition of the outstanding equity securities of Eldorado Resort Casino Shreveport (“Shreveport”) from
Caesars for a purchase price of $140 million in cash, subject to certain customary post-closing adjustments. On April 6, 2021, we
completed the acquisition of the outstanding equity securities of MontBleu Resort Casino & Spa (“MontBleu” and together
with Casino KC, Casino Vicksburg and Shreveport, the “Acquired Companies”) from Caesars for a purchase price of $15 million
in cash, subject to certain customary post-closing adjustments.
The following summary unaudited
pro forma condensed combined financial data as of and for the year ended December 31, 2020 have been prepared to illustrate the effects
of certain adjustments that are expected to have a continuing impact on our pro forma results of operations from the Combination, the
acquisition of the Acquired Companies and the other adjustments described in the accompanying notes under the section entitled “Unaudited
Pro Forma Condensed Combined Financial Information,” as if each transaction had occurred on (a) January 1, 2020, in the
case of the Unaudited Pro Forma Consolidated Statement of Operations Data, and (b) December 31, 2020, in the case of the Unaudited
Pro Forma Consolidated Balance Sheet Data. Preparation of the unaudited pro forma condensed combined financial information is based on
estimates and assumptions deemed appropriate by management, which are described more fully under the section entitled “Unaudited
Pro Forma Condensed Combined Financial Information.”
In addition, the summary unaudited
pro forma condensed combined financial information does not purport to project the future financial position or results of operations
of the Combined Group. Future results may vary significantly from the results reflected because of various factors, including those discussed
in the section entitled “Risk Factors” beginning on page S-19 of this prospectus supplement and “Risk Factors”
included in our annual report on Form 10-K for the fiscal year ended December 31, 2020. The following summary unaudited pro
forma condensed combined financial information should be read in conjunction with “Summary Historical Consolidated Financial Data
of Bally’s” and “Summary Consolidated Financial Data of Gamesys” included elsewhere in this prospectus supplement
and the Unaudited Pro Forma Condensed Combined Financial Information included elsewhere in this prospectus supplement.
(In thousands)
|
|
Pro Forma Year
Ended December
31, 2020
|
|
Pro Forma Income Statement of Operations Data
|
|
|
|
|
Net revenue
|
|
$
|
1,431,538
|
|
Operating costs and expenses
|
|
|
1,428,260
|
|
Income from operations
|
|
|
3,278
|
|
Interest expense, net of amounts capitalized and interest income
|
|
|
(122,775
|
)
|
Loss before provision for income
taxes
|
|
|
(108,187
|
)
|
(Benefit) Provision for income taxes
|
|
|
(97,696
|
)
|
Net loss
|
|
$
|
(10,491
|
)
|
(In thousands)
|
|
Pro Forma Year
Ended December
31, 2020
|
|
Pro Forma Balance Sheet Data
|
|
|
|
Cash and cash equivalents
|
|
$
|
407,869
|
|
Total assets
|
|
$
|
6,042,499
|
|
Total liabilities
|
|
$
|
3,861,801
|
|
Total stockholders’ equity
|
|
$
|
2,180,698
|
|
Risk
Factors
An
investment in the Units involves various risks. You should carefully consider the risks and uncertainties described below and the other
information included or incorporated by reference in this prospectus supplement and the accompanying prospectus, including the risk factors
set forth under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 10, 2021, before deciding to invest in the Units. Any of the risk factors described
therein or set forth below could significantly and adversely affect our business, prospects, financial condition and results of operations.
As a result, the trading price of the Units could decline and you could lose a part or all of your investment.
Risks Related to the Units, the Separate Purchase
Contracts and the Separate Amortizing Notes
If
the closing of the Combination has not occurred on or prior to the Long Stop Date, or if, prior to such date, the
Combination is terminated, we may redeem the purchase contracts for an amount of cash and/or a number of shares of our common stock (depending
on the price of our common stock at the time of redemption) with a value that may not adequately compensate you for any lost option value.
Our
planned acquisition of Gamesys may not be consummated. See “—Risks Related to the Combination.” If the closing of the
Combination has not occurred on or prior to the Long Stop Date, or if, prior to such date, the Combination is terminated we may
elect to redeem all, but not less than all, of the outstanding purchase contracts by delivering notice within the five business days immediately
following the Long Stop Date or the Termination Date. We will pay or deliver, as the case may be, a redemption amount to be determined
based on the price of our common stock at that time in cash or in shares of our common stock in accordance with the terms of the purchase
contracts (as described under “Description of the Purchase Contracts—Combination Termination Redemption”). If we elect
to redeem the purchase contracts, we may be required by the holders thereof to repurchase the amortizing notes at the repurchase price
set forth under “Description of the Amortizing Notes—Repurchase of Amortizing Notes at the Option of the Holder.” The
redemption amount that you receive upon a combination termination redemption may not adequately compensate you for any lost option value
of the purchase contracts. In addition, if the Combination is not consummated, the net proceeds from this offering and of the concurrent
Common Stock Offering, if completed, will not be used to consummate the Combination. Instead, we intend to use the net proceeds from this
offering and concurrent Common Stock Offering, if completed, after payment of any cash redemption amount and/or repurchase price, as described
above, for general corporate purposes.
You will bear the risk that the market value
of our common stock may decline.
The purchase contracts,
pursuant to which we will deliver to you shares of our common stock, are components of the Units. The number of shares of common
stock that you will receive upon settlement of a purchase contract on the mandatory settlement date, whether as a component of a
Unit or a separate purchase contract, will depend upon the applicable market value, which is equal to the arithmetic average of the
daily VWAPs of our common stock on each of the 20 consecutive trading days beginning on, and including, the 21st scheduled trading
day immediately preceding April 15, 2024. There can be no assurance that the market value of the common stock received by you
will be greater than or equal to the reference price of approximately $ . If
the applicable market value of our common stock is less than the reference price, then the market value of the common stock issued
to you on the mandatory settlement date (assuming that the market value is the same as the applicable market value of the common
stock) will be less than the effective price per share paid by you for such common stock on the date of issuance of the Units.
Furthermore, because we will in no event deliver more than shares (subject to
adjustment as described herein) upon settlement of a purchase contact, the market value of the common stock delivered to you upon
any early settlement may be less than the effective price per share paid to you for such common stock on the date of the issuance of
the Units. Therefore, you assume the entire risk that the market value of our common stock may decline before the mandatory
settlement date, early settlement date, fundamental change early settlement date, combination redemption settlement date or early
mandatory settlement date, as applicable. Any decline in the market value of our common stock may be substantial.
See “—Risks Related
to Our Common Stock and this Offering” for a discussion of risks related to our common stock”.
The opportunity for equity appreciation
provided by an investment in the Units is less than that provided by a direct investment in our common stock.
The aggregate market value
of our common stock delivered to you upon settlement of a purchase contract on the mandatory settlement date generally will exceed the
$50.00 stated amount of each Unit only if the applicable market value of our common stock exceeds the threshold appreciation price. Therefore,
during the period prior to the mandatory settlement date, an investment in a Unit affords less opportunity for equity appreciation than
a direct investment in our common stock. If the applicable market value exceeds the reference price but is less than the threshold appreciation
price, you will realize no equity appreciation on our common stock above the reference price. Furthermore, if the applicable market value
exceeds the threshold appreciation price, you would receive only a portion of the appreciation in the market value of the shares of our
common stock you would have received had you purchased shares of common stock with $50.00 at the public offering price in the concurrent
Common Stock Offering. See “Description of the Purchase Contracts—Delivery of Common Stock” for a table showing the
number of shares of common stock that you would receive at various applicable market values.
We may not be able to settle or redeem your
purchase contracts and deliver shares of our common stock, or make payments on the amortizing notes or repurchase the amortizing notes,
in the event that we file for bankruptcy.
Pursuant to the terms of the
purchase contract agreement, your purchase contracts will automatically accelerate upon the occurrence of specified events of bankruptcy,
insolvency or reorganization with respect to us.
A bankruptcy court may prevent
us from delivering our common stock to you in settlement or redemption of your purchase contracts. In such circumstances or if for any
other reason the accelerated purchase contracts are not settled by the delivery of common stock, your resulting claim for damages against
us following such acceleration will rank pari passu with the claims of holders of our common stock in the relevant bankruptcy proceeding.
As such, to the extent we fail to deliver common stock to you upon such an acceleration, you will only be able to recover damages to the
extent holders of our common stock receive any recovery. See “Description of the Purchase Contracts—Consequences of Bankruptcy.”
In addition, with respect
to the amortizing notes, bankruptcy law and bankruptcy-related court orders generally prohibit the payment of pre-bankruptcy debt by a
company that has commenced a bankruptcy case while the case is pending. If we become a debtor in a bankruptcy case, so long as the case
was pending, you would likely not receive timely installment payments under, or, if you exercised your right to require repurchase following
a combination termination redemption or early mandatory settlement, receive any repurchase price on, the amortizing notes.
The amortizing notes will be subject to
the prior claims of any secured creditors, and if a default occurs, we may not have sufficient funds to fulfill our obligations under
the amortizing notes.
The amortizing notes are unsecured
obligations, ranking equally with our other senior unsecured indebtedness and effectively junior to any secured indebtedness we may incur.
If we incur secured debt, our assets securing any such indebtedness will be subject to prior claims by our secured creditors. In the event
of the bankruptcy, insolvency, liquidation, reorganization, dissolution or other winding up of the Company, our assets that secure debt
will be available to pay obligations on the amortizing notes only after all debt secured by those assets has been repaid in full. If there
are not sufficient assets remaining to pay all creditors, then all or a portion of the amortizing notes then outstanding would remain
unpaid. Additionally, if any portion of the amount payable on the amortizing notes upon acceleration is considered by a court to be unearned
interest, the court could disallow recovery of any such portion.
The amortizing notes are structurally subordinated
to the indebtedness and other liabilities of our subsidiaries.
The
amortizing notes are our obligations exclusively and not of any of our subsidiaries. Our subsidiaries are separate legal entities
that have no obligation to pay any amounts due under the amortizing notes or to make any funds available therefor, whether by
dividends, loans or other payments. Except to the extent we are a creditor with recognized claims against our subsidiaries, all
claims of creditors, including trade creditors of our subsidiaries, will have priority with respect to the assets of such
subsidiaries over our claims (and therefore the claims of our creditors, including holders of the amortizing notes). Consequently,
the amortizing notes will be structurally subordinated to all liabilities, including trade payables, of our subsidiaries and any
subsidiaries that we may in the future acquire or establish. As of December 31, 2020, our subsidiaries (1) had
approximately $503 million of outstanding liabilities and (2) as adjusted for this offering, would have had $548
million of outstanding liabilities, in each case including trade payables, but excluding intercompany liabilities and deferred
gains.
In addition, the indenture
governing the amortizing notes permits our subsidiaries to incur additional indebtedness, and does not contain any limitation on the amount
of other liabilities, such as trade payables, that may be incurred by our subsidiaries.
The trading prices for the Units, the purchase
contracts and the amortizing notes will be directly affected by the trading prices for our common stock, the general level of interest
rates and our credit quality, each of which is impossible to predict.
It is impossible to predict
whether the prices of our common stock, interest rates or our credit quality will rise or fall. Trading prices of the common stock will
be influenced by general stock market conditions and our operating results and business prospects and other factors described elsewhere
in this section “Risk Factors.”
The market for our common
stock likely will influence, and be influenced by, any market that develops for the Units or the separate purchase contracts. For example,
investors’ anticipation of the distribution into the market of the additional shares of common stock issuable upon settlement of
the purchase contracts could depress the price of our common stock and increase the volatility of the common stock price, which could
in turn depress the price of the Units or the separate purchase contracts. The price of our common stock also could be affected by possible
sales of such common stock by investors who view the Units as a more attractive means of equity participation in us and by hedging or
arbitrage trading activity that is likely to develop involving the Units, separate purchase contracts and the common stock. Such hedging
or arbitrage activity could, in turn, affect the trading prices of the Units, the separate purchase contracts and the common stock.
In addition, in general, as
market interest rates rise, notes (such as the amortizing notes) bearing interest at a fixed rate generally decline in value because the
premium, if any, over market interest rates will decline. Consequently, if you purchase Units and market interest rates increase, the
market value of the amortizing notes forming a portion of the Units may decline. We cannot predict the future level of market interest
rates.
Regulatory actions and other events may
adversely affect the trading price and liquidity of the Units.
We expect that many investors
in, and potential purchasers of, the Units will employ, or seek to employ, an equity-linked arbitrage strategy with respect to the Units.
Investors would typically implement such a strategy by selling short the common stock underlying the Units and dynamically adjusting their
short position while continuing to hold the Units. Investors may also implement this type of strategy by entering into swaps on our common
stock in lieu of or in addition to short selling the common stock. The SEC and other regulatory and self-regulatory authorities have implemented
various rules and taken certain actions, and may in the future adopt additional rules and take other actions, that may impact
those engaging in short selling activity involving equity securities (including our common stock). Such rules and actions include
Rule 201 of SEC Regulation SHO, the adoption by the Financial Industry Regulatory Authority, Inc. and the national securities
exchanges of a “Limit Up-Limit Down” program, the imposition of market-wide circuit breakers that halt trading of securities
for certain periods following specific market declines, and the implementation of certain regulatory reforms required by the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010. Any governmental or regulatory action that restricts the ability of investors
in, or potential purchasers of, the Units to effect short sales of our common stock, borrow our common stock or enter into swaps on our
common stock could adversely affect the trading price and the liquidity of the Units.
In addition, if investors
and potential purchasers seeking to employ an equity-linked arbitrage strategy are unable to borrow or enter into swaps on our common
stock, in each case, on commercially reasonable terms, the trading price and liquidity of the Units may be adversely affected.
You may receive shares of common stock upon
settlement of the purchase contracts that are lower in value than the price of the common stock just prior to the mandatory settlement
date or combination redemption settlement date, as the case may be.
Because
the applicable market value of the common stock is determined over (1) the 20 consecutive trading days beginning on, and including,
the 21st scheduled trading day immediately preceding April 15, 2024, in the case of settlement on the mandatory settlement
date, or (2) the five consecutive trading day period ending on, and including, the trading day immediately preceding the Long Stop
Date or Termination Date, as applicable, in the case of combination termination redemption, the number of shares of common stock delivered
for each purchase contract may, on the mandatory settlement date or the combination redemption settlement date, as the case may be, be
greater than or less than the number of shares that would have been delivered based on the closing price (or daily VWAP) of the common
stock on the last trading day in the related five or 20 trading day period. In addition, you will bear the risk of fluctuations in the
market price of the shares of common stock deliverable upon settlement of the purchase contracts between the end of such period and the
date such shares are delivered.
If you elect to settle your purchase contracts
early, you may not receive the same return on your investment as purchasers whose purchase contracts are settled on the mandatory settlement
date.
Holders of the Units or separate
purchase contracts have the option to settle their purchase contracts early at any time beginning on, and including, the business day
immediately following the date of initial issuance of the Units until the second scheduled trading day immediately preceding April 15,
2024. However, if you settle your purchase contracts prior to the second scheduled trading day immediately preceding April 15, 2024,
you will receive for each purchase contract a number of shares of common stock equal to the minimum settlement rate, regardless of the
current market value of our common stock, unless you elect to settle your purchase contracts early in connection with a fundamental change,
in which case you will be entitled to settle your purchase contracts at the fundamental change early settlement rate, which may be greater
than the minimum settlement rate. In either case, you may not receive the same return on your investment as purchasers whose purchase
contracts are settled on the mandatory settlement date.
The fundamental change early settlement
rate or the amount of cash and/or number of shares of our common stock paid or delivered, as the case may be, upon a combination termination
redemption, may not adequately compensate you.
If a “fundamental change”
occurs and you elect to exercise your fundamental change early settlement right, you will be entitled to settle your purchase contracts
at the fundamental change early settlement rate. In addition, in connection with any combination termination redemption, upon redemption
of the purchase contracts, you will be paid an amount of cash equal to the redemption amount (or, in certain circumstances, a number of
shares of our common stock or any combination of cash and shares of our common stock). Although the fundamental change early settlement
rate or the redemption amount, as the case may be, is designed to compensate you for the lost option value of your purchase contracts
as a result of the early settlement of the purchase contracts, this feature may not adequately compensate you for such loss. In addition,
if the stock price in the fundamental change is greater than $ per share (subject to adjustment), this feature of the purchase contracts
will not compensate you for any additional loss suffered in connection with a fundamental change. See “Description of the Purchase
Contracts—Early Settlement Upon a Fundamental Change” and “Description of the Purchase Contracts—Combination Termination
Redemption.”
Our obligation to settle the
purchase contracts at the fundamental change early settlement rate or to redeem the purchase contracts pursuant to a combination termination
redemption could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness
of economic remedies.
The minimum settlement rate, maximum settlement
rate, reference price and threshold appreciation price of the purchase contracts may not be adjusted for all dilutive events and any adjustment
may not be adequate compensation for lost value.
The minimum settlement rate,
maximum settlement rate, reference price and threshold appreciation price of the purchase contracts are subject to adjustment for certain
events, including, but not limited to, certain dividends on our common stock, the issuance of certain rights, options or warrants to holders
of our common stock, subdivisions or combinations of our common stock, certain distributions of assets, debt securities, capital stock
or cash to holders of our common stock and certain tender offers or exchange offers, as described under “Description of the Purchase
Contracts—Adjustments to the Fixed Settlement Rates” in this prospectus supplement. The minimum settlement rate, maximum settlement
rate, reference price and threshold appreciation price will not be adjusted for other events that may adversely affect the trading price
of the purchase contracts or the Units and the market price of our common stock, such as employee stock options grants, offerings of our
common stock for cash (including under the concurrent Common Stock Offering), certain exchanges of our common stock for our other securities
or in connection with acquisitions (including the Combination) and other transactions. The terms of the Units and the separate purchase
contracts do not restrict our ability to engage in these activities, and events may occur that are adverse to the interests of the holders
of the purchase contracts or the Units and their value, but that do not result in an adjustment to the minimum settlement rate, maximum
settlement rate, reference price and threshold appreciation price, or that result in an adjustment that is not adequate compensation for
lost value.
We may incur additional indebtedness.
As
of December 31, 2020, we had $1,129 million of debt outstanding. The indenture governing the amortizing notes does not prohibit
us from incurring additional unsecured indebtedness or secured indebtedness that would be effectively senior to the amortizing notes in
the future. The indenture governing the amortizing notes also permits unlimited additional borrowings by our subsidiaries that are effectively
senior to the amortizing notes. In addition, the indenture does not contain any restrictive covenants limiting our ability to pay dividends
or make payments on junior or other indebtedness.
The Units are not protected by restrictive
covenants.
Neither the purchase contracts
nor the indenture contains any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness
or the issuance or repurchase of securities by us or any of our subsidiaries. Neither the purchase contracts nor the indenture contains
any covenants or other provisions to afford protection to holders of the purchase contracts or the amortizing notes in the event of a
fundamental change involving us except, with respect to the purchase contracts, to the extent described under “Description of the
Units—Early Settlement Upon a Fundamental Change.”
Until the purchase contracts are settled
with, or redeemed for, common stock, you will not be entitled to any rights with respect to our common stock, but you will be subject
to all changes made with respect to our common stock.
Until the date on which you
are treated as the record holder of common stock on account of a redemption or settlement of the purchase contracts for or with, as the
case may be, common stock, you will not be entitled to any rights with respect to our common stock, including voting rights and rights
to receive any dividends or other distributions on our common stock, but you will be subject to all changes affecting the common stock.
You will be treated as the record holder of any shares of our common stock issuable upon settlement or redemption of the purchase contracts
only as follows:
|
·
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in the case of (x) settlement of purchase contracts on the mandatory settlement date or (y) a
combination termination redemption if the combination termination stock price is greater than the reference price and we elect to pay
cash in lieu of delivering a portion of any shares of common stock that would otherwise be included in the redemption amount, as of 5:00
p.m., New York City time, on the last trading day of the 20 consecutive trading day period during which the applicable market value or
redemption market value, as the case may be, is determined;
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in the case of settlement of purchase contracts in connection with any early settlement at the holder’s
option, as of 5:00 p.m., New York City time, on the early settlement date;
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in the case of settlement of purchase contracts following exercise of a holder’s fundamental change
early settlement right, as of 5:00 p.m., New York City time, on the fundamental change early settlement date;
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in the case of settlement of purchase contracts following exercise by us of our early mandatory settlement
right, as of 5:00 p.m., New York City time, on the notice date; and
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in the case of a combination termination redemption where we elect (or are deemed to have elected) to
settle the redemption amount solely by delivering shares of common stock, as of 5:00 p.m., New York City time, on the date of the combination
redemption notice.
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For example, in the event
that an amendment is proposed to our certificate of incorporation or amended and restated by-laws requiring stockholder approval and the
record date for determining the stockholders of record entitled to vote on the amendment occurs prior to the date specified above on which
you are treated as the record holder of the shares of our common stock, you will not be entitled to vote on the amendment, although you
will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock once you become a stockholder.
Some significant restructuring transactions
may not constitute fundamental changes, in which case we would not be obligated to early settle the purchase contracts, and you will not
have the right to require repurchase of your amortizing notes upon a fundamental change.
Upon
the occurrence of specified fundamental changes, you will have the right to require us to settle the purchase contracts. You will not
have the right to require repurchase of your amortizing notes upon a fundamental change, however. Additionally, the definition of “fundamental
change” herein is limited to specified corporate events and may not include other events that might adversely affect our
financial condition or the value of the purchase contracts. For example, events such as leveraged recapitalizations, refinancings, restructurings
or acquisitions initiated by us may not constitute a fundamental change requiring us to settle the purchase contracts at the applicable
fundamental change early settlement rate. In the event of any such events, the holders of the purchase contracts would not have the right
to require us to settle the purchase contracts at the applicable fundamental change early settlement rate, even though each of these transactions
could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings, thereby adversely
affecting the trading price of the purchase contracts and/or the amortizing notes.
We may not have the ability to raise the
funds necessary to repurchase the amortizing notes following the exercise of our early mandatory settlement right or in connection with
a combination termination redemption, and our debt outstanding at that time may contain limitations on our ability to repurchase the amortizing
notes.
If
we elect to exercise our early mandatory settlement right or effect a combination termination redemption, holders of the amortizing notes
will have the right to require us to repurchase the amortizing notes on the repurchase date at the repurchase price described under
“Description of the Amortizing Notes—Repurchase of Amortizing Notes at the Option of the Holder.” However, we may not
have enough available cash or be able to obtain financing at the time we are required to make repurchases of amortizing notes surrendered
for repurchase. In addition, our ability to pay the relevant repurchase price for the amortizing notes may be limited by agreements governing
our current and future indebtedness. Our failure to repurchase amortizing notes at a time when the repurchase is required by the indenture
would constitute a default under the indenture. A default under the indenture could also lead to a default under agreements governing
our indebtedness outstanding at that time. If the repayment of the related indebtedness were to be accelerated after any applicable notice
or grace periods, we may not have sufficient funds to repay the indebtedness and the repurchase price for the amortizing notes.
The secondary market for the Units, the
purchase contracts and the amortizing notes may be illiquid.
We
have applied to list the Units on the NYSE under the symbol “BALX”, subject to satisfaction of its minimum listing
standards with respect to the Units. However, we cannot assure you that the Units will be approved for listing. If the Units are approved
for listing, we expect that the Units will begin trading on the NYSE within 30 calendar days after the Units are first issued. In addition,
the underwriters have advised us that they intend to make a market in the Units, but the underwriters are not obligated to do so. However,
listing on the NYSE does not guarantee that a trading market will develop, and the underwriters may discontinue market making at any time
in their sole discretion without prior notice to Unit holders. Accordingly we cannot assure you that a liquid trading market will develop
for the Units (or, if developed, that a liquid trading market will be maintained), that you will be able to sell Units at a particular
time or that the prices you receive when you sell will be favorable.
Beginning
on the business day immediately succeeding the date of initial issuance of the Units, purchasers of Units will be able to separate
each Unit into a purchase contract and an amortizing note. We are unable to predict how the separate purchase contracts or the separate
amortizing notes will trade in the secondary market, or whether that market will be liquid or illiquid. We will not initially apply to
list the separate purchase contracts or the separate amortizing notes on any securities exchange or automated inter-dealer quotation system,
but we may apply to list such separate purchase contracts and separate amortizing notes in the future as described herein. If (1) a
sufficient number of Units are separated into separate purchase contracts and separate amortizing notes and traded separately such that
applicable listing requirements are met and (2) a sufficient number of holders of such separate purchase contracts and separate amortizing
notes request that we list such separate purchase contracts and separate amortizing notes, we may endeavor to list such separate purchase
contracts and separate amortizing notes on an exchange of our choosing (which may or may not be the NYSE) subject to applicable listing
requirements. However, even if we do so apply to list such separate purchase contracts or separate amortizing notes, we cannot assure
you that such securities will be approved for listing.
The purchase contract agreement will not
be qualified under the Trust Indenture Act, and the obligations of the purchase contract agent are limited.
The purchase contract agreement
between us and the purchase contract agent will not be qualified as an indenture under the Trust Indenture Act of 1939, and the purchase
contract agent will not be required to qualify as a trustee under the Trust Indenture Act. Thus, you will not have the benefit of the
protection of the Trust Indenture Act with respect to the purchase contract agreement or the purchase contract agent. The amortizing notes
constituting a part of the Units will be issued pursuant to an indenture, which has been qualified under the Trust Indenture Act. Accordingly,
if you hold Units, you will have the benefit of the protections of the Trust Indenture Act only to the extent applicable to the amortizing
notes. The protections generally afforded the holder of a security issued under an indenture that has been qualified under the Trust Indenture
Act include:
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disqualification of the trustee for “conflicting interests,” as defined under the Trust Indenture
Act;
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provisions preventing a trustee that is also a creditor of the issuer from improving its own credit position
at the expense of the security holders immediately prior to or after a default under such indenture; and
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the requirement that the trustee deliver reports at least annually with respect to certain matters concerning
the trustee and the securities.
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The U.S. federal income tax consequences
relating to the Units are uncertain.
There is no authority directly
addressing the characterization of Units or instruments similar to Units for U.S. federal income tax purposes and therefore the characterization
of Units for these purposes is not entirely free from doubt. We intend to take the position that each Unit will be treated as an investment
unit composed of two separate instruments for U.S. federal income tax purposes: (1) a prepaid purchase contract to acquire our common
stock and (2) an amortizing note that is our indebtedness. Under this treatment, a holder of Units will be treated as if it held
each component of such Units for U.S. federal income tax purposes. By acquiring a Unit, you will agree to treat (1) a Unit as an
investment unit composed of two separate instruments in accordance with its form and (2) the amortizing notes as indebtedness for
U.S. federal income tax purposes. If, however, the components of a Unit were treated as a single instrument, or the amortizing notes were
recharacterized as equity for U.S. federal income tax purposes (even if the components of a Unit are respected as separate instruments
for U.S. federal income tax purposes), the U.S. federal income tax consequences could differ from the consequences described below. Specifically,
if you are a U.S. Holder, you could be required to recognize the entire amount of each installment payment on the amortizing notes, rather
than merely the portion of such payment denominated as interest, as income. In addition, if you are a non-U.S. Holder, payments of principal
and interest made to you on the amortizing notes could be subject to U.S. federal withholding tax. Other treatments may also be possible
and the Internal Revenue Service (“IRS”) might assert that some other treatment is more appropriate. We have not sought any
rulings concerning the treatment of Units, and no assurance can be given that the IRS or any court will agree with the tax consequences
described in “Certain United States Federal Income Tax Considerations.” Prospective investors should consult their tax advisors
regarding the tax treatment of an investment in Units and whether a purchase of a Unit is advisable in the investor’s particular
tax situation and the tax treatment described under “Certain United States Federal Income Tax Considerations.”
You may be subject to tax upon an adjustment
to the settlement rate of the purchase contracts even though you do not receive a corresponding cash distribution.
The fixed settlement rates
of the purchase contracts are subject to adjustment in certain circumstances, including the payment of certain cash dividends or upon
a fundamental change. If the settlement rates are adjusted as a result of a distribution that is taxable to our common stockholders, such
as a cash dividend, you generally will be deemed to have received for U.S. federal income tax purposes a taxable dividend without the
receipt of any cash. In addition, a failure to adjust (or to adjust adequately) the settlement rates after an event that increases your
proportionate interest in us could be treated as a deemed taxable dividend to you. You may also be deemed to have received a taxable dividend
in the event we make certain other adjustments to the settlement rates of the purchase contracts. For example, if a fundamental change
occurs prior to the maturity date, under some circumstances, we will increase the settlement rate for purchase contracts settled in connection
with the fundamental change. Such increase may also be treated as a distribution subject to U.S. federal income tax as a dividend. See
“Certain United States Federal Income Tax Considerations.” If you are a “non-U.S. Holder” (as defined in “Certain
United States Federal Income Tax Considerations”), U.S. federal withholding tax at a rate of 30 percent (or at a lower rate if an
applicable income tax treaty so provides and an applicable withholding agent has received proper certification as to the application of
that treaty) generally will apply to the gross amount of deemed or constructive dividends received by you. If an applicable withholding
agent pays such withholding taxes on your behalf with respect to such deemed or constructive dividends, the withholding agent may withhold
any such withholding tax from any cash to be paid to, or common stock to be delivered to, you, or set-off such amount against certain
other funds or assets belonging to you.
Any adverse rating action with respect to
the Units may cause their trading price to fall.
We do not intend to seek a rating on the Units.
However, if a rating service were to rate the Units and if such rating service were to lower its rating on the Units below the rating
initially assigned to the Units or otherwise announces its intention to put the Units on credit watch, the trading price of the Units
could decline.
Risks Related to Our Common Stock, this Offering, and the Common
Stock Offering
Future sales of our common stock in the public market by existing
holders of our common stock could cause volatility in the price of our common stock or cause the share price to fall.
Following completion of the
Common Stock Offering (without any exercise of the underwriters’ option to purchase additional shares) and prior to completion of
the Combination, based on the 30,925,545 shares outstanding as of March 19, 2021, 39.4% of our outstanding shares will be beneficially
owned by our executive officers and our directors. Our CEO, CFO, directors, and Standard General L.P. have entered into a lock-up agreement
with the underwriters, which regulates their sales of our common stock for a period of 60 days after the date of this prospectus, subject
to certain exceptions. Sales of substantial amounts of our common stock in the public market after this offering, or the perception that
such sales will occur, could adversely affect the market price of our common stock and the market price of our common stock could be extremely
volatile.
You may experience future dilution as a result of future equity
issuances.
In
the future, we may sell additional shares or Units to raise capital or acquire interests in other companies by using shares
or a combination of cash and shares. For example, concurrently with this offering, we are offering, by means of a separate
prospectus supplement, shares of our common stock plus up to
additional shares that the underwriters of the Common Stock Offering
have the option to purchase directly from us, at the public offering price of $
per share. Under the terms of the Combination, Gamesys shareholders
have the option to receive, for each of their shares of Gamesys, 1,850 pence in cash or shares of our common stock or a combination
of both. Certain of Gamesys’ current shareholders holding 25.6% of Gamesys’ shares have agreed to receive shares of our
common stock in the Combination. In addition, pursuant to the GLPI Commitment Letter, GLPI has irrevocably committed to purchase
shares of our common stock, or, subject to U.S. regulatory requirements, warrants, with a value of up to $500.0 million, at a price
per share based on volume-weighted average price determined over a period of timeprior to such issuance. In connection with our
strategic partnership with Sinclair Broadcast Group, we issued to Sinclair (1) an immediately exercisable warrant to purchase
up to 4,915,726 shares of the Company at an exercise price of $0.01 per share, (2) a warrant to purchase up to a maximum of
3,279,337 additional shares of the Company at a price of $0.01 per share subject to the achievement of various performance metrics,
and (3) an option to purchase up to 1,639,669 additional shares in four tranches with purchase prices ranging from $30.00 to
$45.00 per share, exercisable over a seven-year period beginning on the fourth anniversary of the November 18, 2020 closing. In
addition, in connection with the acquisition of Monkey Knife Fight and SportCaller and the pending acquisition of Bet.Works, we
agreed to issue shares or warrants to purchase shares. Further, as of March 31, 2021, we have 660,411 shares that are reserved
for issuance under our employee stock plans, which shares may be issued from time to time upon the vesting or exercise, as
applicable, of various equity awards.
Additionally, we may seek
approval to increase the number of authorized common shares or authorization to create new series or classes of securities under our Amended
and Restated Certificate of Incorporation, as amended. For example, our 2021 Proxy Statement includes, among other proposals, proposals
to (1) approve an increase in the total number of our authorized common shares from 100,000,000 to 200,000,000; and (2) authorize
10,000,000 shares of preferred stock and to provide that our board of directors is authorized to prescribe the series and the number of
the shares of each series of preferred stock and the voting powers, designations, preferences, limitations, restrictions and relative
rights of the shares of each series of preferred stock.
These events may dilute your
ownership interest and have an adverse impact on the price of the shares. Furthermore, sales of a substantial amount of shares or any
securities convertible into or exercisable or exchangeable for shares in the public market or the perception that these sales or conversions
may occur, could reduce the market price of the shares. This could also impair our ability to raise additional capital through the sale
of our securities. No prediction can be made as to the effect, if any, that future sales or issuance of shares or other equity or equity-linked
securities will have on the trading price of shares.
This offering is not conditioned upon the
completion of the Combination. If the Combination is not consummated, we will have broad discretion on the use of the net proceeds of
this offering.
This
offering is not conditioned upon the completion of the Combination. Accordingly, your purchase of the Units in this offering
may be an investment in us on a stand-alone basis without any of the assets of Gamesys or anticipated benefits of the Combination.
We will have broad discretion to use the net proceeds of this offering if the Combination does not occur. If the Combination does
not occur, we expect to use the net proceeds from this offering, after payment of any cash redemption amount and/or repurchase price to you, for general corporate
purposes, which may include repayment of debt, repurchases of our common stock, and capital expenditures and investments. See
“Use of Proceeds.”
If the closing of the Combination has
not occurred on or prior to the Long Stop Date, or if, prior to such date, the Combination is terminated, we may redeem the purchase
contracts, in which case holders of the Units would have the right to require us to repurchase amortizing notes.
If the consummation of the
Combination has not occurred on or prior to the Long Stop Date, or if, prior to such date, the Combination is terminated we may elect
to redeem all, but not less than all, of the outstanding purchase contracts (if issued). We will pay or deliver, as the case may be,
a redemption amount to be determined based on the price of our common stock at that time in cash or in shares of our common stock in
accordance with the terms of the purchase contracts.
Upon redemption of the
purchase contracts, our common stock may incur immediate net tangible book value dilution on a per share basis. In addition, if the
purchase contracts are redeemed for cash and holders of Units require us to repurchase amortizing notes, we would experience reduced
liquidity, which could limit our flexibility in the conduct of our business and make us more vulnerable to economic downturns and
adverse competitive and industry conditions. If we elect to redeem the purchase contracts early, holders will have the right to require us to repurchase their amortizing notes for
cash at the repurchase price as described under “Description of the Amortizing Notes—Repurchase of Amortizing Notes at the
Option of the Holder."
Risks Related to Gamesys’ Business
Declining popularity of games and changes in device preferences
of players could have a negative effect on our business following the Combination.
Revenue from online games
tends to decline over time after reaching a peak of popularity and player usage. The speed of this decline is referred to as the decay
rate of a game. As a result of this natural decline in the life cycle of Gamesys’ products, Gamesys’ business depends on its
ability and the ability of its third-party partners to consistently and timely launch new games across multiple platforms and devices
that achieve significant popularity. The ability of Gamesys to successfully launch, sustain and expand games as applicable, largely will
depend on its ability to, amongst other things: (1) anticipate and effectively respond to changing game player interests and preferences;
(2) anticipate or respond to changes in the competitive landscape; (3) develop, sustain and expand games that are fun, interesting
and compelling to play; (4) minimize launch delays and cost overruns on new games; (5) minimize downtime and other technical
difficulties; (6) acquire leading technology and high quality personnel; and (7) comply with constraints on game design and/or
functionality imposed by regulators. There is a risk that Gamesys may not launch any new games according to schedule, or that those games
do not attract and retain a significant number of players, which could have a negative effect on Gamesys’, and following the Combination,
the Combined Group’s prospects, revenues, operating results and financial condition.
Furthermore, more individuals
are using non-PC/laptop devices to access the internet and versions of Gamesys’ technology developed for these devices may not be
widely adopted by users of such devices. The number of people who access the internet through devices other than personal computers, including
mobile telephones, tablets and television set-top devices, has increased over the past several years. If Gamesys is unable to attract
and retain a substantial number of alternative device users to its gambling services or if Gamesys is slow to develop products and technologies
that are more compatible with non-PC/laptop communications devices relative to its competitors, Gamesys may fail to capture a significant
share of an increasingly important portion of the market for online gambling services.
In addition to offering popular
new games, Gamesys must extend the life of the existing games which they make available to users, in particular the most successful games.
While it is difficult to predict when revenues from any such existing games will begin to decline, for a game to remain popular, Gamesys
must constantly enhance, expand or upgrade the relevant game with new features that players find attractive. There is a risk that they
may not be successful in enhancing, expanding or upgrading its current games or any new games in the future and in addition regulators
may introduce new rules that limit functionality within existing games. Should Gamesys not succeed in sufficiently offsetting the
effects of declining popularity in the games they make available, this may have a material adverse effect following the Combination on
the Combined Group’s business, prospects, revenues, operating results and financial condition.
We and Gamesys operate
and, following the Combination, the Combined Group will operate in a highly competitive environment.
The online gambling industry
is highly competitive, and we expect more competitors to enter the sector. With several thousand online gambling sites accessible to potential
customers around the world with little product differentiation, there is arguably an excess of suppliers. Online and offline advertising
is widespread, with operators competing for affiliates and customers who are attracted by sign-up bonuses and other incentives.
Existing and new competitors
may also increase marketing spending, including to unprofitable levels, in an attempt to distort the online gambling market to build market
share quickly. Some of our, Gamesys’ and, following Combination, the Combined Group’s competitors have or will have significantly
greater financial, technical, marketing and sales resources and may be able to respond more quickly to changes in customer needs. Additionally,
these competitors may be able to devote a greater number of resources to the enhancement, promotion and sale of their games and gaming
systems. Our, Gamesys’ and, following Combination, the Combined Group’s future success is or will be dependent upon its ability
to retain its current customers and to acquire new customers. Failure to do so could result in a material adverse effect on our, Gamesys’
and, following Combination, the Combined Group’s business, prospects, revenues, operating results and financial condition.
The profitability of Gamesys will be dependent on return to players.
The revenue from certain of
Gamesys’ gaming products depends on the outcome of random number generators built into the gaming software running the games made
available to customers. Return to player is measured by dividing the amount of real money won by players on a particular game by the total
real money wagers over a particular period on that game. An increasing return to player may negatively affect revenue as it represents
a larger amount of money being won by players. Return to player is driven by the overall random number generator outcome, the mechanics
of different games and jackpot winnings. Each game utilizes a random number generating engine; however, generally the return to player
fluctuates in the short-term based on large wins or jackpots, or a large share of wagers made for higher-payout games. To the extent Gamesys
is unable to set, or fails to obtain, a favorable return to player in their (or a third party supplier’s) gambling software which
maximizes revenue, it could have a material adverse effect on Gamesys’ business, prospects, revenues, operating results and financial
condition.
Gamesys or certain third parties that they
rely on, may fail to establish and maintain effective and compliant anti-money laundering, counter terrorism financing, safer gambling,
fraud detection, risk management and other regulatory policies, procedures and controls.
Online gambling operators
licensed in the UK and other jurisdictions are obliged to establish and maintain compliant anti-money laundering (“AML”),
anti-terrorism, safer gambling, fraud detection, risk management and other regulatory policies, procedures and controls to mitigate and
effectively manage these risks. In the event that they fail to do so, they may be subject to enforcement action by gambling regulators
or other governmental agencies or private action by affected third parties. In the event of a breach, a range of sanctions may be imposed,
including financial penalties or regulatory settlements, public warnings, the imposition of special operating conditions and the suspension
or revocation of gambling licenses.
In recent years the British
gambling regulator, the Great Britain Gambling Commission (the “GBGC”), has repeatedly stated that the UK facing online gambling
industry needed to take greater steps to implement effective AML and safer gambling policies and procedures. By way of example, in January 2018
the GBGC sent a letter to operators in the UK’s online casino sector indicating that the GBGC had identified significant concerns
about the effectiveness of the online casino sector’s management and mitigation of AML and safer gambling risks. The GBGC indicated
that it had already started investigations into 17 remote operators and was considering whether to undertake a licence review of five
operators with a view to exercising the GBGC’s regulatory powers. The GBGC re-emphasised its focus in this compliance area and the
risk of license revocations in its Enforcement report 2018/2019. The GBGC has imposed financial penalties or regulatory settlements in
lieu of a penalty on a number of different operators for failing to apply effective AML and/or safer gambling policies and procedures,
including Gamesys.
In addition, there is a risk
that increased safer gambling and AML regulatory measures in the UK will prove to be challenging for Gamesys. For example, Gamesys’
highest value customers may be unwilling to provide the additional detail required by Gamesys in the UK to ascertain their sources of
wealth, the affordability of their leisure spend with Gamesys or their risk of gambling related harm or vulnerability, and to continue
to verify these. The GBGC is also consulting on tougher rules for online gambling operators for identifying and tackling gambling
harm, including customer affordability, for all UK customers. The GBGC may impose requirements for a gambling business to act on information
they have about a customer's vulnerability and to assess whether a customer’s gambling is affordable at thresholds which will be
set by the GBGC. The imposition of such requirements will impact significantly Gamesys' business as Gamesys may be unable to establish
the affordability of customers on the basis of the available evidence and/or because customers are unwilling to provide the information
requested.
The failure by any third-party
providers or, following the Combination, any relevant entity within the Company to establish and maintain effective and compliant AML,
counter terrorism, anti-bribery, fraud detection, regulatory compliance and risk management processes may have a material adverse effect
on Gamesys’ and, following the Combination, the Combined Group’s business, prospects, revenues, operating results, regulatory
compliance and financial condition.
Gamesys will be reliant on effective payment
processing services from a limited number of providers in each of the markets in which they operate.
The provision of convenient,
trusted, fast and effective payment processing services to Gamesys’ customers and potential customers is critical to their business.
If there is any deterioration in the quality of the payment processing services provided to these customers or any interruption to those
services (including with respect to system intrusions, unauthorized access or manipulation), or if such services are only available at
an increased cost to Gamesys or their customers or are terminated and no timely and comparable replacement services are found, Gamesys’
customers and potential customers may be deterred from using Gamesys’ products. In addition, Gamesys’ inability to secure
payment processing services in markets into which Gamesys intends to expand may seriously impair their growth opportunities and strategies.
Any of these occurrences may have a material adverse effect on Gamesys’ and, following the Combination, the Combined Group’s
business, prospects, revenues, operating results and financial condition.
Furthermore, a limited number
of banks and credit card companies process online gambling related payments as a matter of internal policy and any capacity to accept
such payments may be limited by the regulatory regime of a given jurisdiction. The introduction of legislation or regulations restricting
financial transactions with online gambling operators, other prohibitions or restrictions on the use of credit cards and other banking
instruments for online gambling transactions may restrict Gamesys’ abilities to accept payment from their customers. These restrictions
may be imposed as a result of concerns related to fraud, payment processing, AML or other issues related to the provision of online gambling
services. A number of issuing banks or credit card companies may from time to time reject payments to Gamesys that are attempted to be
made by their customers. Should such restrictions and rejections become more prevalent, or any other restriction on payment processing
be introduced, gambling activity by the Gamesys’ customers could be adversely affected, which in turn could have a material adverse
effect on Gamesys’ and, following the Combination, the Combined Group’s business, prospects, revenues, operating results and
financial condition.
In
addition, Gamesys is subject and, following the Combination, the Combined Group will be subject to the risk of credit card chargebacks,
which may also result in possible penalties. A chargeback is a credit card originated deposit transaction to a player account with an
operator that is later reversed or repudiated. The risk of such chargeback transactions is greater in respect of certain markets and certain
payment methods. Revenue is recognized by Gamesys upon the first loss of the player on amounts tendered, and any credit card chargebacks
are then deducted from their revenues. Even though security measures are in place, high rates of credit card chargebacks could result
in credit card associations levying additional costs and fines or withdrawing their service and could have a material adverse effect on
Gamesys’, and, following the Combination, the Combined Group’s business, prospects, revenues, operating results and financial
condition.
Gamesys’ business is subject to a
variety of U.S. and foreign laws, many of which are unsettled and still developing, and which could subject Gamesys to claims or otherwise
harm Gamesys’ business across jurisdictions. Any change in existing regulations or their interpretation, or the regulatory or prosecutorial
climate applicable to our products and services, or changes in tax rules and regulations or interpretation thereof related to Gamesys’
products and services, could adversely impact Gamesys’ ability to operate its business as currently conducted or as we seek to operate
in the future, which could have a material adverse effect on our financial condition and results of operations.
Gamesys is generally subject
to laws and regulations relating to iGaming in the jurisdictions in which it conducts business, as well as the general laws and regulations
that apply to all e-commerce businesses, such as those related to privacy and personal information, tax and consumer protection. These
laws and regulations vary by jurisdiction and future legislative and regulatory action, court decisions or other governmental action,
which may be affected by, among other things, political pressures, attitudes and climates, as well as personal biases, may have a material
impact on Gamesys’ operations and financial results. Some jurisdictions have introduced regulations attempting to restrict or prohibit
online gaming, while others have taken the position that online gaming should be licensed and regulated and have adopted or are in the
process of considering legislation and regulations to enable that to happen. The regulatory environment in any particular jurisdiction
may change in the future and any such change could have a material adverse effect on Gamesys’ results of operations.
Future legislative and regulatory
action, and court decisions or other governmental action, may have a material impact on Gamesys’ operations and financial results.
Governmental authorities could view Gamesys as having violated local laws, despite Gamesys’ efforts to obtain all applicable licenses
or approvals. There is also risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or
public entities or incumbent monopoly providers, or private individuals, could be initiated against Gamesys, Internet service providers,
credit card and other payment processors iGaming industries. Such potential proceedings could involve substantial litigation expense,
penalties, fines, seizure of assets, injunctions or other restrictions being imposed upon Gamesys’ licensees or other business partners,
while diverting the attention of key executives. Such proceedings could have a material adverse effect on Gamesys’ business, financial
condition, results of operations and prospects, as well as impact Gamesys’ reputation.
There can be no assurance
that legally enforceable legislation will not be proposed and passed in jurisdictions relevant or potentially relevant to Gamesys’
business to prohibit, legislate or regulate various aspects of the iGaming (or that existing laws in those jurisdictions will not be interpreted
negatively). Compliance with any such legislation may have a material adverse effect on Gamesys’ and, following the Combination,
the Combined Group’s business, financial condition and results of operations, either as a result of our determination that a jurisdiction
should be blocked, or because a local license or approval may be costly for us or our business partners to obtain and/or such licenses
or approvals may contain other commercially undesirable conditions.
Gamesys’ growth prospects depend on
the legal status of real-money gaming in various jurisdictions and legalization may not occur in as many jurisdictions as Gamesys’
expect, or may occur at a slower pace than Gamesys anticipates. Additionally, even if jurisdictions legalize real money gaming, this may
be accompanied by legislative or regulatory restrictions and/or taxes that make it impracticable or less attractive to operate in those
jurisdictions, or the process of implementing regulations or securing the necessary licenses to operate in a particular jurisdiction may
take longer than Gamesys anticipates, which could adversely affect Gamesys’ future results of operations and make it more difficult
to meet our expectations for financial performance.
Several jurisdictions have
legalized or are currently evaluating the legalization of real money gaming, and Gamesys’ business, financial condition, results
of operations and business prospects are significantly dependent upon the status of legalization in these jurisdictions. Gamesys’
business plan is partially based upon the legalization of real money gaming in additional jurisdictions and the legalization may not occur
as anticipated. Additionally, if a large number of additional jurisdictions or federal governments enact real money gaming legislation
and Gamesys is unable to obtain, or is otherwise delayed in obtaining, the necessary licenses to operate iGaming websites in U.S. jurisdictions
where such games are legalized, Gamesys’ future growth in iGaming could be materially impaired.
As Gamesys enters new jurisdictions,
states or the federal government may legalize real money gaming in a manner that is unfavorable to it. As a result, Gamesys may encounter
legal, regulatory and political challenges that are difficult or impossible to foresee and which could result in an unforeseen adverse
impact on planned revenues or costs associated with the new opportunity. Jurisdictions also impose substantial tax rates on iGaming revenue.
Tax rates, whether federal or state-based, that are higher than we expect will make it more costly and less desirable for it to launch
in a given jurisdiction, while tax increases in any of our existing jurisdictions may adversely impact profitability.
Therefore, even in cases in
which a jurisdiction purports to license and regulate iGaming, the licensing and regulatory regimes can vary considerably in terms of
their business-friendliness and at times may be intended to provide incumbent operators with advantages over new licensees. Therefore,
some “liberalized” regulatory regimes are considerably more economically viable than others.
Gamesys derives meaningful revenues from players located in jurisdictions
in which it does not hold a license.
In certain
jurisdictions, online gambling is either not regulated at all, is subject to very limited regulation or its legality is unclear. These
jurisdictions are commonly referred to in the gaming industry as “unregulated jurisdictions”. Certain of Gamesys’ products
are made available to players in unregulated jurisdictions. The relevant transactions in such unregulated jurisdictions and the associated
player relationships that underpin them are generally regulated in either Malta or Gibraltar which use “point of supply” gambling
regimes. Gamesys or its commercial partners hold point-of-supply licenses in Malta and Gibraltar. As such, such transactions are in fact
heavily regulated but are not themselves regulated in the jurisdiction within which the player is ultimately located.
Operators
within the online gambling industry, including Gamesys, have commonly taken a risk-based approach when supplying their online gambling
services into jurisdictions in which it is not possible to obtain a gambling license. In these circumstances, online gambling operators
may justify their remote supply of gambling services for a number of reasons, including a “country of origin” basis which
asserts that it is lawful to supply online gambling services remotely from a jurisdiction in which a gambling license is held into another
jurisdiction, unless there is something within the laws of that second jurisdiction that explicitly outlaws such provision, and explicitly
applies to such inward supply emanating from outside its borders. An example of this is Japan. Japan has been a focus of Gamesys’
Asian business segment and has yet to introduce its own licensing regime applicable to Gamesys’ business.
There
is a risk that such jurisdictions may enact regulations relating to online real money gaming and that Gamesys may be required to register
its activities or obtain licenses (or obtain further registrations or licenses, as applicable), pay taxes, royalties or fees or that the
operation of online gambling businesses in such jurisdictions may be prohibited entirely. The implementation of additional licensing or
regulatory requirements, prohibitions or payments in such jurisdictions could have an adverse effect on the viability of Gamesys’
revenue, operations, business or financial performance. Where Gamesys or its partners fail to obtain the necessary registrations or licenses,
make the necessary payments or operate in a jurisdiction where online gambling is deemed to be or becomes prohibited, Gamesys or its partners
may be subject to investigation, penalties or sanctions or forced to discontinue operations entirely in relation to that jurisdiction.
Any such actions may also have an adverse impact on the way Gamesys’ regulators regulate Gamesys in the jurisdictions in which Gamesys
holds a license and following the Combination, the Combined Group’s subsidiaries that depend on such licenses.
Certain of
Gamesys’ technology providers, payment processing partners or other suppliers of content or services (collectively, “Infrastructure
Services”) may cease to provide, or limit the availability of, such Infrastructure Services to the extent Gamesys derives revenue
from, or makes such Infrastructure Services available to customers in, unregulated jurisdictions. There is no assurance that Gamesys would
be able to identify suitable or economical replacements if such Infrastructure Services become unavailable.
There is also
a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities, incumbent
monopoly providers or private individuals could be initiated against Gamesys or providers of its Infrastructure Services in unregulated
markets. Such potential proceedings could assert that online gambling services have not been lawfully supplied into the domestic market
and could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed
on Gamesys or its business partners, and may divert the attention of key executives of Gamesys. If Gamesys becomes subject to any such
investigations, proceedings and/or penalties in one jurisdiction, this may lead to investigations, proceedings and/or penalties arising
in other jurisdictions in which Gamesys operates and/or holds a license. Such investigations, proceedings, and/or penalties could have
a material adverse effect on Gamesys’ and, following the Combination, the Combined Group’s business, prospects, revenues,
operating results and financial condition, as well as its reputation.
Following the Combination, the Combined Group will be exposed
to exchange rate risks.
Foreign exchange risk arises
when individual group entities enter into transactions denominated in a currency other than their functional currency. Gamesys’
policy is, where possible, to allow its entities to settle liabilities denominated in their functional currency with the cash generated
from their own operations in that currency. Where Gamesys’ entities have liabilities denominated in a currency other than their
functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will,
where possible, be transferred from elsewhere within Gamesys. Apart from these particular cash flows, the Gamesys aims to fund expenses
and investments in the respective currency and to manage foreign exchange risk at a local level by matching the currency in which revenue
is generated and expenses are incurred, as well as by matching the currency of its debt structure with the currency that cash is generated
in. However, no assurance can be given that these policies will deliver all, or substantially all, of the expected benefits.
A vast majority of the revenues
currently generated by Gamesys are from the UK market and are conducted in GBP and are therefore susceptible to any movements in exchange
rates between GBP and USD. Any exchange rate risk may materially adversely affect Gamesys and, following the Combination, the Combined
Group’s business, prospects, revenues, operating results and financial condition.
Gamesys is reliant on the reliability and viability of the internet
infrastructure, which is out of their control, and the proper functioning of their own network systems.
The growth of internet usage
has caused interruptions and delays in processing and transmitting data over the internet. There can be no assurance that the internet
infrastructure or Gamesys’ own network systems will continue to be able to support the demands placed on them by the continued growth
of the internet, the overall online gambling industry or that of their customers. The internet’s viability could be affected by
delays in the development or adoption of new standards and protocols to handle increased levels of internet activity or by increased government
regulation. The introduction of legislation or regulations requiring internet service providers in any jurisdiction to block access to
Gamesys’ websites and products may restrict the ability of their customers to access products and services offered by them. Such
restrictions, should they be imposed, could have a material adverse effect on the business, prospects, revenues, operating results and
financial condition of Gamesys.
If critical issues concerning
the commercial use of the internet are not favorably resolved (including security, reliability, cost, ease of use, accessibility and quality
of service), if the necessary infrastructure is not sufficient, or if other technologies and technological devices eclipse the internet
as a viable channel, this may negatively affect internet usage, and Gamesys’ and, following the Combination, the Combined Group’s
business, prospects, revenues, operating results and financial condition will be materially adversely affected. Additionally, the increasing
presence of viruses and cyber-attacks may affect the viability and infrastructure of the internet and/or the proper functioning of Gamesys’
network systems and could materially adversely affect Gamesys’ and, following the Combination, the Combined Group’s business,
prospects, revenues, operating results and financial condition.
The
UK’s withdrawal from the EU and the wider political climate may have a negative effect on global economic conditions, financial
markets and Gamesys’ business, prospects, revenues, operating results and financial condition.
Gamesys is a multinational
group headquartered in London with worldwide operations, including material revenues derived from the UK and Europe. The UK formally left
the European Union on January 31, 2020 (“Brexit”) which has resulted, and the medium and long term consequences of Brexit,
may result in significant economic, political and social instability, not only in the UK and Europe, but across the globe generally. In
particular, this has led to volatility in the value of GBP, which may affect the profitability of Gamesys. These developments and the
prevailing uncertainty relating to these developments, have had and may continue to have a material adverse effect on global economic
conditions, and economic conditions in the UK in particular, and the stability of global financial markets, and could significantly reduce
global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Asset valuations,
currency exchange rates and credit ratings may be especially subject to increased market volatility.
Despite a new free trade agreement
between the UK and the EU, lack of clarity about future UK laws and regulations as the UK determines which EU laws to replace or maintain,
including financial laws and regulations, tax and free trade agreements, intellectual property rights, supply chain logistics, environmental,
health and safety laws and regulations, immigration laws and employment laws, could decrease foreign direct investment in the UK, increase
costs, depress economic activity and restrict Gamesys’ access to capital and impact revenues. In particular, Brexit may lead to
material changes to the regulatory regimes that would be applicable to Gamesys’ operations in the UK in the future. This could increase
compliance and operating costs for Gamesys and, following the Combination, for the Combined Group and have a material adverse effect on
Gamesys and, following the Combination, the Combined Group’s business, prospects, revenues, operating results and financial condition.
Further economic, political
and social instability may also result from the Scottish public voting for Scotland to leave the UK in any future referendum. Scotland’s
First Minister has tabled draft legislation to set the rules for a second independence referendum (though any such referendum would
be subject to UK government approval). The implications of any vote in favor of independence are uncertain, but could still be wide-ranging
(for instance, in affecting the value of GBP, global markets and the ongoing relationship between Scotland and the rest of the UK and,
potentially, the introduction of a discrete gambling regulatory regime in Scotland). Any of these factors could have a material adverse
effect on Gamesys’ and, following the Combination, the Combined Group’s business, prospects, revenues, operating results and
financial condition.
Gamesys’
activities affected by the General Data Protection Regulation (“GDPR”).
Gamesys is required to comply
with the GDPR to the extent that they either: (1) have customers located in the UK and the EU or (2) conduct the processing
of personal data in the EU. The impact of the GDPR is of particular relevance to Gamesys’ marketing activities and IT security systems
and procedures. The GDPR and associated e-privacy laws impose constraints on the ability of a data controller to profile and market to
customers. Data subjects have the right to object to a controller processing their data in certain circumstances, including the right
to object to their data being processed for the purposes of direct marketing. Controllers of personal data are required to maintain written
records as to how they comply with the GDPR and provide more detailed information to data subjects in relation to how their data is being
processed. In addition, updated e-privacy laws are under consideration in the EU to update the legislative rules applicable to digital
and online data processing and to align e-privacy laws to the GDPR.
The GDPR also increased the
level of fines which may be imposed for a breach of data protection laws, with the maximum fine (in the most serious cases of a breach
of the GDPR) being the higher of €20 million (£17.5 million for the UK) or 4 per cent. of annual worldwide turnover. In certain
instances, Gamesys could be held jointly responsible for breaches committed by the third-party service providers which they use or by
other third parties with whom they share personal data.
Many of the obligations imposed
on controllers by the GDPR are expressed as high-level principles, such as the obligation to act fairly with respect to the processing
of personal data. The manner in which the data regulators and courts will interpret and apply the GDPR is and will continue to evolve
over time. These procedures and policies may adversely affect Gamesys’ business by constraining their data processing activities,
or by increasing their operational and compliance costs. Additional updates to these policies and procedures and associated operational
changes may be required and costs incurred to comply with updates to e-privacy laws.
If the data processing activities
of Gamesys or any third-party service providers breach the GDPR (or associated e-privacy laws), then Gamesys could, whether as a result
of a failure to implement adequate policies and procedures or otherwise, face significant fines and/or the revocation of existing licenses
and/ or the refusal of new applications for licenses, as well as claims by customers and reputational damage. The resultant losses suffered
could materially adversely affect the business, prospects, revenues, operating results and financial condition of Gamesys, and, following
the Combination, the Combined Group. There can be no assurances that Gamesys, and, following the Combination, the Combined Group would
be able to recoup such losses, whether in whole or in part, from their third-party service providers or insurers.
Gamesys’
substantial activities in foreign jurisdictions may be affected by factors outside of their control.
A significant portion of Gamesys’
operations are conducted in non-U.S. jurisdictions. As such, the operations of Gamesys may be adversely affected by changes in foreign
government policies and legislation (including gambling legislation) or social instability and other factors that are not within their
control, including renegotiation or nullification of existing contracts or licenses, changes in gambling policies, regulatory requirements
or the personnel administering them, currency fluctuations and devaluations, exchange controls, economic sanctions, tax increases, retroactive
tax claims, changes in taxation policies, risk of terrorist activities, revolution, border disputes, implementation of tariffs and other
trade barriers and protectionist practices, volatility of financial markets and fluctuations in foreign exchange rates, difficulties in
the protection of intellectual property, labor disputes and other risks arising out of foreign governmental sovereignty over the areas
in which operations are conducted. Gamesys’ operations may also be adversely affected by laws and policies of such foreign jurisdictions
affecting foreign trade, taxation and investment. Accordingly, Gamesys’ activities in foreign jurisdictions could be substantially
affected by factors beyond their control, any of which could have a material adverse effect on Gamesys’, and, following the Combination,
the Combined Group’s business, prospects, revenues, operating results and financial condition.
In the event of a dispute
arising in connection with operations in a foreign jurisdiction where Gamesys conducts business, Gamesys may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of the UK or
enforcing UK judgments in such other jurisdictions. Gamesys may also be hindered or prevented from enforcing their rights with respect
to a governmental instrumentality because of the doctrine of sovereign immunity.
Gamesys, and, following the
Combination, the Combined Group may also enter into agreements and conduct activities outside of the jurisdictions in which they or we
currently carry on business, which expansion may present challenges and risks as a result of the factors described above that they have
not faced in the past, any of which could have a material adverse effect on Gamesys, and, following the Combination, the Combined Group’s
business, prospects, revenues, operating results and financial condition.
Gamesys’
branded sites are heavily reliant on well-known brands owned by third parties.
Gamesys
operates certain branded sites, including sites branded as Virgin Games, Heart Bingo and Monopoly Casino. All such branded sites operated
by Gamesys are reliant on the use of highly trusted and recognizable brands which are owned by third parties (the “Third Party Brands”).
Gamesys operates the Third Party Brands pursuant to brand licensing arrangements with the relevant third party brand owner (the “Brand
Owner”). Gamesys is contractually required to operate the such branded sites in accordance with those brand licensing arrangements,
and any material breach of those requirements may expose Gamesys to claims for breach of contract, and/or may lead to the Brand Owner
terminating or failing to renew the brand licensing arrangements. Gamesys owns the player data in respect of such branded sites, and in
the event that the brand licensing arrangements for any of such branded sites were to be terminated early or not renewed, then Gamesys
would seek to migrate those players to a different gaming site operated by it. However, there is a risk that any replacement branded site
offered by Gamesys may not successfully retain the custom of those players, and in the event that Gamesys or, following the Combination,
the Combined Group loses the right to use any of the Third Party Brands its business, financial condition, results of operations
and/or prospects may be materially adversely affected.
Gamesys
is and, following the Combination, the Combined Group will be exposed to the risk that the reputation of the Third Party Brands
may be adversely affected by the activities of third parties over whom it has no control. For example, Gamesys operates and, following
the Combination, the Combined Group will operate the Virgin Games site. The Virgin brand is used by a wide range of businesses. In the
event that the reputation of the Virgin brand was to be adversely affected due to the actions of third parties, that may affect the business
prospects of Gamesys and, following the Combination, the Combined Group.
Risks Related to the
Combination
We may fail to consummate the Combination
or may not consummate it on the terms described herein.
It is currently anticipated
that we will complete the Combination in the second half of 2021. Completion of the Combination is subject to the receipt of applicable
shareholder approvals by each of Gamesys’ shareholders and Bally’s shareholders, regulatory approvals and other customary
closing conditions for the acquisition of a UK public company. As a result, the possible timing and likelihood of completion are uncertain
and, accordingly, there can be no assurance that such Combination will be completed on the expected terms, anticipated schedule or at
all.
If the Combination is not
consummated, we could be subject to a number of risks that may adversely affect our business and the market price of our common stock,
including:
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we will be required to pay costs relating to the Combination such as legal, accounting, financial advisory
and printing fees, whether or not the Combination is consummated;
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time and resources committed by our management to matters relating to the Combination could otherwise
have been devoted to pursuing other beneficial opportunities; and
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we would not realize the benefits we expect to realize from consummating the Combination.
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We cannot provide any assurance
that the Combination will be consummated or that there will not be a delay in the consummation of the Combination. If the Combination
is not consummated, our reputation in our industry and in the investment community could be damaged, and the market price of our common
stock could decline.
The unaudited pro forma condensed combined
financial information and other adjusted information included in this prospectus supplement is unaudited and the actual financial condition
and results of operations after the Combination may differ materially.
The unaudited pro forma condensed
combined financial information and other adjusted information included in this prospectus supplement is presented for illustrative purposes
only are based on numerous adjustments, assumptions and estimates, are subject to numerous other uncertainties and do not purport to reflect
what the Company’s financial position or results of operations would have been had the Combination, this offering and/or the Unit
Offering been completed as of the dates assumed for purposes of that information. Such unaudited pro forma consolidated combined financial
information and certain other adjusted information reflects the assumptions of our management at the time that such information was initially
prepared and may differ, perhaps substantially, from the assumed amounts set forth in the unaudited pro forma condensed combined financial
information and the other adjusted information included or incorporated by reference in this prospectus supplement and the accompanying
prospectus. In addition, in lieu of the Bridge Commitment and the GLPI Commitment, we may pursue one or more offerings of private placements
of debt or equity securities, sale and leaseback transactions and/or bank financings, in each case (including the refinancing of existing
indebtedness of Gamesys) and/or refinance our existing credit facilities and senior unsecured notes, or may otherwise to finance the Combination,
and/or may modify our plan of finance for the Combination, in a manner that is different from the assumptions reflected in the unaudited
pro forma condensed combined financial information and other adjusted information included in this prospectus supplement.
Accordingly, the final acquisition
accounting adjustments may differ materially from the unaudited pro forma adjustments reflected in this prospectus supplement. For more
information, see “Unaudited Pro Forma Condensed Combined Financial Information.”
The Combination is subject to the receipt
of governmental and regulatory approvals that may impose conditions that could have an adverse effect on us or, if not obtained, could
prevent consummation of the Combination.
Consummation of the Combination
is conditioned upon the receipt of governmental approvals, including gaming regulatory approvals. There can be no assurance that these
approvals will be obtained and that the other conditions to consummating the Combination will be satisfied. In addition, the governmental
authorities from which the regulatory approvals are required may impose conditions on the consummation of the Combination or require changes
to the terms of the Combination or agreements to be entered into in connection with the Combination. Such conditions or changes and the
process of obtaining regulatory approvals could have the effect of delaying or impeding consummation of the Combination or of imposing
additional costs or limitations on us following consummation of the Combination, any of which might have an adverse effect on our business,
financial condition and results of operations. This offering of our common stock is not conditioned on the consummation of the Combination
and, as a result, it is possible that this offering occurs and the Combination does not occur. See “—This offering is not
conditioned upon the completion of the Combination. If the Combination is not consummated, we will have broad discretion on the use of
the net proceeds of this offering.”
The Combination is subject to other conditions
that we cannot control.
The Combination is subject
to conditions, including the approval of the Scheme by Gamesys shareholders, the approval of the issuance of shares of our common stock
in connection with the Combination (the “New Bally’s Shares”) by our shareholders, the sanction of the Scheme by the
Court, the Scheme becoming effective by April 12, 2022 (or such later date, if any, as may be agreed by Bally’s, Gamesys, and,
if required, the Court) and the NYSE having authorized the listing of the New Bally’s Shares. No assurance can be given that all
of the conditions to the Combination will be satisfied, or if they are, as to the timing of such satisfaction. If the conditions to the
Combination are not satisfied, then the Combination may not be consummated.
In certain circumstances, we may not be
able to invoke the transaction conditions and terminate the Combination, which could reduce the value of our common stock.
The Takeover Code provides
that certain conditions may only be invoked where the circumstances underlying the failure of the condition are of material significance
to us in the context of the Combination. Therefore, with the exceptions of certain antitrust conditions and certain conditions relating
to (1) the approval of the Scheme by Gamesys shareholders and the Court, (2) the approval of the New Bally’s Shares by
our shareholders and (3) the listing of New Bally’s Shares on the NYSE, we may be required to obtain agreement of the Takeover
Panel that the circumstances giving rise to the right to invoke the condition were of material significance to us in the context of the
Combination before we would be permitted to rely on that condition.
If a material adverse change
affecting Gamesys occurs and the Takeover Panel does not allow us to invoke a condition to cause the Combination not to proceed, the market
price of our common stock may decline or our business or financial condition may be materially adversely affected. As a result, the value
of the New Bally’s Shares received by Gamesys shareholders may be reduced and/or our business or financial condition may be adversely
affected after the Combination.
The Takeover Code may limit our ability
to cause Gamesys to consummate the transaction and may otherwise limit the relief we may obtain in the event Gamesys’ board of directors
withdraws its support of the Scheme.
The Takeover Code limits the
contractual commitments that may be obtained from Gamesys to take actions in furtherance of the Combination, and the Gamesys board of
directors may, if its fiduciary and other directors’ duties so require, withdraw its recommendation in support for the Scheme, and
withdraw the Scheme itself, at any time before the Court Meeting. The Takeover Code does not permit Gamesys to pay any break fee if it
does so, nor can it be subject to any restrictions on soliciting or negotiating other offers or transactions involving Gamesys other than
the restrictions against undertaking actions or entering into agreements which are similar to or have a similar effect to “poison
pills” and which might frustrate the Combination.
Governmental
gaming regulatory requirements concerning ownership of our common stock may impact our regulatory compliance.
The gaming and racing industries
are highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. We are subject to extensive regulation
under laws, rules and supervisory procedures primarily in the jurisdictions where our facilities are located or docked.
These laws, rules and
regulations generally concern the responsibility, financial stability and characters of the owners, managers, and persons with financial
interests in the gaming operations. Some jurisdictions require applications for findings of suitability, licensing or other approvals
for owners of our stock exceeding certain thresholds. If, as a result of this offering, a person purchases stock in us in an amount that
results in such person attaining or exceeding thresholds of ownership requiring regulatory approvals from one or more gaming jurisdictions,
the regulators could take the position that such person must make the requisite filings or obtain the requisite approvals from the regulator.
We cannot predict whether a gaming regulator may take such a position.
The cash consideration
subjects Bally’s to foreign exchange rate exposure.
Because
the cash portion of the purchase price payable to the Gamesys shareholders in the Combination is payable in pound sterling, while
the proceeds from this offering and the Unit Offering will be received in U.S. dollars and a majority of Bally’s revenues are denominated
in U.S. dollars, Bally’s is subject to exchange rate exposure through the closing of the Combination. Bally’s may seek to
mitigate its exposure to currency exchange rate fluctuations by hedging any material mismatch between revenues and obligations, but any
such efforts may not be successful, in which case changes in the relative value of pounds sterling versus U.S. dollars could materially
and adversely affect Bally’s financial condition.
Gamesys currently is not subject to the
internal controls and other compliance obligations of the U.S. securities laws, and Bally’s may not be able to timely and effectively
implement controls and procedures over Gamesys operations as required under the U.S. securities laws.
Gamesys
currently is not subject to the information and reporting requirements of the Exchange Act and other U.S. federal securities laws, including
the compliance obligations relating to, among other things, the maintenance of a system of internal controls as contemplated by the Exchange
Act. Subsequent to the completion of the Combination, Bally’s will need to timely and effectively implement the internal controls
necessary to satisfy those requirements, which require annual management assessments of the effectiveness of internal control over financial
reporting and a report by an independent registered public accounting firm addressing these assessments. Bally’s intends to take
appropriate measures to establish or implement an internal control environment at Gamesys aimed at successfully fulfilling these requirements.
However, it is possible that Bally’s may experience delays in implementing or be unable to implement the required internal financial
reporting controls and procedures, which could result in enforcement actions, the assessment of penalties and civil suits, failure to
meet reporting obligations and other material and adverse events that could have a negative effect on the market price for our common
stock.
Future changes to U.S. and non-U.S.
tax laws could adversely affect the Combined Group.
The
U.S. Congress, the Organization for Economic Co-operation and Development and other government agencies in jurisdictions where Bally’s
and its affiliates do business have had an extended focus on issues related to the taxation of multinational corporations. One example
is in the area of “base erosion and profit shifting,” including situations where payments are made between affiliates
from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States, the UK
and other countries in which Bally’s and its affiliates do business could change on a prospective or retroactive basis, and any
such changes could adversely affect Bally’s and its affiliates (including Bally’s and its affiliates after the Combination).
In
addition, the U.S. government may enact significant changes to the taxation of business entities including, among others, an increase
in the corporate income tax rate, an increase in the tax rate applicable to the global intangible low-taxed income and elimination of
certain exemptions, and the imposition of minimum taxes or surtaxes on certain types of income. No specific United States tax legislation
has been proposed at this time and the likelihood of these changes being enacted or implemented is unclear. We are currently unable to
predict whether such changes will occur and, if so, the ultimate impact on our business or, following the Combination, the business of
the Combined Group.
Bally’s and Gamesys are and, after
the Combination, the Combined Group will be dependent on key management personnel and may face challenges in attracting and retaining
individuals with specialized skills and experience.
We and Gamesys’ success
is and, following the Combination, the Combined Group’s success will be largely dependent upon the performance of their key management,
marketing and technology personnel. As competition for highly skilled management, marketing and technology personnel is intense, any inability
to retain employees, key members of Bally’s, Gamesys’ and, following the Combination, the Combined Group’s executive
management team, and to attract and retain key employees, in particular those who have subject-matter expertise and institutional knowledge
and the necessary skills critical to their operations and the implementation of their strategy, may have a material adverse effect upon
Bally’s, Gamesys’ and, following Combination, the Combined Group’s business, prospects, revenues, operating results
and financial condition.
Use
of Proceeds
We estimate that the net
proceeds from this offering, after deducting the underwriters’ discount, will be approximately $241.1 million (or
approximately $277.4 million if the underwriters exercise their option to purchase additional shares in full).
We
intend to use the net proceeds from this offering (including any net proceeds resulting from the underwriters’ exercise of their
option), together with the proceeds of the Common Stock Offering, to partially fund the cash portion of the purchase price of our announced
Combination (as defined herein) with Gamesys. Upon the consummation
of this offering and the Common Stock Offering, all or substantially all of the net proceeds may be contributed to a newly formed subsidiary
established for the purpose of consummating the Combination and may be converted into pounds sterling and deposited into one or more escrow
accounts with one or more of the banks that have committed to finance the Combination, which escrow deposits will to reduce the financing
commitments under the Bridge Commitment, and any equity raise in excess of $850 million will reduce the GLPI Commitment on a dollar-for-dollar
basis. Any additional net proceeds from this offering or the Common Stock Offering may, at our discretion, also be deposited into such
escrow accounts and further reduce the financing commitments under the Bridge Commitment. If the Combination is terminated, lapses or
is withdrawn for any reason prior to the consummation of the Combination, the amount in escrow will be released to us and, after payment of any cash redemption amount and/or repurchase price, used for general
corporate purposes, which may include repayment of debt, repurchases of our common stock, capital expenditures, acquisitions and investments.
This offering is not contingent
on the consummation of the Combination, and the consummation of the Combination is not contingent on the consummation of this offering,
and, as a result, it is possible that this offering occurs and the Combination does not occur and vice versa, and we cannot give you any
assurances that the Combination will be consummated on the terms described herein or the time frame contemplated herein, if at all.
Certain of the underwriters
or their respective affiliates are acting as our financial advisors in connection with the Combination and they are or may become agents,
arrangers, bookrunners or lenders under Bridge Commitment to fund a portion of the Combination. A portion of the proceeds from this offering
and any proceeds from the Common Stock Offering will be used to reduce the Bridge Commitment, and to pay the fees, costs and expenses
incurred in connection thereto. As a result, certain of the underwriters or their respective affiliates will benefit from the application
of a portion of the net proceeds from this offering and/or the Common Stock Offering to reduce the Bridge Commitment.
Capitalization
The following table sets forth our cash and cash
equivalents and capitalization as of December 31, 2020:
|
·
|
on an as adjusted basis to give effect to this offering;
|
|
·
|
on an as further adjusted basis to give effect to the Common Stock Offering; and
|
|
·
|
on a pro forma basis to give effect to this offering, the Common Stock Offering and the Combination (collectively, the “Transactions”)
on a basis consistent with the Unaudited Pro Forma Condensed Combined Financial Information set forth herein.
|
The
following table does not reflect the sale of any shares or Units that may be sold to the respective underwriters of this offering
and of the Common Stock Offering upon exercise of their respective options to purchase additional shares and Units. If the underwriters
exercise such options, we expect that the proceeds from such sales will be used to fund a portion of the purchase price of the Combination.
Consistent with the
Unaudited Pro Forma Condensed Combined Financial Information set forth therein, the following amounts set forth to give pro forma
effect to the “Transactions” assume (1) the minimum number of Bally’s shares to be issued in connection with
the Combination per agreement with certain Gamesys shareholders is 9,196,000, (2) the lenders under the Bridge Facility provide
financing necessary to pay the cash portion of the consideration payable to Gamesys’ shareholders ($2,143 million) upon
consummation of the Combination and related fees and expenses of $14.2 million, with remaining proceeds from the Bridge Facility,
together with partial proceeds from this offering and the Common Stock Offering, utilized to repay the outstanding balance of
Gamesys’ EUR and GBP Term Facilities ($693 million); (3) the purchase by GLPI of shares of our common stock, or, subject
to U.S. regulatory requirements, warrants, with a value of up to $500.0 million and (4) the issuance of 9,674,000 shares in the
Common Stock Offering. In lieu of the Bridge Commitment and the GLPI Commitment, we may pursue one or more offerings of private
placements of debt or equity securities, sale and leaseback transactions and/or bank financings, in each case, to finance the
Combination (including the refinancing of existing indebtedness of Gamesys) and/or refinance our existing credit facilities and
senior unsecured notes. See “—Risk Factors Relating to the Combination—The unaudited pro forma condensed combined
financial information and other adjusted information included in this prospectus supplement is unaudited and the actual financial
condition and results of operations after the Combination may differ materially.”
This offering is not contingent
on the consummation of the Combination or the Common Stock Offering, and the consummation of the Combination or the Common Stock Offering
is not contingent on the consummation of this offering, and, as a result, it is possible that this offering occurs and the Combination
or the Common Stock Offering does not occur and vice versa, and we cannot give you any assurances that the Combination will be consummated
on the terms described herein or the time frame contemplated herein, if at all. See “Use of Proceeds” and see “Risk
Factors—Risks Related to Our Common Stock and this Offering—This offering is not conditioned upon the completion of the Combination.
If the Combination is not consummated, we will have broad discretion on the use of the net proceeds of this offering.” and “—Risk
Factors Relating to the Combination—We may fail to consummate the Combination or may not consummate it on the terms described herein.”
You should read this table
in conjunction with “Use of Proceeds” in this prospectus supplement, and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and our audited annual consolidated financial statements and related notes and
other financial information incorporated by reference to our annual report on Form 10-K for the fiscal year ended December 31,
2020.
|
|
As of December 31, 2020
|
|
(unaudited, in millions)
|
|
Actual
|
|
|
As Adjusted
for this
Offering
|
|
|
As Further
Adjusted
for the
Common
Stock Offering
|
|
|
As Further
Adjusted
for the
Transactions
|
|
Cash and cash equivalents(1)
|
|
$
|
123.4
|
|
|
$
|
123.4
|
|
|
$
|
123.4
|
|
|
$
|
407.9
|
|
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
5.8
|
|
|
|
5.8
|
|
|
|
5.8
|
|
|
|
5.8
|
|
Long-term debt
|
|
|
1,094.1
|
|
|
|
893.1
|
|
|
|
314.1
|
|
|
|
2,683.4
|
|
Total debt
|
|
$
|
1,099.9
|
|
|
$
|
898.9
|
|
|
$
|
319.9
|
|
|
|
2,689.2
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock $0.01 par value, 100,000,000 shares authorized, actual and as adjusted; 31,315,151 shares issued, actual 31,315,151 shares issued and outstanding, as adjusted for this offering and as further adjusted for the Common Stock Offering; 58,659,426 shares issued and outstanding, as further adjusted for the Transactions(2)
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.4
|
|
|
|
0.6
|
|
Additional paid-in capital
|
|
|
294.6
|
|
|
|
502.9
|
|
|
|
1,102.8
|
|
|
|
2,198.2
|
|
Retained earnings
|
|
|
34.8
|
|
|
|
27.5
|
|
|
|
6.5
|
|
|
|
(15.0
|
)
|
Accumulated other comprehensive loss
|
|
|
(3.1
|
)
|
|
|
(3.1
|
)
|
|
|
(3.1
|
)
|
|
|
(3.1
|
)
|
Treasury stock, at cost: 0 shares of common stock, actual, as adjusted and as further adjusted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total stockholders’ equity (deficit)
|
|
$
|
326.6
|
|
|
$
|
527.6
|
|
|
$
|
1,106.6
|
|
|
$
|
2,180.7
|
|
Total capitalization
|
|
$
|
1,426.5
|
|
|
$
|
1,426.5
|
|
|
|
1,426.5
|
|
|
$
|
4,869.9
|
|
|
(1)
|
Cash and cash equivalents may increase or decrease depending
on, among other things, actual costs and expenses incurred in connection with the Transactions.
|
|
(2)
|
The number of issued and outstanding shares, actual and as adjusted,
excludes (i) 60,000 shares issuable upon the exercise of options outstanding as of March 31, 2021, having a weighted-average exercise
price of $4.31 per share, under our equity incentive plan; (ii) 600,411 shares of common stock underlying outstanding restricted stock
units and other equity awards reserved for future issuance under existing compensation plans; (iii) 417,572 shares of common stock available
to be granted under our existing equity plans, (iv) up to 9,834,732 shares of common stock that may become issuable upon exercise of
option and warrants issued in connection with our strategic partnership with Sinclair; (v) up to 6,687,722 shares of our common stock
that may become issuable upon exercise of penny warrants issued in connection with our acquisition of Monkey Knife Fight and SportCaller,
and our pending acquisition of Bet.Works; and (vi) up to 300,000 shares of our common stock that may be issuable to SportCaller selling
stockholders in connection with achievement of certain post-closing performance targets in connection with our acquisition of SportCaller.
Except as set forth above under “as further adjusted for the Transactions,” the number of issued and outstanding shares does
not include any shares (or warrants) that may be issued under the GLPI Commitment or any shares that may be issued to Gamesys shareholders
in the Combination. Share numbers and amounts do not reflect shares of our common stock, issuable upon settlement of the purchase contracts.
|
Dividend
policy
We are not currently paying
a cash dividend on our common stock, and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future.
Any future determinations relating to our dividend policies will be made at the discretion of our board of directors and will depend on
conditions then existing, including our financial condition, results of operations, contractual restrictions, capital and regulatory requirements
and other factors our board of directors may deem relevant.
Unaudited
Pro Forma Condensed combined Financial Information
The unaudited pro forma condensed
combined financial information (“Unaudited Pro Forma Financial Information”) included herein presents the unaudited pro forma
condensed combined balance sheet (“Pro Forma Balance Sheet”) and the unaudited pro forma condensed combined statement of operations
(“Pro Forma Statement of Operations”) based upon the audited historical financial statements of Bally’s Corporation
(“Bally’s” or the “Company”), the Acquired Companies (as defined below) and Gamesys Group plc (“Gamesys”),
after giving effect to the acquisitions of the Acquired Companies (the “Completed Acquisitions”) and the Company’s planned
combination with Gamesys (the “Gamesys Combination”), the Financing Transaction (as defined below) and the Equity Offerings
(as defined below) (collectively, the “Transactions”), and the adjustments described in the accompanying notes.
The Pro Forma Statement of
Operations for the year ended December 31, 2020 gives effect to the Transactions as if each of them had occurred on January 1,
2020. The Pro Forma Balance Sheet as of December 31, 2020 gives effect to the Company’s acquisition (the “MontBleu Acquisition”)
of MontBleu Resort Casino & Spa (“MontBleu”), the Gamesys Combination, the Financing Transaction, and the Equity
Offerings as if each of them had occurred on December 31, 2020.
The Unaudited Pro Forma Financial
Information set out below have been prepared in accordance with Article 11 of Regulation S-X, as amended by the Securities and Exchange
Commission (“SEC”) Final Rule Release No. 33 10786, Amendments to Financial Disclosures About Acquired and Disposed
Businesses using accounting policies in accordance with principles generally accepted in the United States of America (“U.S. GAAP”).
The Unaudited Pro Forma Financial
Information reflects transaction related adjustments management believes are necessary to present fairly Bally’s Pro Forma Balance
Sheet and Pro Forma Statement of Operations.
The Unaudited Pro Forma Financial
Information has been prepared for illustrative purposes only. The hypothetical financial position or results included in the Unaudited
Pro Forma Financial Information may differ from the Company’s actual financial position or results following the Transactions.
The Unaudited Pro Forma Financial Information has been prepared on the basis set out in the notes below and has been prepared in a manner
consistent with the accounting policies applied by the Company in its historical financial statements for the year ended December 31,
2020. In preparing the Unaudited Pro Forma Financial Information, no adjustments have been made to reflect the potential operating synergies
and administrative cost savings or the costs of integration activities that could result from the combination of Bally’s, the Acquired
Companies and Gamesys.
Completed Acquisitions
On July 1, 2020, the
Company closed its acquisition of each of IOC-Kansas City, Inc. (“Casino KC”) and Rainbow Casino-Vicksburg Partnership,
L.P. (“Casino Vicksburg”) from Caesars Entertainment, Inc., formerly Eldorado Resorts, Inc. (“Caesars”),
for an aggregate purchase price of $230,000,000 in cash, subject to customary post-closing adjustments pursuant to the terms of an Equity
Purchase Agreement, dated July 10, 2019, among Bally’s, Caesars and various of their affiliates. This acquisition was funded
with available cash on hand at July 1, 2020 and from borrowings under the Company’s revolving credit facility.
On December 23, 2020,
the Company closed its acquisition of Eldorado Resort Casino Shreveport (“Shreveport”) from Caesars for a purchase price of
$140,000,000 in cash, subject to customary post-closing adjustments pursuant to the terms of an Equity Purchase Agreement, dated April 24,
2020 (the “Shreveport/MontBleu Agreement”), among Bally’s, Caesars and certain of their affiliates. This acquisition
was funded with available cash on hand at December 23, 2020 and from borrowings under the Company’s revolving credit facility.
On April 6, 2021, the
Company completed its acquisition of MontBleu from Caesars for a purchase price of $15,000,000 in cash, payable one year from the closing
date, subject to customary post-closing adjustments pursuant to the terms of the Shreveport/MontBleu Agreement. The Company expects that
this acquisition will be funded with available cash on hand or available borrowings under the Company’s existing debt agreements
when due in April 2022.
The acquisitions of Casino
KC, Casino Vicksburg, Shreveport and MontBleu (together the “Acquired Companies”) are being accounted for as business combinations
using the acquisition method with Bally’s as the accounting acquirer in accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 805, Business Combinations (“ASC 805”). Under this method of accounting the respective
purchase prices for the Completed Acquisitions will be allocated to the Acquired Companies’ assets acquired and liabilities assumed
based upon their estimated fair values at the date of consummation of the relevant acquisition.
Gamesys Combination
On April 13, 2021, the Company issued an announcement pursuant to Rule 2.7 of the United Kingdom City Code on Takeovers and Mergers disclosing
the terms of the Gamesys Combination pursuant to which Bally’s would acquire the entire issued and to be issued ordinary share capital
of Gamesys. Under the terms of the Gamesys Combination, Gamesys shareholders would be entitled to receive 1,850 pence in cash for each
share of Gamesys or, under a share alternative, Gamesys shareholders would be able to elect to receive newly issued common shares of the
Company in lieu of part or all of the cash consideration to which they would be entitled to elect to receive under the Gamesys Combination
at an exchange ratio of 0.343 new Bally’s common shares for each Gamesys share. The minimum number of shares to be issued, per agreement
with certain shareholders, is 9,196 thousand which is the number of shares assumed to be issued for purposes of this Unaudited Pro Forma
Financial Information. An increase in the number of shares issued could materially impact the Unaudited Pro Forma Financial Information.
The Gamesys Combination is expected to be accounted for as a business combination using the acquisition method with Bally’s as the
accounting acquirer in accordance with ASC 805. In arriving at the conclusion that Bally’s is the accounting acquirer, the Company
considered the structure of the transaction, relative outstanding share ownership, the composition of the combined company’s board
of directors, the relative size of Bally’s and Gamesys, and the designation of certain senior management positions of the combined
company.
Financing Transaction
On April 13, 2021,
Bally’s entered into a $2,378 million secured bridge loan agreement (the ‘‘Bridge Facility’’), subject
to limited conditions, under which the lenders party thereto agreed to provide the financing necessary to pay the cash portion of the
consideration payable to Gamesys’ shareholders ($2,143 million) upon consummation of the Gamesys Combination and related fees
and expenses of $14.3 million. The remaining proceeds from the Bridge Facility, together with partial proceeds from the Equity Offerings
and, if funded, the GLPI Commitment (defined below), will be utilized to repay the outstanding balance of Gamesys’ EUR and GBP Term
Facilities ($693 million). The amount of the Bridge Commitment may be reduced by certain proceeds from the Equity Offering.
Bally’s has also entered
into a commitment letter (the “GLPI Commitment Letter”) with Gaming & Leisure Properties, Inc. (“GLPI”)
pursuant to which GLPI has irrevocably committed to purchase shares of our common stock, or, subject to U.S. regulatory requirements,
warrants, with a value of up to $500 million (the “GLPI Commitment”) at a price per share based on the volume-weighted average
price determined over a period of time prior to such issuance. The proceeds may be used to fund a portion of the aggregate cash
consideration for the Combination, acquisition costs and fees and expenses incurred by Bally’s and its affiliated entities related
to the Combination, or to refinance the existing indebtedness of Gamesys. The GLPI Commitment contemplates that Bally’s and
GLPI will affect one or more takeout sale and leaseback transactions, thereby reducing the number of Bally’s shares (or warrants)
to be issued to GLPI. The amount of the GLPI Commitment may be reduced by certain net proceeds from the Equity Offerings.
The incurrence of the Bridge
Facility and issuance of shares pursuant to the GLPI Commitment are collectively referred to as the “Financing Transaction”.
Equity Offerings
Common
Stock Offering. The Company expects to offer and issue (the “Common Stock Offering”) $600 million of its common
stock, par value $0.01 (the “Common Stock”). The Unaudited Pro Forma Financial Information assumes a public offering price
in the Common Stock Offering of $62.01 per share, which is the last reported sale price of the Common Stock on the New York Stock Exchange
on April 7, 2021, and would result in the issuance of 9,674 thousand shares in the Common Stock Offering, subject to changes in stock
price among other factors. The Company has estimated total net proceeds for the Common Stock Offering of $579 million, net of estimated
issuance costs of $21 million. The amounts set forth above in this paragraph and elsewhere in the Unaudited Pro Forma Financial Information
assume no exercise of the underwriters’ option to purchase additional shares of the Company’s common stock in connection with
the Common Stock Offering.
TEU
Offering. The Company expects to offer and issue (the “TEU Offering” and, together with the Common Stock Offering,
the “Equity Offerings”) $250 million of tangible equity units (each, a “TEU”). Each TEU will be comprised of two
parts: (1) a prepaid stock purchase contract (a “TEU purchase contract”) and (2) a senior amortizing note (a “TEU amortizing
note”) that will pay equal quarterly installments. Unless earlier redeemed by the Company in connection with a Gamesys Combination
termination redemption or settled earlier at the holder’s option or at the Company’s option, each TEU purchase contract will,
subject to postponement in certain limited circumstances, automatically settle on April 15, 2024, and the Company will deliver a specified
number of shares of Common Stock per TEU based upon applicable settlement rates and the market value of the Company’s Common Stock.
The TEU amortizing notes are expected to have a specified initial principal amount and a specified interest rate and the Company will
make specified payments of interest and partial repayments of principal on quarterly installment payment dates.
The Unaudited Pro Forma
Financial Information reflects the expected issuance of the TEU purchase contract portion of the TEUs as additional paid-in-capital,
net of issuance costs, and the TEU amortizing notes portion of the TEU as long-term debt, net of issuance costs. The Company has
estimated total net proceeds for the TEU Offering of $241.25 million, net of estimated issuance costs of $8.75 million, which has
been allocated to the TEU purchase contracts and the TEU amortizing notes based on the relative fair values of the respective
components, determined based on the most recent fair market estimates at the time of filing. The Company has estimated that the
allocation of the net proceeds of the TEU is $201.0 million, net of issuance costs of $7.3 million for the TEU purchase contracts,
and $41.8 million, net of issuance costs of $1.5 million for the TEU amortizing note.
Based on the expected structure
of the TEU, the Company currently expects the TEU purchase contracts to meet equity classification. The classification of the TEU will
be subject to detailed assessment once finalized and a different conclusion may result in a material impact on the information presented.
The Company intends to use
the net proceeds from the Equity Offerings to partially fund the cash portion of the consideration payable for the Gamesys Combination.
Upon the consummation of the Equity Offerings, all or substantially all of the net proceeds will be placed in an escrow account with one
of the banks that have committed to finance the Gamesys Combination to reduce such financing commitments. If the Gamesys Combination is
terminated, lapses or is withdrawn for any reason prior to the consummation of the Gamesys Combination, the net proceeds of the Equity
Offerings will be released to the Company from escrow and, after payment of any cash redemption amount and/or repurchase price, used for general corporate purposes. The Equity Offerings are not contingent
on the consummation of the Gamesys Combination, and the consummation of the Gamesys Combination is not contingent on the consummation
of the Equity Offerings, and, as a result, it is possible that the Equity Offerings occur and the Gamesys Combination does not occur and
vice versa.
Unaudited Pro Forma Condensed
Combined Balance Sheet as of December 31, 2020
(in thousands)
|
|
|
|
|
Pro
forma adjustments
|
|
|
(In thousands)
|
|
Bally’s
Historical
(Note 2)
|
|
|
MontBleu
pre-acquisition
results and
reclassifications
(Note 5)
|
|
|
MontBleu
Combination
Adjustments
(Note 6)
|
|
Gamesys
(US GAAP)
(Note 7)
|
|
|
Gamesys
Combination
Adjustments
(Note 8)
|
|
Financing
Transaction
(Note 9)
|
|
Equity
Offerings
(Note 10)
|
|
Pro
forma
Combined
Company
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
123,445
|
|
|
$
|
2,494
|
|
|
$
|
-
|
|
|
|
$
|
289,788
|
|
|
$
|
(2,877,130
|
)
|
8(a)
|
|
$
|
2,864,022
|
|
9(a)
|
|
$
|
5,250
|
|
10(a)
|
|
$
|
407,869
|
Restricted cash
|
|
|
3,110
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
3,110
|
Players deposit
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
40,347
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
40,347
|
Accounts receivable, net
|
|
|
14,798
|
|
|
|
1,370
|
|
|
|
-
|
|
|
|
|
54,386
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
70,554
|
Inventory
|
|
|
9,296
|
|
|
|
537
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
9,833
|
Tax receivable
|
|
|
84,483
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
84,483
|
Prepaid expenses and other current
assets
|
|
|
53,823
|
|
|
|
1,271
|
|
|
|
-
|
|
|
|
|
5,180
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
60,274
|
Total current assets
|
|
|
288,955
|
|
|
|
5,672
|
|
|
|
-
|
|
|
|
|
389,701
|
|
|
|
(2,877,130
|
)
|
|
|
|
2,864,022
|
|
|
|
|
5,250
|
|
|
|
676,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
749,029
|
|
|
|
56,259
|
|
|
|
(49,345
|
)
|
6(a)
|
|
|
12,131
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
768,074
|
Right of use assets, net
|
|
|
36,112
|
|
|
|
41,636
|
|
|
|
16,171
|
|
6(a)
|
|
|
29,851
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
123,770
|
Goodwill, net
|
|
|
186,979
|
|
|
|
5
|
|
|
|
(5
|
)
|
6(a)
|
|
|
717,245
|
|
|
|
1,268,861
|
|
8(a)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
2,173,086
|
Intangible assets, net
|
|
|
663,395
|
|
|
|
4,368
|
|
|
|
4,532
|
|
6(a)
|
|
|
555,586
|
|
|
|
1,047,380
|
|
8(b)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
2,275,261
|
Deferred tax assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
13,494
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
13,494
|
Other assets
|
|
|
5,385
|
|
|
|
8
|
|
|
|
-
|
|
|
|
|
6,952
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
12,345
|
Total assets
|
|
$
|
1,929,855
|
|
|
$
|
107,948
|
|
|
$
|
(28,647
|
)
|
|
|
$
|
1,724,960
|
|
|
$
|
(560,888
|
)
|
|
|
$
|
2,864,022
|
|
|
|
$
|
5,250
|
|
|
|
$
|
6,042,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
5,750
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$5,750
|
Current portion of lease obligations
|
|
|
1,520
|
|
|
|
550
|
|
|
|
1,877
|
|
6(a)
|
|
|
8,315
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
12,262
|
Current portion of cross currency and interest rate swap
payable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
5,043
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
5,043
|
Accounts payable
|
|
|
15,869
|
|
|
|
661
|
|
|
|
-
|
|
|
|
|
17,038
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
33,568
|
Payable to players
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
40,347
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
40,347
|
Accrued liabilities
|
|
|
120,055
|
|
|
|
2,263
|
|
|
|
15,000
|
|
6(b)
|
|
|
143,395
|
|
|
|
26,580
|
|
8(c)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
307,292
|
Total current liabilities
|
|
|
143,194
|
|
|
|
3,474
|
|
|
|
16,877
|
|
|
|
|
214,138
|
|
|
|
26,580
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
404,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease obligations, net of current portion
|
|
|
62,025
|
|
|
|
65,790
|
|
|
|
(14,051
|
)
|
6(a)
|
|
|
22,627
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
136,391
|
Long-term debt, net of current portion
|
|
|
1,094,105
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
692,574
|
|
|
|
(692,574
|
)
|
8(e)
|
|
|
2,364,022
|
|
9(b)
|
|
|
(774,711
|
)
|
10(a),(b),(d)
|
|
2,683,415
|
Pension benefit obligations
|
|
|
9,215
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
9,215
|
Deferred tax liability
|
|
|
36,983
|
|
|
|
-
|
|
|
|
1,675
|
|
6(a)
|
|
|
60,520
|
|
|
|
244,043
|
|
8(f)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
343,221
|
Naming rights liabilities
|
|
|
243,965
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
243,965
|
Other long-term liabilities
|
|
|
13,770
|
|
|
|
436
|
|
|
|
-
|
|
|
|
|
27,125
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
41,331
|
Total liabilities
|
|
$
|
1,603,257
|
|
|
$
|
69,700
|
|
|
$
|
4,501
|
|
|
|
$
|
1,016,984
|
|
|
$
|
(421,951
|
)
|
|
|
$
|
2,364,022
|
|
|
|
$
|
(774,711
|
)
|
|
|
$
|
3,861,801
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
307
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
14,994
|
|
|
|
(14,898
|
)
|
8(g)
|
|
|
81
|
|
9(c)
|
|
|
97
|
|
10(c)
|
|
580
|
Additional paid-in capital
|
|
|
294,643
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
12,131
|
|
|
|
583,391
|
|
8(g)
|
|
|
499,919
|
|
9(c)
|
|
|
808,153
|
|
10(b),(c)
|
|
2,198,238
|
Retained earnings
|
|
|
34,792
|
|
|
|
38,248
|
|
|
|
(33,148
|
)
|
6(a),(c)
|
|
|
335,723
|
|
|
|
(362,303
|
)
|
8(g)
|
|
|
-
|
|
|
|
|
(28,289
|
)
|
10(d)
|
|
(14,977)
|
Other Reserves
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
345,128
|
|
|
|
(345,128
|
)
|
8(g)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
Accumulated other comprehensive loss
|
|
|
(3,144
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(3,144)
|
Total shareholders’
equity
|
|
|
326,598
|
|
|
|
38,248
|
|
|
|
(33,148
|
)
|
|
|
|
707,976
|
|
|
|
(138,938
|
)
|
|
|
|
500,000
|
|
|
|
|
779,961
|
|
|
|
2,180,698
|
Total liabilities
and shareholders’ equity
|
|
$
|
1,929,855
|
|
|
$
|
107,948
|
|
|
$
|
(28,647
|
)
|
|
|
$
|
1,724,960
|
|
|
$
|
(560,888
|
)
|
|
|
$
|
2,864,022
|
|
|
|
$
|
5,250
|
|
|
|
$
|
6,042,499
|
See accompanying notes to the Unaudited Pro Forma
Financial Information, which are an integral part of these statements.
Unaudited Pro Forma Condensed
Combined Statement of Operations for the year ended December 31, 2020
(in thousands, except share and per share amounts)
|
|
|
|
|
Pro
forma adjustments
|
|
(In
thousands, except for shares and share price)
|
|
Bally’s
Historical
(Note 2)
|
|
|
Completed
Acquisitions
pre-acquisition
results and
reclassifications
(Note 3) (a)
|
|
|
Completed
Acquisitions
Adjustments
(Note 4)
|
|
Gamesys
(US GAAP)
(Note 7)
|
|
|
Gamesys
Combination
Adjustments
(Note 8)
|
|
Financing
Transaction
(Note 9)
|
|
Equity
Offerings
(Note 10)
|
|
Pro
forma
Combined
Company
|
|
Revenues
|
|
$
|
372,792
|
|
|
$
|
124,348
|
|
|
$
|
-
|
|
|
|
$
|
934,398
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
1,431,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming, racing, hotel, food and beverage, retail, entertainment
and other
|
|
|
138,669
|
|
|
|
56,911
|
|
|
|
-
|
|
|
|
|
513,489
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
709,069
|
|
Advertising, general and administrative
|
|
|
176,943
|
|
|
|
44,069
|
|
|
|
2,920
|
|
4(a)
|
|
|
170,778
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
394,710
|
|
Goodwill and asset impairment
|
|
|
8,659
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
8,659
|
|
Expansion and pre-opening
|
|
|
921
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
921
|
|
Acquisition, integration and restructuring expense
|
|
|
13,257
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
4,751
|
|
|
|
26,580
|
|
8(c)
|
|
|
-
|
|
|
|
|
28,289
|
|
10(d)
|
|
|
72,876
|
|
Storm related losses, net of insurance recoveries
|
|
|
14,095
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
14,095
|
|
Rebranding
|
|
|
792
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
792
|
|
Depreciation and amortization
|
|
|
37,842
|
|
|
|
14,553
|
|
|
|
(2,780
|
)
|
4(b),(c)
|
|
|
121,599
|
|
|
|
50,532
|
|
8(d)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
221,745
|
|
Foreign Exchange Gain/Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
5,393
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
5,393
|
|
Total operating
costs and expenses
|
|
|
391,178
|
|
|
|
115,533
|
|
|
|
140
|
|
|
|
|
816,009
|
|
|
|
77,111
|
|
|
|
|
-
|
|
|
|
|
28,289
|
|
|
|
|
1,428,260
|
|
Income (loss) from operations
|
|
|
(18,386
|
)
|
|
|
8,815
|
|
|
|
(140
|
)
|
|
|
|
118,389
|
|
|
|
(77,111
|
)
|
|
|
|
-
|
|
|
|
|
(28,289
|
)
|
|
|
|
3,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
612
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
642
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1,254
|
|
Interest expense, net of amounts capitalized
|
|
|
(63,248
|
)
|
|
|
(6,167
|
)
|
|
|
(498
|
)
|
4(d)
|
|
|
(30,817
|
)
|
|
|
30,817
|
|
8(e)
|
|
|
(53,161
|
)
|
9(d)
|
|
|
(955
|
)
|
10(e)
|
|
|
(124,029
|
)
|
Change in value of naming rights liabilities
|
|
|
(57,660
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(57,660
|
)
|
Gain on bargain purchases
|
|
|
63,871
|
|
|
|
-
|
|
|
|
5,100
|
|
4(e)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
68,971
|
|
Total other expense
|
|
|
(56,425
|
)
|
|
|
(6,167
|
)
|
|
|
4,602
|
|
|
|
|
(30,175
|
)
|
|
|
30,817
|
|
|
|
|
(53,161
|
)
|
|
|
|
(955
|
)
|
|
|
|
(111,464
|
)
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for income taxes
|
|
|
(74,811
|
)
|
|
|
2,648
|
|
|
|
4,462
|
|
|
|
|
88,214
|
|
|
|
(46,294
|
)
|
|
|
|
(53,161
|
)
|
|
|
|
(29,243
|
)
|
|
|
|
(108,187
|
)
|
Provision (Benefit) for income taxes
|
|
|
(69,324
|
)
|
|
|
322
|
|
|
|
1,249
|
|
4(f)
|
|
|
1,926
|
|
|
|
(8,796
|
)
|
8(f)
|
|
|
(14,885
|
)
|
9(e)
|
|
|
(8,188
|
)
|
10(f)
|
|
|
(97,696
|
)
|
Net income (loss)
|
|
$
|
(5,487
|
)
|
|
$
|
2,326
|
|
|
$
|
3,212
|
|
|
|
$
|
86,288
|
|
|
$
|
(37,498
|
)
|
|
|
$
|
(38,276
|
)
|
|
|
$
|
(21,055
|
)
|
|
|
$
|
(10,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning per share (Note 11):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.18
|
)
|
Diluted
|
|
$
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding (Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
31,315,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,605,201
|
|
11(a)
|
|
|
8,063,216
|
|
11(a)
|
|
|
9,675,859
|
|
11(a)
|
|
|
58,659,426
|
|
Diluted
|
|
|
31,315,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,605,201
|
|
11(a)
|
|
|
8,063,216
|
|
11(a)
|
|
|
9,675,859
|
|
11(a)
|
|
|
58,659,426
|
|
|
(a)
|
Includes pre-acquisition results for (1) Casino KC and Casino Vicksburg for the period from January 1, 2020 through June 30, 2020, (2) Shreveport for the period from January 1, 2020 through December 22, 2020 and (3) MontBleu for the period from January 1, 2020 through December 31, 2020. See Note 3 for reclassification adjustments made to conform the Completed Acquisitions to the presentation used by Bally’s.
|
See accompanying notes to the Unaudited Pro Forma
Financial Information, which are an integral part of these statements.
Notes to the Unaudited Pro Forma Condensed Combined
Financial Information
Note 1 — Description of
Transaction and Basis of Presentation
The Unaudited Pro Forma Financial
Information has been prepared based on “U.S. GAAP”
and pursuant to the rules and regulations of Securities and Exchange Commission’s (“SEC”) Regulation S-X and presents
the Pro Forma Balance Sheet and Pro Forma Statement of Operations of the combined companies based upon the historical financial information
of Bally’s, the Acquired Companies and Gamesys, after giving effect to the following transactions:
|
•
|
The Completed Acquisitions;
|
|
•
|
The Gamesys Combination;
|
|
•
|
The Financing Transaction; and
|
The Unaudited Pro Forma Financial
Information is not necessarily indicative of what Bally’s consolidated statements of operations or consolidated balance sheet would
have been had the Acquisitions been completed as of the dates indicated or will be for any future periods. The Unaudited Pro Forma Financial
Information does not purport to project the future financial position or results of operations of Bally’s following the Transactions.
The Unaudited Pro Forma Financial Information reflects transaction related adjustments management believes are necessary to present fairly
Bally’s Pro Forma Balance Sheet and Pro Forma Statement of Operations assuming the Transactions (other than, in the case of Bally’s
Pro Forma Balance Sheet, the Casino KC, Casino Vicksburg and Shreveport acquisitions) had been consummated as of December 31, 2020
and January 1, 2020, respectively. The transaction related adjustments are based on currently available information and assumptions
management believes are, under the circumstances and given the information available at this time, reasonable, and reflective of adjustments
necessary to report Bally’s financial condition and results of operations as a result of the closing of the Transactions. All dollar
amounts are presented in thousands, unless otherwise noted.
Bally’s has concluded
that the MontBleu Acquisition and the Gamesys Combination each represent business combinations pursuant to ASC 805. As of the date of
this filing, the calculations necessary to estimate the fair values of the assets acquired and liabilities assumed have been performed
based on a preliminary valuation for the MontBleu Acquisition, and based on publicly available benchmarking information as well as
a variety of other assumptions, including market participant assumptions for the Gamesys Combination.. The Company will continue to refine
its identification and valuation of assets acquired and the liabilities assumed as further information becomes available. Using
the total consideration for the transactions, Bally’s has preliminarily allocated the purchase price to such assets and liabilities
as of January 31, 2021. These preliminary purchase price allocations have been used to prepare pro forma adjustments in the Unaudited
Pro Forma Financial Information. The final purchase price allocations will be determined when Bally’s has completed
the Gamesys Combination and the detailed valuations and other studies and necessary calculations. The final purchase price allocations
could differ materially from the preliminary purchase price allocations. The final purchase price allocations may include changes in allocations
to intangible assets, goodwill and bargain purchase based on the results of certain valuations and other studies that have yet to be completed
and other changes to assets and liabilities.
The Unaudited Pro Forma Financial
Information has been compiled in a manner consistent with the accounting policies adopted by Bally’s, and reflect certain adjustments
to the Acquired Companies’ and Gamesys’ historical financial information to conform to the accounting policies of Bally’s
based on a preliminary review of the Acquired Companies’ and Gamesys accounting policies.
The pro forma adjustments
are based on preliminary estimates and currently available information and assumptions that Bally’s management believes are reasonable.
The notes to the Unaudited Pro Forma Financial Information describe how such adjustments were derived and presented in the Pro Forma Balance
Sheet and Pro Forma Statement of Operations. Changes in facts and circumstances or discovery of new information may result in revised
estimates. As a result, there may be material adjustments to the Unaudited Pro Forma Financial Information. Certain historical financial
statement caption amounts for Gamesys and the Acquired Companies have been reclassified or combined to conform to Bally’s presentation
and disclosure requirements.
The Unaudited Pro Forma Financial
Information should be read in conjunction with the audited consolidated financial statements and related notes of Bally’s, the Acquired
Companies and Gamesys as of and for the year ended December 31, 2020.
Note 2 — Bally’s historical financial
statements
The results and net assets of Bally’s as
of and for the year ended December 31, 2020 have been extracted from the audited consolidated financial statements of Bally’s,
as set out in Bally’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Note 3 — Completed Acquisitions pre-acquisition results and reclassifications
Certain reclassifications were directly applied
to the pre-acquisition historical financial statements of the Acquired Companies to conform to the financial statement presentation of
Bally’s.
Reclassifications in the Pro Forma Statement of
Operations are as follows:
|
|
Year
Ended December 31, 2020
|
|
|
|
Casino
KC and
Casino Vicksburg
Before
Reclassification
|
|
|
Shreveport
Before
Reclassification
|
|
|
MontBleu
Reported
|
|
|
Reclassifications
|
|
|
Notes
|
|
Completed
Acquisitions After
Reclassifications
|
|
(In thousands)
|
|
|
Note
(a)
|
|
|
|
Note
(b)
|
|
|
|
Note
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
25,130
|
|
|
$
|
67,763
|
|
|
$
|
31,455
|
|
|
$
|
-
|
|
|
|
|
$
|
124,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming, racing, hotel, food and beverage, retail, entertainment
and other
|
|
|
10,493
|
|
|
|
34,974
|
|
|
|
13,819
|
|
|
|
(2,375
|
)
|
|
(d)
|
|
|
56,911
|
|
Marketing & promotions
|
|
|
1,144
|
|
|
|
2,248
|
|
|
|
-
|
|
|
|
(3,392
|
)
|
|
(d)
|
|
|
-
|
|
Advertising, general and /administrative
|
|
|
9,068
|
|
|
|
11,765
|
|
|
|
14,893
|
|
|
|
8,343
|
|
|
(d)
|
|
|
44,069
|
|
Management Fee
|
|
|
514
|
|
|
|
2,062
|
|
|
|
-
|
|
|
|
(2,576
|
)
|
|
(d)
|
|
|
-
|
|
Depreciation and amortization
|
|
|
2,913
|
|
|
|
6,904
|
|
|
|
4,736
|
|
|
|
-
|
|
|
|
|
|
14,553
|
|
Total operating costs and expenses
|
|
|
24,132
|
|
|
|
57,953
|
|
|
|
33,448
|
|
|
|
-
|
|
|
|
|
|
115,533
|
|
Income from operations
|
|
|
998
|
|
|
|
9,810
|
|
|
|
(1,993
|
)
|
|
|
-
|
|
|
|
|
|
8,815
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of amounts capitalized
|
|
|
(1,730
|
)
|
|
|
(4,437
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
(6,167
|
)
|
Total other expense
|
|
|
(1,730
|
)
|
|
|
(4,437
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
(6,167
|
)
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes
|
|
|
(732
|
)
|
|
|
5,373
|
|
|
|
(1,993
|
)
|
|
|
-
|
|
|
|
|
|
2,648
|
|
(Benefit) Provision for income taxes
|
|
|
322
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
322
|
|
Net income (loss)
|
|
$
|
(1,054
|
)
|
|
$
|
5,373
|
|
|
$
|
(1,993
|
)
|
|
$
|
-
|
|
|
|
|
$
|
2,326
|
|
(a) The results of Casino KC and Casino Vicksburg
for the period from January 1, 2020 through June 30, 2020 have been extracted from the audited combined financial statements
of Casino KC and Casino Vicksburg, as set out in Bally’s Current Report on Form 8-K filed with the SEC on February 3,
2021.
(b) The results of Shreveport for the period
from January 1, 2020 through December 22, 2020 have been extracted from the audited consolidated financial statements of Shreveport,
as set out in Bally’s Current Report on Form 8-K filed with the SEC on February 12, 2021.
(c) The results of MontBleu for the year
ended December 31, 2020 have been extracted from the audited consolidated financial statements of MontBleu, as set out in Bally’s
Current Report on Form 8-K filed with the SEC on March 16, 2021.
(d) Represents the reclassification of balances
in “Gaming, racing, hotel, food and beverage, retail, entertainment and other” ($2,375), “Marketing & promotions”
($3,392), and “Management Fee” ($2,576) to Advertising, general and administrative expenses.
Note 4 — Completed Acquisitions adjustments
The pro forma adjustments are based on preliminary
estimates and assumptions that are subject to change. The following adjustments have been reflected in the Unaudited Pro Forma Financial
Information:
4(a) Represents a $2,920 increase in lease
expense related to changes in the fair value of right of use asset and lease liabilities of the Acquired Companies.
4(b) Represents decrease in depreciation
expense related to acquired property and equipment resulting from the fair value adjustment of assets acquired in the Completed Acquisitions.
Bally’s estimated that the fair value of property and equipment was less than MontBleu’s book value by $49.3 million, greater
than Shreveport’s book value by $45.9 million and less than Casino KC and Casino Vicksburg’s book value by $8.0 million.
Therefore, depreciation expense decreased by a total of $2.9 million on a combined basis for the year ended December 31, 2020 using
the straight-line method of depreciation, including a reduction in MontBleu depreciation expense of $2.5 million. The estimated remaining
useful lives of acquired property and equipment from the Completed Acquisitions ranged from 2 years to 40 years:
(In thousands)
|
|
Fair Value
|
|
|
Weighted Average
Useful Life (Years)
|
|
|
Depreciation Method
|
|
Year ended December 31,
2020
|
|
Land improvements
|
|
$
|
6,100
|
|
|
|
10
|
|
|
Straight Line
|
|
$
|
428
|
|
Buildings and improvements
|
|
|
114,419
|
|
|
|
37
|
|
|
Straight Line
|
|
|
2,676
|
|
Furniture, fixtures and equipment
|
|
|
26,374
|
|
|
|
6
|
|
|
Straight Line
|
|
|
4,101
|
|
Vessels and automobiles
|
|
|
26,751
|
|
|
|
12
|
|
|
Straight Line
|
|
|
2,191
|
|
Total depreciation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
9,396
|
|
Less: historical depreciation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,765
|
)
|
Casino KC, Casino Vicksburg, and Shreveport Pro forma adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
(369
|
)
|
Reduction in MontBleu depreciation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,536
|
)
|
Total Pro forma Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(2,905
|
)
|
4(c) Represents the amortization of intangible
assets related to the Completed Acquisitions over a three- to ten-year period as if the Completed Acquisitions occurred on January 1,
2020. The estimated useful lives were determined based on a review of the time period over which economic benefit is expected to be generated
as well as additional factors. Factors considered include contractual life, the period over which a majority of cash flow is expected
to be generated, and management’s expectations based on historical experience with similar assets:
(In thousands)
|
|
Fair Value
|
|
|
Weighted Average
Useful Life (Years)
|
|
|
Amortization Method
|
|
Year ended December 31,
2020
|
|
Rated Player Relationships
|
|
|
1,300
|
|
|
|
8
|
|
|
Straight Line
|
|
$
|
107
|
|
Total acquired finite lived intangible assets
|
|
|
1,300
|
|
|
|
|
|
|
|
|
|
107
|
|
Less: historical intangible asset amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
(52
|
)
|
Casino KC, Casino Vicksburg, and Shreveport Pro forma adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
55
|
|
Increase in MontBleu amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
70
|
|
Total Pro forma Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
$
|
125
|
|
4(d) Represents the reversal of interest
expense on intercompany loans recorded by Casino KC and Casino Vicksburg ($1,730) and Shreveport ($4,437). Additionally, represents the
interest expense for borrowings that would have been needed to finance the $230 million purchase price of Casino KC and Casino Vicksburg
and the $140 million purchase price of Shreveport had each of the acquisitions closed on January 1, 2020. The adjustment to record
interest expense assumes the additional borrowings for Casino KC, Casino Vicksburg, and Shreveport were obtained on January 1, 2020
for both transactions and was outstanding until the point the Company had financing in place to fund each acquisition.
For the Casino KC and Casino
Vicksburg transaction, interest expense of $2,540 was calculated using a weighted average rate of 4.43% for the first three months of
2020 at which point the Company had financing in place to fund the acquisition.
Interest expense of $4,125
for the Shreveport transaction was calculated assuming the additional debt of $140 million was outstanding at a weighted average rate
of 3.8% until October 2020 at which point the Company had financing in place to fund
the acquisition:
(In thousands)
|
|
Casino KC and
Casino Vicksburg
|
|
|
Shreveport
|
|
|
Total Pro Forma
Adjustment
|
|
Elimination of historical interest expense
|
|
$
|
(1,730
|
)
|
|
$
|
(4,437
|
)
|
|
$
|
(6,167
|
)
|
Interest expense related to net borrowings
|
|
|
2,540
|
|
|
|
4,125
|
|
|
|
6,665
|
|
Pro forma adjustment to interest expense
|
|
$
|
810
|
|
|
$
|
(312
|
)
|
|
$
|
498
|
|
4(e) Represents the non-recurring gain on
bargain purchase recorded in connection with the MontBleu Acquisition.
4(f) Reflects the income tax effect of the
Completed Acquisitions adjustments, calculated using Bally’s statutory tax rate of 28%. This rate may be subject to change and may
not be reflective of Bally’s effective tax rate for future periods after consummation of the Transactions:
(In thousands)
|
|
Casino KC, Casino
Vicksburg, and
Shreveport
|
|
|
MontBleu
|
|
|
Total
|
|
Total Pro forma tax adjustment
|
|
$
|
(37
|
)
|
|
$
|
1,286
|
|
|
$
|
1,249
|
|
Note 5 – MontBleu pre-acquisition results and reclassifications
Certain reclassifications were directly applied
to the pre-acquisition historical financial statements of MontBleu to conform to the financial statement presentation of Bally’s.
MontBleu reclassifications in the Pro Forma Balance
Sheet are as follows:
|
|
MontBleu
Reported
|
|
|
|
|
|
|
|
|
MontBleu After
Reclassifications
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
December 31,
|
|
(In thousands)
|
|
2020
|
|
|
Reclassifications
|
|
|
Note
|
|
|
2020
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,494
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
2,494
|
|
Accounts receivable, net
|
|
|
1,370
|
|
|
|
-
|
|
|
|
|
|
|
|
1,370
|
|
Inventory
|
|
|
537
|
|
|
|
-
|
|
|
|
|
|
|
|
537
|
|
Prepaid expenses and other current assets
|
|
|
1,271
|
|
|
|
-
|
|
|
|
|
|
|
|
1,271
|
|
Total current assets
|
|
|
5,672
|
|
|
|
-
|
|
|
|
|
|
|
|
5,672
|
|
Property and equipment, net
|
|
|
56,259
|
|
|
|
-
|
|
|
|
|
|
|
|
56,259
|
|
Right of use assets, net
|
|
|
-
|
|
|
|
41,636
|
|
|
|
(a)
|
|
|
|
41,636
|
|
Goodwill, net
|
|
|
5
|
|
|
|
-
|
|
|
|
|
|
|
|
5
|
|
Intangible assets, net
|
|
|
4,368
|
|
|
|
-
|
|
|
|
|
|
|
|
4,368
|
|
Other assets
|
|
|
41,644
|
|
|
|
(41,636
|
)
|
|
|
(a)
|
|
|
|
8
|
|
Total assets
|
|
$
|
107,948
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
107,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of lease obligations
|
|
|
-
|
|
|
|
550
|
|
|
|
(b)
|
|
|
|
550
|
|
Accounts payable
|
|
|
661
|
|
|
|
-
|
|
|
|
|
|
|
|
661
|
|
Accrued liabilities
|
|
|
2,813
|
|
|
|
(550
|
)
|
|
|
(b)
|
|
|
|
2,263
|
|
Total current liabilities
|
|
|
3,474
|
|
|
|
-
|
|
|
|
|
|
|
|
3,474
|
|
Lease obligations, net of current portion
|
|
|
-
|
|
|
|
65,790
|
|
|
|
(c)
|
|
|
|
65,790
|
|
Deferred credits and other liabilities
|
|
|
66,226
|
|
|
|
(66,226
|
)
|
|
|
(c)
|
|
|
|
-
|
|
Other long-term liabilities
|
|
|
-
|
|
|
|
436
|
|
|
|
(c)
|
|
|
|
436
|
|
Total liabilities
|
|
|
69,700
|
|
|
|
-
|
|
|
|
|
|
|
|
69,700
|
|
Commitments and contingencies
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
38,248
|
|
|
|
-
|
|
|
|
|
|
|
|
38,248
|
|
Total shareholders’ equity
|
|
|
38,248
|
|
|
|
-
|
|
|
|
|
|
|
|
38,248
|
|
Total liabilities and shareholders’ equity
|
|
$
|
107,948
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
107,948
|
|
(a) Represents the reclassification of Other
Assets ($41,636) to Right of Use Assets, net.
(b) Represents the reclassification of Accrued
liabilities ($550) to Current portion of lease obligations.
(c) Represents the reclassification of Deferred
credits and other liabilities ($66,226) to Lease obligations, net of current portion ($65,790) and Other long-term liabilities ($436).
Note 6 — MontBleu combination adjustments
6(a) Preliminary purchase consideration and purchase price allocation
The acquisition of MontBleu,
which closed on April 6, 2021, resulted in Bally’s acquiring all of the outstanding equity securities of MontBleu for a purchase
price of $15 million in cash, payable one year from the closing date, subject to certain customary post-closing adjustments.
Bally’s has performed
a preliminary valuation analysis of the fair market value of MontBleu’s assets and liabilities. The following table summarizes the
allocation of the preliminary purchase price as of the acquisition date:
(In thousands)
|
|
|
|
Purchase price
|
|
$
|
15,000
|
|
Write-down/(write-up) of assets:
|
|
|
|
|
Property and equipment, net
|
|
|
49,345
|
|
Right of use assets
|
|
|
(16,171
|
)
|
Intangible assets
|
|
|
(4,532
|
)
|
Historical goodwill
|
|
|
5
|
|
(Write-down)/write-up of liabilities:
|
|
|
|
|
Lease obligations (current portion)
|
|
|
1,877
|
|
Lease obligations
|
|
|
(14,051
|
)
|
Deferred income taxes
|
|
|
1,675
|
|
Elimination of equity:
|
|
|
|
|
Retained earnings
|
|
|
(38,248
|
)
|
Bargain Purchase
|
|
$
|
(5,100
|
)
|
Under the acquisition method of accounting, the
total purchase price is allocated to the acquired tangible and intangible assets and assumed liabilities of MontBleu based on its estimated
fair value as of the closing date.
6(b) Represents the total purchase price
for MontBleu, which is due in cash on the one-year anniversary of the closing of the transaction.
6(c) Represents the $5,100 non-recurring
gain on bargain purchase recorded in connection with the MontBleu Acquisition.
Note 7— Gamesys reclassifications and IFRS to U.S.
GAAP adjustments
Gamesys’ historical financial
statements were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (‘‘IFRS’’), which differ in certain significant respects from U.S. GAAP as applied by
Bally’s. Adjustments were made to Gamesys’ financial statements to convert them from IFRS to U.S. GAAP and to
Bally’s existing accounting policies after evaluating potential areas of differences.
The historical financial information of Gamesys
was prepared in accordance with IFRS and presented in Pounds Sterling. The historical financial information was translated from Pounds
Sterling to U.S. dollars using the December 31, 2020 spot rate to translate the Balance Sheet and the average daily exchange rate
for 2020 to translate the Statement of Operations:
GBP £ / USD $
|
|
|
|
December 31, 2020 spot rate
|
|
|
1.3631
|
|
|
|
|
|
|
Year ended December 31, 2020 average exchange rate
|
|
|
1.2840
|
|
These exchange rates may differ from future
exchange rates which would have an impact on the Unaudited Pro Forma Financial Information and would also impact purchase accounting
upon consummation of the acquisition. As an example, utilizing the daily closing exchange rate at April 7, 2021 of £1/US$1.379
would increase the translated amounts of net income for the year ended December 31, 2020, as well as increase total assets as of December
31, 2020, presented below, by approximately $6,361 and $19,785, respectively.
Refer below for impacted line items and adjustments to the Unaudited
Pro Forma Balance Sheet:
(In thousands)
|
|
Gamesys
Reported IFRS
(GBP) (a)
|
|
|
Reclassifications
(GBP)
|
|
|
Note
|
|
|
Gamesys
U.S. GAAP
(GBP)
|
|
|
Gamesys
U.S. GAAP
(USD)
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
212,600
|
|
|
|
-
|
|
|
|
|
|
|
|
212,600
|
|
|
|
289,788
|
|
Player deposits
|
|
|
29,600
|
|
|
|
-
|
|
|
|
|
|
|
|
29,600
|
|
|
|
40,347
|
|
Accounts receivable, net
|
|
|
39,900
|
|
|
|
-
|
|
|
|
|
|
|
|
39,900
|
|
|
|
54,386
|
|
Taxes receivable
|
|
|
3,800
|
|
|
|
(3,800
|
)
|
|
|
(b)
|
|
|
|
-
|
|
|
|
-
|
|
Prepaid expenses and other current assets
|
|
|
-
|
|
|
|
3,800
|
|
|
|
(b)
|
|
|
|
3,800
|
|
|
|
5,180
|
|
Total current assets
|
|
|
285,900
|
|
|
|
-
|
|
|
|
|
|
|
|
285,900
|
|
|
|
389,701
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
8,900
|
|
|
|
-
|
|
|
|
|
|
|
|
8,900
|
|
|
|
12,131
|
|
Intangible assets
|
|
|
407,600
|
|
|
|
-
|
|
|
|
|
|
|
|
407,600
|
|
|
|
555,586
|
|
Goodwill
|
|
|
526,200
|
|
|
|
-
|
|
|
|
|
|
|
|
526,200
|
|
|
|
717,245
|
|
Right-of-use assets
|
|
|
21,900
|
|
|
|
-
|
|
|
|
|
|
|
|
21,900
|
|
|
|
29,851
|
|
Deferred tax asset
|
|
|
9,900
|
|
|
|
-
|
|
|
|
|
|
|
|
9,900
|
|
|
|
13,494
|
|
Other long-term receivables
|
|
|
5,100
|
|
|
|
(5,100
|
)
|
|
|
(c)
|
|
|
|
-
|
|
|
|
-
|
|
Other assets
|
|
|
-
|
|
|
|
5,100
|
|
|
|
(c)
|
|
|
|
5,100
|
|
|
|
6,952
|
|
Total assets
|
|
|
1,265,500
|
|
|
|
-
|
|
|
|
|
|
|
|
1,265,500
|
|
|
$
|
1,724,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
98,600
|
|
|
|
(98,600
|
)
|
|
|
(d),(e)
|
|
|
|
-
|
|
|
|
-
|
|
Accounts payable
|
|
|
-
|
|
|
|
12,500
|
|
|
|
(d)
|
|
|
|
12,500
|
|
|
|
17,038
|
|
Accrued liabilities
|
|
|
-
|
|
|
|
105,200
|
|
|
|
(e)
|
|
|
|
105,200
|
|
|
|
143,395
|
|
Other short-term payables
|
|
|
300
|
|
|
|
(300
|
)
|
|
|
(d)
|
|
|
|
-
|
|
|
|
-
|
|
Current portion of cross currency and interest rate swap payable
|
|
|
3,700
|
|
|
|
-
|
|
|
|
|
|
|
|
3,700
|
|
|
|
5,043
|
|
Current portion of lease obligations
|
|
|
6,100
|
|
|
|
-
|
|
|
|
|
|
|
|
6,100
|
|
|
|
8,315
|
|
Interest payable
|
|
|
1,900
|
|
|
|
(1,900
|
)
|
|
|
(e)
|
|
|
|
-
|
|
|
|
-
|
|
Payable to players
|
|
|
29,600
|
|
|
|
-
|
|
|
|
|
|
|
|
29,600
|
|
|
|
40,347
|
|
Provision for taxes
|
|
|
16,900
|
|
|
|
(16,900
|
)
|
|
|
(e)
|
|
|
|
-
|
|
|
|
-
|
|
Total current liabilities
|
|
|
157,100
|
|
|
|
-
|
|
|
|
|
|
|
|
157,100
|
|
|
|
214,138
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other long-term payables
|
|
|
13,100
|
|
|
|
(13,100
|
)
|
|
|
(f)
|
|
|
|
-
|
|
|
|
-
|
|
Other long-term liabilities
|
|
|
-
|
|
|
|
19,900
|
|
|
|
(f)
|
|
|
|
19,900
|
|
|
|
27,125
|
|
Provisions
|
|
|
6,800
|
|
|
|
(6,800
|
)
|
|
|
(f)
|
|
|
|
-
|
|
|
|
-
|
|
Lease obligations, net of current portion
|
|
|
16,600
|
|
|
|
-
|
|
|
|
|
|
|
|
16,600
|
|
|
|
22,627
|
|
Deferred tax liability
|
|
|
44,400
|
|
|
|
-
|
|
|
|
|
|
|
|
44,400
|
|
|
|
60,520
|
|
Long-term debt, net of current portion
|
|
|
508,100
|
|
|
|
-
|
|
|
|
|
|
|
|
508,100
|
|
|
|
692,574
|
|
Total liabilities
|
|
|
746,100
|
|
|
|
-
|
|
|
|
|
|
|
|
746,100
|
|
|
|
1,016,984
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
246,300
|
|
|
|
-
|
|
|
|
|
|
|
|
246,300
|
|
|
|
335,723
|
|
Share capital
|
|
|
11,000
|
|
|
|
(11,000
|
)
|
|
|
(g)
|
|
|
|
-
|
|
|
|
-
|
|
Common stock
|
|
|
-
|
|
|
|
11,000
|
|
|
|
(g)
|
|
|
|
11,000
|
|
|
|
14,994
|
|
Share premium
|
|
|
8,900
|
|
|
|
(8,900
|
)
|
|
|
(g)
|
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
-
|
|
|
|
8,900
|
|
|
|
(g)
|
|
|
|
8,900
|
|
|
|
12,131
|
|
Other reserves
|
|
|
253,200
|
|
|
|
-
|
|
|
|
|
|
|
|
253,200
|
|
|
|
345,128
|
|
Total shareholders’ equity
|
|
|
519,400
|
|
|
|
-
|
|
|
|
|
|
|
|
519,400
|
|
|
|
707,976
|
|
Total liabilities and shareholders’ equity
|
|
|
1,265,500
|
|
|
|
-
|
|
|
|
|
|
|
|
1,265,500
|
|
|
$
|
1,724,960
|
|
(a) The net assets of Gamesys as at December 31,
2020 have been extracted from the audited consolidated financial statements of Gamesys, as set out in Bally’s Current Report on
Form 8-K incorporated by reference herein.
The classification of certain items presented
by Gamesys under IFRS have been modified in order to align with the presentation used by Bally’s under U.S. GAAP. There were no
other material adjustments made to the balance sheet to align with U.S. GAAP based on management’s preliminary assessment of differences
between IFRS and U.S. GAAP. The following modifications were made to the Unaudited Pro Forma Balance Sheet presentation:
(b) Reclassification of Taxes receivable to Prepaid expenses and
other current assets.
(c) Reclassification of Other long-term receivables to Other assets.
(d) Reclassification of £12.2 million
of trade payables from Accounts payable and accrued liabilities to Accounts payable and £0.3 million of Other short-term payables
to Accounts payable.
(e) Reclassification of Interest payable,
Provision for taxes, and £86.4 million of accrued liabilities included in Accounts payable and accrued liabilities to Accrued Liabilities.
(f) Reclassification of Other long-term payables and Provisions
to Other long-term liabilities.
(g) Reclassification of Share capital and
Share premium to Common stock and Additional paid-in capital, respectively.
Refer below for impacted line items and adjustments to the Unaudited
Pro Forma Statement of Operations:
|
|
|
|
|
Reclassification
and IFRS to U.S. GAAP adjustments (GBP)
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Gamesys
Reported
IFRS (GBP) (a)
|
|
|
Reclassification
Adjustments
|
|
|
Leases
|
|
|
Notes
|
|
Gamesys
U.S. GAAP
(GBP)
|
|
|
Gamesys
U.S. GAAP
(USD)
|
|
Revenues
|
|
|
727,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
727,700
|
|
|
$
|
934,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Distribution costs
|
|
|
399,900
|
|
|
|
(399,900
|
)
|
|
|
-
|
|
|
(b)
|
|
|
-
|
|
|
|
-
|
|
Gaming, racing, hotel, food and beverage, retail, entertainment
and other
|
|
|
-
|
|
|
|
399,900
|
|
|
|
-
|
|
|
(b)
|
|
|
399,900
|
|
|
|
513,489
|
|
Administrative costs
|
|
|
221,500
|
|
|
|
(221,500
|
)
|
|
|
-
|
|
|
(c),(d)
|
|
|
-
|
|
|
|
-
|
|
Impairment of financial assets
|
|
|
5,000
|
|
|
|
(5,000
|
)
|
|
|
-
|
|
|
(d)
|
|
|
-
|
|
|
|
-
|
|
Advertising, general and administrative
|
|
|
-
|
|
|
|
126,500
|
|
|
|
6,500
|
|
|
(d),(g)
|
|
|
133,000
|
|
|
|
170,778
|
|
Severance costs
|
|
|
1,900
|
|
|
|
(1,900
|
)
|
|
|
-
|
|
|
(e)
|
|
|
-
|
|
|
|
-
|
|
Transaction related costs
|
|
|
1,800
|
|
|
|
(1,800
|
)
|
|
|
-
|
|
|
(e)
|
|
|
-
|
|
|
|
-
|
|
Acquisition, integration and restructuring expense
|
|
|
-
|
|
|
|
3,700
|
|
|
|
-
|
|
|
(e)
|
|
|
3,700
|
|
|
|
4,751
|
|
Depreciation and amortization
|
|
|
-
|
|
|
|
100,000
|
|
|
|
(5,300
|
)
|
|
(c),(g)
|
|
|
94,700
|
|
|
|
121,599
|
|
Foreign exchange loss/(gain)
|
|
|
4,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
4,200
|
|
|
|
5,393
|
|
Total operating costs and expenses
|
|
|
634,300
|
|
|
|
-
|
|
|
|
1,200
|
|
|
|
|
|
635,500
|
|
|
|
816,009
|
|
Income (loss) from operations
|
|
|
93,400
|
|
|
|
-
|
|
|
|
(1,200
|
)
|
|
|
|
|
92,200
|
|
|
|
118,389
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Interest income
|
|
|
(500
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
(500
|
)
|
|
|
(642
|
)
|
Interest expense
|
|
|
24,000
|
|
|
|
(24,000
|
)
|
|
|
-
|
|
|
(f)
|
|
|
-
|
|
|
|
-
|
|
Accretion on financial liabilities
|
|
|
1,200
|
|
|
|
(1,200
|
)
|
|
|
|
|
|
(f)
|
|
|
-
|
|
|
|
-
|
|
Interest expense, net of amounts capitalized
|
|
|
-
|
|
|
|
25,200
|
|
|
|
(1,200
|
)
|
|
(f),(g)
|
|
|
24,000
|
|
|
|
30,817
|
|
Total other expense
|
|
|
24,700
|
|
|
|
|
|
|
|
(1,200
|
)
|
|
|
|
|
23,500
|
|
|
|
30,175
|
|
Income (loss) before provision for income taxes
|
|
|
68,700
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
68,700
|
|
|
|
88,214
|
|
Tax expense
|
|
|
1,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
1,500
|
|
|
|
1,926
|
|
Net income (loss)
|
|
|
67,200
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
67,200
|
|
|
$
|
86,288
|
|
(a) The results
of Gamesys for the year ended December 31, 2020 have been extracted from the audited consolidated financial statements of Gamesys,
as set out in Bally’s Current Report on Form 8-K incorporated by reference herein.
The classification
of certain items presented by Gamesys under IFRS has been modified in order to align with the presentation used by Bally’s under
U.S. GAAP. The following modifications were made to the Unaudited Pro Forma Statement of Operations presentation:
(b) Reclassification of Distribution
costs to Gaming, racing, hotel, food and beverage, retail, entertainment and other.
(c) Includes the reclassification
of £91.2 million and £8.8 million of amortization and depreciation, respectively to Depreciation and amortization.
(d) Reclassification of
£5.0 million of Impairment of financial assets and £121.5 million of Administrative costs to Advertising, general and
administrative.
(e) Reclassification of Severance
costs and Transaction related costs to Acquisition, integration and restructuring expense
(f) Reclassification of Interest
expense and Accretion on financial liabilities to Interest expense, net of amounts capitalized.
(g) Reflects
reclassification of £5.3 million of depreciation and £1.2 million of interest expense related to leased assets to lease expense.
Under IFRS, leases are not classified as operating or finance leases. A single recognition and measurement model is applied to all leases,
which results in nearly all leases under IFRS being treated similarly to finance leases under U.S. GAAP. Under U.S. GAAP, leases are
classified as either operating or finance leases on the basis of specific lease classification criteria. Management performed a preliminary
assessment and concluded that Gamesys’ leases would be classified as operating leases under U.S. GAAP with lease expense recognized
on a straight-line basis as part of Advertising, general and administrative expenses. Management concluded that there would not be a
material difference between the expense already recognized and measuring lease expense on a straight-line basis under U.S. GAAP. Therefore,
no further adjustment has been recorded.
Note 8 — Gamesys Combination
adjustments
8(a) Preliminary purchase consideration
and allocation
The
Gamesys Combination, which is expected to close in the fourth quarter of 2021, will result in Bally’s acquiring all of the outstanding
equity securities of Gamesys for an estimated purchase price of $3,429 million funded through debt financing and the issuance of equity,
subject to certain customary post-closing adjustments. The Company will acquire both the operations and real estate of Gamesys.
Bally’s
has performed a preliminary analysis of the fair value of Gamesys’ assets and liabilities based on publicly available benchmarking
information as well as a variety of other factors, including market participant assumptions. The following table summarizes the allocation
of the preliminary purchase price as of the acquisition date:
(In thousands, except share and share price amounts)
|
|
|
|
|
Gamesys shares expected to be exchanged
|
|
|
28,003,501
|
|
(i)
|
Gamesys purchase price per share translated using April 7, 2021 spot rate
|
|
$
|
25.51
|
|
|
Bally’s closing share price on April 7, 2021
|
|
$
|
62.01
|
|
|
Exchange ratio
|
|
|
0.343
|
|
(i)
|
Total Bally's shares to be issued
|
|
|
9,605,201
|
|
|
Total value of Bally’s shares to be issued
|
|
$
|
595,619
|
|
(i)
|
Total cash consideration paid at $25.43 price per Gamesys Share
|
|
$
|
2,142,556
|
|
(ii)
|
Repayment of Gamesys Debt
|
|
$
|
692,574
|
|
(iii)
|
Total purchase consideration
|
|
$
|
3,430,748
|
|
|
Less total cash acquired
|
|
$
|
(247,788
|
)
|
(iv)
|
Purchase consideration, net of cash acquired
|
|
$
|
3,182,960
|
|
|
|
|
|
|
|
|
Allocation of purchase consideration, net of cash acquired:
|
|
|
|
|
|
Estimated fair values of assets acquired
|
|
|
|
|
|
Current assets, excluding cash
|
|
$
|
99,913
|
|
(v)
|
Intangible assets
|
|
$
|
1,602,966
|
|
(v)
|
Other non current assets
|
|
$
|
62,428
|
|
(v)
|
Total estimated fair values of liabilities assumed, excluding debt
|
|
$
|
(263,890
|
)
|
(v)
|
Deferred tax liability
|
|
$
|
(304,563
|
)
|
(v)
|
Residual Goodwill
|
|
$
|
1,986,107
|
|
|
Less Gamesys’ historical goodwill
|
|
$
|
(717,245
|
)
|
|
Goodwill adjustment
|
|
$
|
1,268,861
|
|
(vi)
|
(i)
|
Upon closing of the Gamesys
Combination, Bally’s will provide Gamesys shareholders who elect to exchange their shares, 0.343 shares of Bally’s common
stock for each share of Gamesys common stock. The remaining shares of Gamesys common stock will be settled in cash for which shareholders
will be entitled to receive £18.50 per share. The table above assumes an exchange rate of $1.379 per Pound Sterling, based
on the April 7, 2021 spot rate, which was used to translate the Gamesys price from Pounds Sterling to U.S. Dollars. Certain of Gamesys’
current shareholders holding an aggregate amount of 25.6% of Gamesys’ shares have agreed to receive shares of Bally’s
Common Stock in the Combination. As such, for purposes of this Unaudited Pro Forma Financial Information, Bally’s estimates
25.6% of Gamesys’ outstanding shares (109,503,120 shares on April 7, 2021) will be exchanged for 9,605
thousand shares of Bally’s Common Stock, and the balance of Gamesys’ outstanding shares will be exchanged for cash. For
purposes of this Unaudited Pro Forma Financial Information, Bally’s estimates that 74.43% of Gamesys’ outstanding shares
will be exchanged for cash, resulting in aggregate cash consideration of $2,143 million to be financed through borrowings under the
Bridge Facility ($2,378 million). The remaining proceeds from the Bridge Facility along with a portion of proceeds from the Equity
Offerings will be used for the repayment of Gamesys’ EUR and GBP Term Facilities. The GLPI Commitment will be leveraged to
the extent the proceeds from the equity offering are not sufficient. The actual amount of purchase consideration that will be settled
in equity will be determined upon consummation of the Gamesys Combination. A hypothetical 10% increase or decrease in the number
of outstanding Gamesys shares that are exchanged for Bally’s Common Stock, all other factors remaining constant, would result
in a corresponding increase or decrease in the equity consideration of $57.1 million, or 920 thousand shares of Bally’s Common
Stock.
|
(ii)
|
Cash consideration assumes
74.43% of outstanding Gamesys shares will be exchanged for cash equal to £18.50 per share. In addition to the current Gamesys
shares outstanding, an additional 2,502 thousand Gamesys shares are expected to vest immediately prior to the transaction which are
also included in the calculation of cash consideration.
|
(iii)
|
Under the terms of the
Gamesys Combination, Bally’s will repay the outstanding balance of Gamesys debt. The value of the Gamesys debt at December
31, 2020 has been included in the calculation of preliminary purchase consideration, however actual purchase consideration will reflect
the balance of Gamesys’ debt outstanding as of the acquisition date.
|
(iv)
|
Cash acquired excludes $42 million dividend (28 pence per share)
declared by Gamesys on March 8, 2021, payment of which will be accelerated upon transaction closing.
|
(v)
|
Under the acquisition method of accounting, the total purchase price is allocated to the acquired tangible and intangible assets and assumed liabilities of Gamesys based on its estimated fair value as of the closing date. Except as discussed in the notes below, the carrying value of Gamesys’ assets and liabilities are considered to approximate their fair values.
|
(vi)
|
The preliminary fair value adjustments are based on benchmark data available to Bally’s and is subject to change upon completion of the final purchase price allocation. Any change in the estimated fair value of the assets and liabilities acquired will have a corresponding impact on the amount of the goodwill recorded. Goodwill is attributable to the assembled workforce of Gamesys and planned growth in new markets through continued investment. Goodwill recorded is not expected to be deductible for tax purposes.
|
8(b) Represents
the fair value of intangible assets acquired. This includes the total acquired finite-lived intangible assets less the historical intangible
assets recorded by Gamesys.
(In thousands)
|
|
Year
ended
December 31, 2020
|
|
Trademarks and trade
names
|
|
$
|
184,014
|
|
Customer relationships
|
|
|
995,038
|
|
Developed technology (Software)
|
|
|
395,289
|
|
Partnership Agreement
|
|
|
28,624
|
|
Total acquired finite lived intangible
assets
|
|
|
1,602,966
|
|
Less: historical
intangible assets
|
|
|
(555,586
|
)
|
Pro forma adjustment
|
|
$
|
1,047,380
|
|
8(c) Represents
non-recurring transaction costs that are expected to be incurred that have not been recognized in the historical financial statements
of Gamesys.
8(d) Represents
incremental amortization expense of $50,532 related to identified intangible assets acquired in connection with the Gamesys Combination.
The estimated useful lives were determined based on a review of the time period over which economic benefit is estimated to be generated
as well as additional factors. Factors considered include contractual life, the period over which a majority of cash flow is expected
to be generated or management’s view based on historical experience with similar assets.
(In thousands)
|
|
Fair
Value
|
|
|
Useful
Life
(Years)
|
|
|
Amortization
Method
|
|
Year
ended December
31, 2020
|
|
Trademarks and trade
names
|
|
$
|
184,014
|
|
|
|
10
|
|
|
Straight Line
|
|
$
|
17,335
|
|
Customer relationships
|
|
|
995,038
|
|
|
|
10
|
|
|
Straight Line
|
|
|
93,735
|
|
Developed technology (Software)
|
|
|
395,289
|
|
|
|
7
|
|
|
Straight Line
|
|
|
53,196
|
|
Partnership Agreement
|
|
|
28,624
|
|
|
|
8
|
|
|
Straight Line
|
|
|
3,371
|
|
Gaming Licenses
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Straight Line
|
|
|
-
|
|
Non compete Agreements
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Straight Line
|
|
|
-
|
|
Total acquired finite lived intangible
assets
|
|
|
1,602,966
|
|
|
|
-
|
|
|
-
|
|
|
167,637
|
|
Less: historical
intangible asset amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
(117,105
|
)
|
Pro forma adjustment
|
|
|
|
|
|
|
|
|
|
|
|
$
|
50,532
|
|
The value of intangible
assets is preliminary. A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the balance
of goodwill of $160.3 million and annual amortization expense of approximately $28.1 million, assuming an overall weighted average useful
life of 9.22 years.
8(e) Represents
repayment of Gamesys’ EUR and GBP Term Facilities ($692,574) and reversal of related interest expense ($30,817).
8(f) Reflects
the income tax effect of pro forma adjustments the year ended December 31, 2020.
Bally’s
has used a UK statutory tax rate of 19 percent to calculate the financing and acquisition related adjustments to the Pro Forma
Balance Sheet. The total adjustment to deferred tax liabilities is related to the following estimated fair value
adjustments:
(In thousands)
|
|
Fair
Value
|
|
|
Tax
rate
|
|
|
Pro
Forma Deferred
Tax Adjustment
|
|
Intangible assets,
net
|
|
$
|
1,602,966
|
|
|
|
19
|
%
|
|
$
|
304,563
|
|
Less: deferred
taxes on historical intangible assets
|
|
|
|
|
|
|
|
|
|
|
(60,520
|
)
|
Pro forma adjustment
|
|
|
|
|
|
|
|
|
|
$
|
244,043
|
|
The tax impact of
the financing and acquisition business-related adjustments to the Pro Forma Statement of Operations was a $8,796 tax benefit. This adjustment
includes amortization, elimination of interest expense, interest expense related to borrowing costs, and transaction costs. The total
tax impact was calculated using a tax rate of 19 percent.
8(g) Represents
adjustments to equity related to the Gamesys Combination:
|
|
Eliminate Gamesys' Equity
|
|
|
Issuance to Gamesys Shareholders
|
|
|
Transaction Costs
|
|
|
Total Acquisition Adjustments to Equity
|
|
Common stock
|
|
|
(14,994
|
)
|
|
|
96
|
|
|
|
-
|
|
|
|
(14,898
|
)
|
Additional paid-in capital
|
|
|
(12,131
|
)
|
|
|
595,522
|
|
|
|
-
|
|
|
|
583,391
|
|
Treasury stock, at cost
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Retained earnings
|
|
|
(335,723
|
)
|
|
|
-
|
|
|
|
(26,580
|
)
|
|
|
(362,303
|
)
|
Other Reserves
|
|
|
(345,128
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(345,128
|
)
|
Accumulated other comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total shareholders’ equity
|
|
|
(707,976
|
)
|
|
|
595,619
|
|
|
|
(26,580
|
)
|
|
|
(138,938
|
)
|
Note 9 — Financing Transaction
adjustments
Adjustments to the
Pro Forma Balance Sheet related to the Bridge Facility and GLPI Commitment include the following:
9(a) Represents
an increase in cash related to net proceeds from the $2,378 million Bridge Facility entered into by Bally’s and proceeds from the
$500 million GLPI Commitment to provide the financing necessary to pay the cash portion of the consideration payable to Gamesys’
shareholders upon consummation of the Gamesys Combination, net of related fees and expenses of $14.3 million for refinancing existing
indebtedness from Gamesys upon consummation of the Combination and to pay fees, costs and expenses incurred in connection with the Combination:
(in thousands except for per share amounts)
|
|
|
|
Bally’s share price on April 7, 2021
|
|
$
|
62.01
|
|
Bally’s shares to be issued to GLPI
|
|
|
8,063
|
|
Proceeds from GLPI
|
|
$
|
500,000
|
|
|
|
|
|
|
Gross proceeds of Bridge Facility
|
|
$
|
2,378,291
|
|
Bridge Facility fees
|
|
$
|
(14,270
|
)
|
Net proceeds from Bridge Facility
|
|
$
|
2,364,022
|
|
|
|
|
|
|
Total proceeds from Financing Transactions
|
|
$
|
2,864,022
|
|
9(b) Represents a $2,378 million increase
in debt from the Bridge Facility, net of $14.3 million related fees and expenses.
9(c) Represents
a $81 adjustment to common stock related to the issuance of 8.0 million shares, at par value of $0.01 per share, expected to be issued
to GLPI (at an assumed purchase price equal to the closing sale price of Bally’s common stock on NYSE on April 7, 2021), and
a $499.9 million adjustment to additional paid in capital related to the GLPI Commitment, as discussed above.
Adjustments to the
Unaudited Pro Forma Income Statement related the Bridge Facility include the following:
9(d) Comprised
of amortization of $14,227 of fees incurred in connection with the Bridge Facility and $38,934 of interest expense related to the Bridge
Facility. The adjustment to record interest expense assumes the $2,378 Bridge Facility was obtained on January 1, 2020 and paid
down to $1,559 million using proceeds from the Equity Offerings. The adjustment further assumes that this amount was outstanding for
the full year 2020 at a weighted average rate of 2.66%. This rate is based on the 1 Month LIBOR rate at December 31, 2020 plus 2.50%.
A change in the underlying interest rate of 1/8 of a percentage point would result in an increase or decrease in interest expense of
$1,830.
9(e) Represents
the tax benefit related to the Financing Transaction adjustments.
Note 10 — Equity Offerings adjustments
Adjustments to the Pro Forma Balance Sheet and
Pro Forma Statement of Operations related to the Equity Offerings include the following:
10(a) Represents the net proceeds from the Equity
Offerings which was used to pay down a portion of the Bridge Facility. A reconciliation of the gross proceeds from the Equity Offerings
to the net cash proceeds after repayment of the Bridge Facility is set forth below:
(In thousands except per share amounts)
|
|
|
|
Class A common stock public offering price per share
|
|
$
|
62.01
|
|
Shares of Class A common stock issued
|
|
|
9,676
|
|
Gross proceeds
|
|
$
|
600,000
|
|
Less: Underwriting discounts, commissions, and offering expenses
|
|
|
(21,000
|
)
|
Net cash proceeds
|
|
$
|
579,000
|
|
|
|
|
|
|
TEU stated price
|
|
$
|
50.00
|
|
TEUs issued
|
|
|
5,000
|
|
Gross proceeds
|
|
$
|
250,000
|
|
Less: Underwriting discounts, commissions, and offering expenses
|
|
|
(8,750
|
)
|
Net cash proceeds
|
|
$
|
241,250
|
|
|
|
|
|
|
Total net cash proceeds from offering
|
|
$
|
820,250
|
|
Cash proceeds from offering used to repay Bridge Facility
|
|
|
815,000
|
|
Net cash proceeds after repayment of Bridge Facility
|
|
$
|
5,250
|
|
10(b) Represents an adjustment related
to the TEUs, which includes (1) a $208.3 million adjustment to additional paid-in-capital for the TEU purchase contracts, which will,
subject to postponement in certain limited circumstances, automatically settle on April 15, 2024, at which point the Company will deliver
a specified number of shares of Common Stock per TEU based upon applicable settlement rates and the market value of the Company’s
Common Stock at that time and (2) a $40.3 million increase in long-term debt related to the TEU amortizing note, net of issuance costs.
10(c) Represents a $97 adjustment to common stock
related to the issuance of 9.7 million shares, par value $0.01 per share, expected to be issued pursuant to the Common Stock Offering,
and a $599.9 million adjustment to additional paid in capital related to the Common Stock Offering, as discussed above.
10(d) Represents a $28.3 million adjustment
to the Pro Forma Statement of Operations and retained earnings related to the issuance fees and offering expenses for the Common
Stock Offering and the TEU purchase contract, and a $1.5 million adjustment to the Pro Forma Balance Sheet to decrease long-term
debt related to deferred financing costs associated with the TEU amortizing note.
10(e) Represents the net adjustment to
interest expense related to (1) $2,038 rebate received for fees in connection with the Bridge Facility, resulting from repayment of
the Bridge Facility with offering proceeds, (2) $2,505 interest expense on the TEU amortizing notes based on an interest rate of
6%, and (3) $487 amortization of deferred financing costs related to the TEU amortizing note. The terms of the TEU amortizing notes are subject to change based on completion of the TEU offering. A 1/8 of a percentage point change
in the interest rate would affect interest expense by approximately $52.
10(f) Represents the tax benefit related to the
Equity Offerings adjustments.
Note 11 — Pro forma earnings per
share information
11(a) Represents the net earnings per share calculated
using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Gamesys Combination,
the Financing Transactions and the Equity Offerings, assuming the shares were outstanding since January 1, 2020. As the Gamesys Combination,
the Financing Transactions and the Equity Offerings are being reflected as if they had occurred at the beginning of the period presented,
the calculation of weighted average shares outstanding assumes that the shares issuable relating to the Gamesys Combination, the Financing
Transactions and the Equity Offerings have been outstanding for the entire period presented. For shares redeemed, this calculation is
retroactively adjusted to eliminate such shares. Basic and diluted earnings per share are equal as the combined company has a pro forma
net loss and the effect of converting the TEUs to common stock would be anti-dilutive.
(In thousands, except shares and per share amounts)
|
|
December 31, 2020
|
|
Pro forma net loss
|
|
$
|
(10,491
|
)
|
Basic and diluted weighted average common shares outstanding:
|
|
|
|
|
Historical share count
|
|
|
31,315,151
|
|
Expected shares issuable to Gamesys Shareholders
|
|
|
9,605,201
|
|
Additional issuance in Common Stock Offering
|
|
|
9,675,859
|
|
Additional issuance to GLPI
|
|
|
8,063,216
|
|
Basic and diluted weighted average common shares outstanding used in pro forma loss per share
|
|
|
58,659,426
|
|
Pro forma loss per share, basic and diluted
|
|
$
|
(0.18
|
)
|
Description
of the Units
We
are offering 5,000,000 Units (or up to 750,000 Units if the underwriters exercise their option
to purchase additional Units), each with a stated amount of $50.00. Each Unit is comprised of a prepaid stock purchase contract (a “purchase
contract”) issued by us and a senior amortizing note issued by us. The following summary of the terms of the Units, the summary
of the terms of the purchase contracts set forth under the caption “Description of the Purchase Contracts” and the summary
of the terms of the amortizing notes set forth under the caption “Description of the Amortizing Notes” in this prospectus
supplement and under the caption “Description of Debt Securities” in the accompanying prospectus contain a description of
all of the material terms of the Units and their components but are not complete and are subject to, and qualified in their entirety
by reference to, the related contracts. We refer you to:
|
·
|
the
purchase contract agreement (the “purchase contract agreement”), to be dated
the date of first issuance of the Units, to be entered into among us, U.S. Bank National
Association, as purchase contract agent (the “purchase contract agent”) and attorney-in-fact
for the holders of purchase contracts from time to time, and U.S. Bank National Association,
as trustee (the “trustee”) under the indenture described below, pursuant to which
the purchase contracts and Units will be issued; and
|
|
·
|
the
indenture dated as of
, 2021, between us, as issuer, and U.S. Bank National Association, as trustee, and a related
supplemental indenture, to be dated the date of first issuance of the Units, between us,
as issuer, and U.S. Bank National Association, as trustee, under which the amortizing notes
will be issued.
|
The
indenture has been filed as an exhibit to the registration statement of which this prospectus supplement forms a part, and the related
supplemental indenture for the amortizing notes and the purchase contract agreement will be filed as exhibits to a current report on
Form 8-K and incorporated by reference as exhibits to that registration statement. Whenever particular sections or defined terms
are referred to, such sections or defined terms are incorporated herein by reference.
As
used in this section, the terms “we,” “us” and “our” mean Bally’s Corporation and do not include
any subsidiary of Bally’s Corporation.
Components of
the Units
Each
Unit offered is comprised of:
|
·
|
a
prepaid stock purchase contract issued by us pursuant to which we will deliver to the holder,
not later than April 15, 2024 (subject to postponement in certain limited circumstances,
the “mandatory settlement date”), unless earlier redeemed or settled, a number
of shares of our common stock, par value $0.01 per share (the “common stock”)
per purchase contract equal to the settlement rate described below under “Description
of the Purchase Contracts—Delivery of Common Stock;” and
|
|
·
|
a
senior amortizing note issued by us with an initial principal amount of $
that pays equal quarterly installments of $ per
amortizing note (except for the July 15, 2021 installment payment, which will be $
per amortizing note), which cash payment in the aggregate will be equivalent to
% per year with respect to the $50.00 stated amount per Unit.
|
Unless
previously settled at your option as described in “Description of the Purchase Contracts—Early Settlement” or “Description
of the Purchase Contracts—Early Settlement Upon a Fundamental Change,” settled at our option as described in “Description
of the Purchase Contracts—Early Settlement at Our Election” or redeemed at our option as described in “Description
of the Purchase Contracts—Combination Termination Redemption,” we will deliver to you not more than
shares and not less than shares of our common stock on
the mandatory settlement date, based upon the applicable “settlement rate” (as defined below), which is subject to adjustment
as described herein, and the “applicable market value” (as defined below) of our common stock, as described below under “Description
of the Purchase Contracts—Delivery of Common Stock.”
Each
amortizing note will have an initial principal amount of $
. On each January 15, April 15, July 15 and October 15, commencing on July 15,
2021, we will pay equal cash installments of $ on each
amortizing note (except for the July 15, 2021 installment payment, which will be $
per amortizing note). Each installment will constitute a payment of interest (at a rate of %
per annum) and a partial repayment of principal on the amortizing note, allocated as set forth on the amortization schedule set forth
under “Description of the Amortizing Notes—Amortization Schedule.”
The
stated amount of each Unit must be allocated between the amortizing note and the purchase contract based upon their relative fair market
values. We have determined that the fair market value of each amortizing note is $
and the fair market value of each purchase contract is $
, as set forth in the purchase contract agreement. Each holder agrees to such allocation and this position will be binding upon each
holder (but not on the Internal Revenue Service).
Separating and
Recreating Units
Upon
the conditions and under the circumstances described below, a holder of a Unit will have the right to separate a Unit into its component
parts, and a holder of a separate purchase contract and a separate amortizing note will have the right to combine the two components
to recreate a Unit.
Separating
Units
At
initial issuance, the purchase contracts and amortizing notes may be purchased and transferred only as Units and will trade under the
CUSIP number for the Units.
On
any business day (subject to the operations of DTC, as defined below) during the period beginning on, and including, the business day
immediately following the date of initial issuance of the Units to, but excluding, the second scheduled trading day immediately preceding
April 15, 2024 or, if earlier, the second scheduled trading day immediately preceding any “early
mandatory settlement date” (as defined under “Description of the Purchase Contracts”) or any “combination redemption
settlement date” (as defined under “Description of the Purchase Contracts”) and also excluding the business day immediately
preceding any installment payment date (provided, the right to separate the Units shall resume after such business day), you will
have the right to separate your Unit into its constituent purchase contract and amortizing note (which we refer to as a “separate
purchase contract” and a “separate amortizing note,” respectively, and which will thereafter trade under their respective
CUSIP numbers), in which case that Unit will cease to exist. If you beneficially own a Unit, you may separate it into its component purchase
contract and component amortizing note by delivering written instructions to the broker or other direct or indirect participant through
which you hold an interest in your Unit (your “participant”) to notify The Depository Trust Company (“DTC”) through
DTC’s Deposit/Withdrawal at Custodian (“DWAC”) system of your desire to separate the Unit. Holders who elect to separate
a Unit into its constituent purchase contract and amortizing note shall be responsible for any fees or expenses payable in connection
with such separation that are incurred by such holders, and neither we nor the purchase contract agent will have any liability therefor.
“Business
day” means any day other than a Saturday, Sunday or any day on which banking institutions in New York, New York are authorized
or obligated by applicable law or executive order to close or be closed. Separate purchase contracts and separate amortizing notes will
be transferable independently from each other.
Recreating
Units
On
any business day during the period beginning on, and including, the business day immediately following the date of initial issuance of
the Units to, but excluding, the second scheduled trading day immediately preceding April 15, 2024 or, if earlier, the second scheduled
trading day immediately preceding any early mandatory settlement date or combination redemption settlement date and also excluding the
business day immediately preceding any installment payment date (provided, the right to recreate the Units shall resume after
such business day), you may recreate a Unit from your separate purchase contract and separate amortizing note. If you beneficially own
a separate purchase contract and a separate amortizing note, you may recreate a Unit by delivering written instruction to your participant
to notify DTC through DTC’s DWAC system of your desire to recreate the Unit. Holders who elect to recreate Units shall be responsible
for any fees or expenses payable in connection with such recreation that are incurred by such holders, and
neither we nor the purchase contract agent will have any liability therefor.
Global Securities
Your
Unit, purchase contract and amortizing note will be represented by global securities registered in the name of a nominee of DTC. You
will not be entitled to receive definitive physical certificates for your Units, purchase contracts or amortizing notes, except under
the limited circumstances described under “Book-Entry Procedures and Settlement.” Beneficial interests in a Unit and, after
separation, the separate purchase contract and separate amortizing note will be represented through book-entry accounts of, and transfers
will be effected through, direct or indirect participants in DTC.
Deemed Actions
by Holders by Acceptance
Each
holder of Units or separate purchase contracts, by acceptance of such securities, will be deemed to have:
|
·
|
irrevocably
authorized and directed the purchase contract agent to execute, deliver and perform on its
behalf the purchase contract agreement, and appointed the purchase contract agent as its
attorney-in-fact for any and all such purposes;
|
|
·
|
in
the case of a purchase contract that is a component of a Unit, or that is evidenced by a
separate purchase contract, irrevocably authorized and directed the purchase contract agent
to execute, deliver and hold on its behalf the separate purchase contract or the component
purchase contract evidencing such purchase contract, and appointed the purchase contract
agent as its attorney-in-fact for any and all such purposes;
|
|
·
|
consented
to, and agreed to be bound by, the terms and provisions of the purchase contract agreement;
and
|
|
·
|
in
the case of a holder of a Unit, agreed, for all purposes, including U.S. federal income tax
purposes, to treat:
|
|
·
|
a
Unit as an investment unit composed of two separate instruments, in accordance with its form;
|
|
·
|
the
amortizing notes as indebtedness of ours; and
|
|
·
|
the
allocation of the $50.00 stated amount per Unit between the purchase contract and the amortizing
note so that such holder’s initial tax basis in each purchase contract will be $
and such holder’s initial tax basis in each amortizing note will be $
.
|
Listing of
Securities
We
have applied to list the Units on the NYSE under the symbol “BALX,” subject to satisfaction
of its minimum listing standards with respect to the Units. However, we can give no assurance that the Units will be so listed. If the
Units are approved for listing, we expect that the Units will begin trading on the NYSE within 30 calendar days after the Units are first
issued. In addition, the underwriters have advised us that they intend to make a market in the Units, but the underwriters are not obligated
to do so. However, listing on the NYSE does not guarantee that a trading market will develop, and the underwriters may discontinue market
making at any time in their sole discretion without notice. Accordingly, we cannot assure you that a liquid trading market will develop
for the Units (or, if developed, that a liquid trading market will be maintained), that you will be able to sell Units at a particular
time or that the prices you receive when you sell will be favorable.
We
will not initially apply to list the separate purchase contracts or the separate amortizing notes on any securities exchange or automated
inter- dealer quotation system. If (1) a sufficient number of Units are separated into separate purchase contracts and separate
amortizing notes and traded separately such that applicable listing requirements are met and (2) a sufficient number of holders
of such separate purchase contracts and separate amortizing notes request that we list such separate purchase contracts and separate
amortizing notes, we may endeavor to list such separate purchase contracts and separate amortizing notes on an exchange of our choosing
(which may or may not be the NYSE) subject to applicable listing requirements.
Our
common stock is listed on the NYSE under the symbol “BALY.” We have applied to have the shares of our common stock deliverable
upon settlement of all purchase contracts approved for listing on the NYSE.
Title
We
and the purchase contract agent will treat the registered owner, which we expect at initial issuance to be a nominee of DTC, of any Unit
or separate purchase contract or amortizing note as the absolute owner of the Unit or separate purchase contract or amortizing note for
the purpose of settling the related purchase contracts or amortizing note and for all other purposes.
Accounting for
the Units
Based
on the expected structure of the Units, we expect the purchase contracts to meet equity classification, which has been reflected as such
in the unaudited pro forma condensed combined balance sheet presented in “Unaudited Pro Forma Condensed Combined Financial Information”
in this prospectus supplement. The classification of the Units will be subject to detailed assessment once finalized and a different
conclusion may result in a material impact on the information presented in “Unaudited Pro Forma Condensed Combined Financial Information”
in this prospectus supplement.
We
expect to record the issuance of the purchase contract portion of the Units as additional paid-in-capital, net of issuance costs of
the purchase contracts, in our financial statements. We also expect to record the amortizing notes portion of the Units as long-term
debt and to record the issuance costs of the amortizing notes as an adjustment to the carrying amount of the amortizing notes. The
amortization of the amortizing notes will be calculated by us using the effective interest method over the life of the amortizing
notes. We will allocate the proceeds from the issuance of the Units to the purchase contracts and amortizing notes based on the
relative fair values of the respective components, determined as of the date of issuance of the Units. We have determined that the
allocation of the purchase price of each Unit as between the amortizing note and the purchase contract will be $46.2 million for
the amortizing note and $203.8 million for the purchase contract,
as set forth in the purchase contract agreement.
Based
on U.S. GAAP, we do not expect the purchase contract component of the Units to be revalued under fair value accounting principles
given the amounts are expected to be recorded within equity.
Our
earnings per share calculations will reflect the shares issuable upon settlement of the purchase contracts portion of the Units. Our
basic earnings per share will include the minimum shares issuable under the purchase contract for each period and our diluted earnings
per share will include any incremental shares that would be issuable assuming a settlement of the purchase contract at the end of each
accounting period, if dilutive.
Replacement of
Unit Certificates
In
the event that physical certificates evidencing the Units have been issued, any mutilated Unit certificate will be replaced by us at
the expense of the holder upon surrender of the certificate to the purchase contract agent. Unit certificates that become destroyed,
lost or stolen will be replaced by us at the expense of the holder upon delivery to us and the purchase contract agent of evidence of
their destruction, loss or theft satisfactory to us and the purchase contract agent. In the case of a destroyed, lost or stolen Unit
certificate, an indemnity and/or security satisfactory to us and the purchase contract agent may be required at the expense of the holder
of the Units before a replacement will be issued.
Notwithstanding
the foregoing, we will not be obligated to replace any Unit certificates on or after the second scheduled trading day immediately preceding
April 15, 2024 or any early settlement date or combination redemption settlement date. In those circumstances, the purchase contract
agreement will provide that, in lieu of the delivery of a replacement Unit certificate, we, upon delivery of the evidence and indemnity
and/or security described above, will deliver or arrange for delivery of the shares of common stock issuable (and/or, in the case of
a combination redemption settlement date, make the required cash payment, if any) pursuant to the purchase contracts included in the
Units evidenced by the Unit certificate.
Miscellaneous
The
purchase contract agreement will provide that we will pay all fees and expenses that you incur related to the offering of the Units and
the enforcement by the purchase contract agent of the rights of the holders of the Units or the separate purchase contracts or amortizing
notes, other than expenses (including legal fees) of the underwriters.
Should
you elect to separate or recreate units, you will be responsible for any fees or expenses that you incur that are payable in connection
with that separation or recreation, and neither we nor the purchase contract agent will have any liability therefor.
Description
of the Purchase Contracts
The
purchase contracts will be issued pursuant to the terms and provisions of the purchase contract agreement. The following summary of the
terms of the purchase contracts contains a description of all of the material terms of the purchase contracts but is not complete and
is subject to, and is qualified in its entirety by reference to, all of the provisions of the purchase contract agreement, including
the definitions in the purchase contract agreement of certain terms. We refer you to the purchase contract agreement which will be filed
as an exhibit to a current report on Form 8-K and incorporated by reference as an exhibit to the registration statement of which
this prospectus supplement forms a part. A copy of the purchase agreement will be available as described under “Where You Can Find
Additional Information.”
Each
purchase contract will initially form a part of a Unit. Each Unit may be separated by a holder into its constituent purchase contract
and amortizing note on any business day during the period beginning on, and including, the business day immediately following the date
of initial issuance of the Units to, but excluding, the second scheduled trading day immediately preceding April 15, 2024 or, if
earlier, the second scheduled trading day immediately preceding any “early mandatory settlement date” or any “combination
redemption settlement date.” Following such separation, purchase contracts may be transferred separately from amortizing notes.
As
used in this section, the terms “we,” “us” and “our” mean Bally’s Corporation and do not include
any subsidiary of Bally’s Corporation.
Delivery of Common
Stock
Unless
redeemed or settled early at your or our option, for each purchase contract we will deliver to you on April 15, 2024 (subject to
postponement in certain limited circumstances described below, the “mandatory settlement date”) a number of shares of our
common stock. The number of shares of our common stock issuable upon settlement of each purchase contract (the “settlement rate”)
will be determined as follows:
|
·
|
if
the applicable market value of our common stock is greater than the threshold appreciation
price, then you will receive shares
of common stock for each purchase contract (the “minimum settlement rate”);
|
|
·
|
if
the applicable market value of our common stock is greater than or equal to the reference
price but less than or equal to the threshold appreciation price, then you will receive a
number of shares of common stock for each purchase contract equal to the Unit stated amount
of $50.00, divided by the applicable market value; and
|
|
·
|
if
the applicable market value of our common stock is less than the reference price, then you
will receive shares of common stock for each purchase contract (the “maximum settlement
rate”).
|
The
maximum settlement rate, minimum settlement rate and reference price are each subject to adjustment as described under “—Adjustments
to the Fixed Settlement Rates” below. Each of the minimum settlement rate and the maximum settlement rate is referred to as a “fixed
settlement rate.”
The
reference price is equal to $50.00 divided by the maximum settlement rate and is approximately equal to $
, which is the public offering price of our common stock in the concurrent Common Stock Offering.
The
threshold appreciation price is equal to $50.00 divided by the minimum settlement rate. The threshold appreciation price, which
is initially approximately $ , represents an appreciation
of approximately % over the reference price.
For
illustrative purposes only, the following table shows the number of shares of common stock issuable upon settlement of a purchase contract
at assumed applicable market values, based on a reference price of $
and a threshold appreciation price of $ . The table assumes
that there will be no adjustments to the fixed settlement rates described under “—Adjustments to the Fixed Settlement Rates”
below and that the purchase contracts have not been redeemed as described under “—Combination Termination Redemption”
below or settled early at the option of holders or at our option as described under “—Early Settlement,” “—Early
Settlement Upon a Fundamental Change” or “—Early Settlement at Our Election” below. We cannot assure you that
the actual applicable market value will be within the assumed range set forth below.
A
holder of a Unit or a separate purchase contract, as applicable, would receive on the mandatory settlement date the following numbers
of shares of common stock for each Unit or separate purchase contract at the following assumed applicable market values:
Assumed
Applicable Market Value
|
|
|
Number
of Shares of
Common
Stock
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
As
the above table illustrates, if, on the mandatory settlement date, the applicable market value is greater than the threshold appreciation
price, we would be obligated to deliver shares of common
stock for each purchase contract. As a result, if the applicable market value exceeds the threshold appreciation price, you will receive
only a portion of the appreciation in the market value of the shares of our common stock you would have received had you purchased shares
of common stock with $50.00 at the public offering price in the concurrent Common Stock Offering.
If,
on the mandatory settlement date, the applicable market value is less than or equal to the threshold appreciation price but greater than
or equal to the reference price of approximately $ , we
would be obligated to deliver a number of shares of our common stock on the mandatory settlement date equal to $50.00, divided by
the applicable market value. As a result, we would retain all appreciation in the market value of our common stock underlying each
purchase contract between the reference price and the threshold appreciation price.
If,
on the mandatory settlement date, the applicable market value is less than the reference price of approximately $
, we would be obligated to deliver upon settlement of the purchase contract
shares of common stock for each purchase contract, regardless of the market price of our common stock. As a result, the holder would
realize a loss on the decline in market value of the common stock below the reference price.
Because
the applicable market value of the common stock is determined over the 20 consecutive “trading days” (as defined below) beginning
on, and including, the 21st scheduled trading day immediately preceding April 15, 2024, the number of shares of common stock delivered
for each purchase contract may be greater than or less than the number that would have been delivered based on the closing price (or
daily VWAP) of the common stock on the last trading day in such 20 consecutive trading day period. In addition, you will bear the risk
of fluctuations in the market price of the shares of common stock deliverable upon settlement of the purchase contracts between the end
of such 20 consecutive trading day period and the date such shares are delivered.
The
term “applicable market value” means the arithmetic average of the daily VWAPs of our common stock on each of the 20 consecutive
trading days beginning on, and including, the 21st scheduled trading day immediately preceding April 15, 2024.
The
“daily VWAP” of our common stock on any trading day means such price per share as displayed under the heading “Bloomberg
VWAP” on Bloomberg (or any successor service) page BALY <Equity> AQR (or its equivalent successor if such page is
not available) in respect of the period from the scheduled open to the scheduled close of trading of the primary trading session on such trading day; or, if
such price is not available, the market value per share of our common stock on such trading day as determined, using a volume-weighted
average method, by a nationally recognized independent investment banking firm retained by us for this purpose. The “daily VWAP”
will be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
“Trading
day” for purposes of determining any consideration due at settlement of a purchase contract means a day on which (1) there
is no “market disruption event” (as defined below) and (2) trading in our common stock (or other security for which
a daily VWAP must be determined) generally occurs on the NYSE or, if our common stock (or such other security) is not then listed on
the NYSE, on the principal other U.S. national or regional securities exchange on which our common stock (or such other security) is
then listed or, if our common stock (or such other security) is not then listed on a U.S. national or regional securities exchange, on
the principal other market on which our common stock (or such other security) is then traded. If our common stock (or such other security)
is not so listed or traded, “trading day” means a “business day.”
“Scheduled
trading day” means a day that is scheduled to be a trading day on the NYSE or, if our common stock is not then listed on the NYSE,
on the principal other U.S. national or regional securities exchange on which our common stock is then listed or, if our common stock
is not then listed on a U.S. national or regional securities exchange, on the principal other market on
which our common stock is then traded. If our common stock is not so listed or admitted for trading, “scheduled trading day”
means a “business day.”
“Market
disruption event” means (1) a failure by the primary U.S. national or regional securities exchange or market on which our
common stock is listed or admitted for trading to open for trading during its regular trading session or (2) the occurrence or existence
prior to 1:00 p.m., New York City time, on any scheduled trading day for our common stock for more than one half-hour period in the aggregate
during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted
by the relevant stock exchange or otherwise) in our common stock or in any options contracts or futures contracts relating to our common
stock.
On
the mandatory settlement date, our common stock will be issued and delivered to you or your designee, upon (1) surrender of certificates
representing the purchase contracts, if such purchase contracts are held in certificated form, and (2) payment by you of any transfer
or similar taxes payable in connection with the issuance of our common stock to any person other than you. As long as the purchase contracts
are evidenced by one or more global purchase contract certificates deposited with DTC, procedures for settlement will be governed by
DTC’s applicable procedures.
If
one or more of the 20 consecutive scheduled trading days beginning on, and including, the 21st scheduled trading day immediately preceding
April 15, 2024 is not a trading day, the mandatory settlement date will be postponed until the second scheduled trading day immediately
following the last trading day of the 20 consecutive trading day period during which the applicable market value is determined.
Prior
to 5:00 p.m., New York City time, on the last trading day of the 20 consecutive trading day period during which the applicable market
value is determined, the shares of common stock underlying each purchase contract will not be outstanding, and the holder of such purchase
contract will not have any voting rights, rights to dividends or other distributions or other rights of a holder of our common stock
by virtue of holding such purchase contract. The person in whose name any shares of our common stock shall be issuable upon settlement
of the purchase contract on the mandatory settlement date will be treated as the holder of record of such shares as of 5:00 p.m., New
York City time, on the last trading day of the 20 consecutive trading day period during which the applicable market value is determined.
We
will pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of our common stock upon settlement or
redemption of the purchase contracts, unless the tax is due because the holder requests any shares to be issued in a name other than
the holder’s name, in which case the holder will pay that tax.
Early Settlement
Prior
to 5:00 p.m., New York City time, on the second scheduled trading day immediately preceding April 15, 2024, you, as a holder of
Units or a holder of a separate purchase contract, may elect to settle your purchase contracts early, in whole or in part, and receive
a number of shares of common stock per purchase contract equal to the “early settlement rate.” The early settlement rate
is equal to the minimum settlement rate on the early settlement date, subject to adjustment as described below under “—Adjustments
to the Fixed Settlement Rates,” unless you elect to settle your purchase contracts early in connection with a fundamental change,
in which case you will receive upon settlement of your purchase contracts a number of shares of our common stock based on the “fundamental
change early settlement rate” as described under “—Early Settlement Upon a Fundamental Change.”
Your
right to receive common stock upon early settlement of a purchase contract is subject to (1) delivery of a written and signed
notice of election (an “early settlement notice”) to the purchase contract agent (cts.conversions@usbank.com) electing
early settlement of such purchase contract, (2) if such purchase contract or the Unit that includes such purchase contract is
held in certificated form, surrendering the certificates representing the purchase contract, or if held in global form, surrendering
in accordance with DTC’s applicable procedures and (3) payment by you of any transfer or similar taxes payable in
connection with the issuance of our common stock to any person other than you. As long as the purchase contracts or the Units are
evidenced by one or more global certificates deposited with DTC, procedures for early settlement will be governed by DTC’s
applicable procedures.
Upon
surrender of the purchase contract or the related Unit and payment of any applicable transfer or similar taxes due because of any issue
of such shares in a name of a person other than the holder, you will receive the applicable number of shares of common stock (and any
cash payable for fractional shares) due upon early settlement on the second business day following the “early settlement date”
(as defined below).
If
you comply with the requirements for effecting early settlement of your purchase contracts earlier than 5:00 p.m., New York City time,
on any business day, then that day will be considered the “early settlement date.” If you comply with such requirements at
or after 5:00 p.m., New York City time, on any business day or at any time on a day that is not a business day, then the next succeeding
business day will be considered the “early settlement date.” Prior to 5:00 p.m., New York City time, on the early settlement
date, the shares of common stock underlying each purchase contract will not be outstanding, and the holder of such purchase contract
will not have any voting rights, rights to dividends or other distributions or other rights of a holder of our common stock by virtue
of holding such purchase contract. The person in whose name any shares of our common stock shall be issuable upon such early settlement
of the purchase contract will be treated as the holder of record of such shares as of 5:00 p.m., New York City time, on the relevant
early settlement date.
Upon
early settlement at the holder’s election of the purchase contract component of a Unit, the amortizing note underlying such Unit
will remain outstanding and beneficially owned by or registered in the name of, as the case may be, the holder who elected to settle
the related purchase contract early and will no longer constitute a part of the Unit.
Early Settlement
Upon a Fundamental Change
If
a “fundamental change” occurs and you elect to settle your purchase contracts early in connection with such fundamental change
in accordance with the procedures described under “—Early Settlement” above, you will receive per purchase contract
a number of shares of our common stock or cash, securities or other property, as applicable, equal to the “fundamental change early
settlement rate,” as described below. An early settlement will be deemed for these purposes to be “in connection with”
such fundamental change if you deliver your early settlement notice to the purchase contract agent, and otherwise satisfy the requirements
for effecting early settlement of your purchase contracts, during the period beginning on, and including, the effective date of the fundamental
change and ending at 5:00 p.m., New York City time, on the 35th business day thereafter (or, if earlier, the second scheduled trading
day immediately preceding April 15, 2024) (the “fundamental change early settlement period”). We refer to this right
as the “fundamental change early settlement right.”
If
you comply with the requirements for effecting early settlement of your purchase contracts in connection with a fundamental change
prior to 5:00 p.m., New York City time, on any business day during the fundamental change early settlement period, then that day
will be considered the “fundamental change early settlement date.” If you comply with such requirements at or after 5:00
p.m., New York City time, on any business day during the fundamental change early settlement period or at any time on a day during
the fundamental change early settlement period that is not a business day, then the next succeeding business day will be considered
the “fundamental change early settlement date.”
We
will provide the purchase contract agent, the trustee and the holders of Units and separate purchase contracts with written notice of a fundamental
change within five business days after its effective date and issue a press release announcing such effective date. The notice will also
set forth, among other things, (1) the applicable fundamental change early settlement rate, (2) if not common stock, the kind
and amount of cash, securities and other property receivable by the holder upon settlement and (3) the deadline by which each holder’s
fundamental change early settlement right must be exercised.
A
“fundamental change” will be deemed to have occurred upon the occurrence of any of the following:
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any
“person” or “group” within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than
us, any of our subsidiaries and any of our and their employee benefit plans, files a Schedule
TO or any other schedule, form or report under the Exchange Act disclosing that such person
or group has become the direct or indirect “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act) of more than 50% of the outstanding shares of our
common stock;
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the
consummation of (A) any recapitalization, reclassification or change of our common stock
(other than changes resulting from a subdivision or combination) as a result of which our
common stock would be converted into, or exchanged for, stock, other securities, other property
or assets; (B) any share exchange, consolidation, combination or merger of us pursuant
to which our common stock will be converted into cash, securities or other property or assets;
or (C) any sale, lease or other transfer in one transaction or a series of transactions
of all or substantially all of the consolidated assets of us and our subsidiaries, taken
as a whole, to any person other than one of our wholly owned subsidiaries;
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our
common stock (or other common stock receivable upon settlement of your purchase contracts,
if applicable) ceases to be listed or quoted on any of the NYSE, the NASDAQ Global Select
Market or the NASDAQ Global Market (or any of their respective successors); or
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our
stockholders approve any plan or proposal for the liquidation or dissolution of us.
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A
transaction or transactions described in the first two bullets above will not constitute a fundamental change, however, if at least 90%
of the consideration received or to be received by our common stockholders (excluding cash payments for fractional shares) in connection
with such transaction or transactions consists of shares of common stock that are listed on any of the NYSE, the NASDAQ Global Select
Market or the NASDAQ Global Market (or any of their respective successors), or will be so listed when issued or exchanged in connection
with such transaction or transactions, and as a result of such transaction or transactions such consideration becomes the consideration
receivable upon settlement of your purchase contracts, if applicable, excluding cash payments for fractional shares.
For
purposes of the immediately preceding paragraph, any transaction that constitutes a fundamental change pursuant to both the first and
second bullet of the definition thereof (prior to giving effect to the exception set forth in the immediately preceding paragraph) shall
be deemed to be a transaction solely under the second bullet of such definition (and, for the avoidance of doubt, will be subject to
the exception set forth in the immediately preceding paragraph).
If
any transaction in which our common stock is replaced by the securities of another entity occurs, following completion of any related
fundamental change early settlement period (or, in the case of a transaction that would have been a fundamental change but for the second
immediately preceding paragraph, following the effective date of such transaction), references to us in the definition of “fundamental
change” above shall instead be references to such other entity.
The
“fundamental change early settlement rate” (including, for the avoidance of doubt, for purposes of determining the combination
redemption rate, as described below) will be determined by us by reference to the table below, based on the date on which the fundamental
change occurs or becomes effective (the “effective date”) and the “stock price” in the fundamental change, which
will be:
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in
the case of a fundamental change described in the second bullet of the definition of “fundamental
change” in which all holders of shares of our common stock receive only cash in the
fundamental change, the stock price will be the cash amount paid per share of our common
stock; and
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in
all other cases, the stock price will be the arithmetic average of the daily VWAPs of our
common stock over the five consecutive trading day period ending on the trading day immediately
preceding the effective date.
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The
stock prices set forth in the column headings of the table below will be adjusted as of any date on which the fixed settlement rates
are adjusted. The adjusted stock prices will equal the stock prices applicable immediately prior to such adjustment, multiplied by a
fraction, the numerator of which is the maximum settlement rate immediately prior to the adjustment giving rise to the stock price adjustment
and the denominator of which is the maximum settlement rate as so adjusted. The fundamental change early settlement rates per purchase
contract in the table below will be adjusted in the same manner and at the same time as the fixed settlement rates as set forth under
“—Adjustments to the Fixed Settlement Rates.”
The
following table sets forth the fundamental change early settlement rate per purchase contract for each stock price and effective date
set forth below:
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Stock Price
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Effective Date
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$
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$
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$
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$
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$
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$
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$
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$
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$
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$
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$
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April , 2021
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April 15, 2022
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April 15, 2023
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April 15, 2024
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The exact stock
prices and effective dates may not be set forth in the table above, in which case:
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if
the applicable stock price is between two stock prices in the table or the applicable effective
date is between two effective dates in the table, the fundamental change early settlement
rate will be determined by straight line interpolation between the fundamental change early
settlement rates set forth for the higher and lower stock prices and the earlier and later
effective dates, as applicable, based on a 365- or 366- day year, as applicable;
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if
the applicable stock price is greater than $
per share (subject to adjustment in the same manner and at the same time as the stock prices
set forth in the column headings of the table above), then the fundamental change early settlement
rate will be the minimum settlement rate; or
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if
the applicable stock price is less than $
per share (subject to adjustment in the same manner and at the same time as the stock prices
set forth in the column headings of the table above, the “minimum stock price”),
the fundamental change early settlement rate will be determined as if the stock price equaled
the minimum stock price, and using straight line interpolation, as described in the first
bullet of this paragraph, if the effective date is between two effective dates in the table.
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The
maximum number of shares of our common stock deliverable under a purchase contract is
, subject to adjustment in the same manner and at the same time as the fixed settlement rates as set forth under “—Adjustments
to the Fixed Settlement Rates.”
Our
obligation to settle the purchase contracts at the fundamental change early settlement rate could be considered a penalty, in which case
the enforceability thereof would be subject to general principles of reasonableness of economic remedies.
We
will deliver the shares of our common stock, securities, cash or other property payable as a result of your exercise of the fundamental
change early settlement right on the second business day following the fundamental change early settlement date. Prior to 5:00 p.m.,
New York City time, on the fundamental change early settlement date, the shares of common stock underlying each purchase contract will
not be outstanding, and the holder of such purchase contract will not have any voting rights, rights to dividends or other distributions
or other rights of a holder of our common stock by virtue of holding such purchase contract. The person in whose name any shares of our
common stock or other securities, if applicable, shall be issuable following exercise of a holder’s fundamental change early settlement
right will be treated as the holder of record of such shares or other securities, if applicable, as of 5:00 p.m., New York City time,
on the fundamental change early settlement date.
Upon
early settlement of the purchase contract component of a Unit at the holder’s election upon a fundamental change, the amortizing
note underlying such Unit will remain outstanding and will be beneficially owned by or registered in the name of, as the case may be,
the holder who elected to settle the related purchase contract early upon the fundamental change and will no longer constitute a part
of the Unit.
If
you do not elect to exercise your fundamental change early settlement right, your purchase contracts will remain outstanding and will
be subject to normal settlement on any subsequent early settlement date, any subsequent fundamental change early settlement date or the
mandatory settlement date or redemption on any subsequent combination redemption settlement date, as the case may be.
Early Mandatory
Settlement at Our Election
We
have the right to settle the purchase contracts on or after January 15, 2022, in whole but not in part, on a date fixed by us as
described below at the “early mandatory settlement rate” described below. We refer to this right as our “early mandatory
settlement right.”
The
“early mandatory settlement rate” will be the maximum settlement rate as of the notice date (as defined below).
In
the event we elect to settle the purchase contracts early, holders of the amortizing notes (whether as components of Units or separate
amortizing notes) will have the right to require us to repurchase some or all of their amortizing notes, as described under “Description
of the Amortizing Notes—Repurchase of Amortizing Notes at the Option of the Holder.” If we exercise our early mandatory settlement
right and the holder of any Unit does not require us to repurchase the amortizing note that is a component of such Unit, such amortizing
note will remain outstanding and will be beneficially owned by or registered in the name of, as the case may be, such holder. If we exercise
our early mandatory settlement right and the holder of any Unit requires us to repurchase the amortizing note that is a component of
such Unit but the related repurchase date falls after the early mandatory settlement date, such amortizing note will remain outstanding
(pending such repurchase date) and will be beneficially owned by or registered in the name of, as the case may be, such holder.
If
we elect to exercise our early mandatory settlement right, we will provide the purchase contract agent and the holders of Units, separate
purchase contracts and separate amortizing notes with a written notice of our election (the “early mandatory settlement notice”)
and issue a press release announcing our election. The early mandatory settlement notice will specify, among other things:
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the
early mandatory settlement rate;
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the
date on which we will deliver shares of our common stock following exercise of our early
mandatory settlement right (the “early mandatory settlement date”), which will
be on or after January 15, 2022 and at least 5 but not more than 20 business days following
the date of our notice (the “notice date”);
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that
holders of Units and separate amortizing notes will have the right to require us to repurchase
their amortizing notes that are a component of the Units or their separate amortizing notes,
as the case may be (subject to certain exceptions described under “Description of the
Amortizing Notes—Repurchase of Amortizing Notes at the Option of the Holder”);
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the
“repurchase price” and “repurchase date” (each as defined below under
“Description of the Amortizing Notes—Repurchase of Amortizing Notes at the Option
of the Holder”);
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the
last date on which holders of amortizing notes may exercise their repurchase right;
and
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the
procedures that holders of amortizing notes must follow to require us to repurchase their
amortizing notes.
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We
will deliver the shares of our common stock and any cash payable for fractional shares to you on the early mandatory settlement date.
Prior to 5:00 p.m., New York City time, on the notice date, the shares of common stock underlying each purchase contract will not be
outstanding, and the holder of such purchase contract will not have any voting rights, rights to dividends or other distributions or
other rights of a holder of our common stock by virtue of holding such purchase contract. The person in whose name any shares of our
common stock shall be issuable following exercise of our early mandatory settlement right will be treated as the holder of record of
such shares as of 5:00 p.m., New York City time, on the notice date.
Combination Termination
Redemption
If
the closing of the Combination has not occurred on or prior to the Long Stop Date, or if, prior to such date, the Combination is terminated
we may elect to redeem all, but not less than all, of the outstanding purchase contracts on the terms described below (a “combination
termination redemption”), by delivering notice during the five business day period immediately following the earlier of (1) the
Long Stop Date and (2) the Termination Date (such notice, the “combination redemption notice”) to the purchase contract
agent, the trustee and all holders of Units, separate purchase contracts or separate amortizing notes and will issue a press release
announcing any such election. The Termination Date will be deemed to occur only on the date on which the Scheme has been finally terminated
in accordance with its terms and the Combination has been abandoned by us, as determined in good faith by our board of directors.
In
the event of a combination termination redemption, you will have the right to require us to repurchase your amortizing notes (whether
as components of Units or separate amortizing notes), as described under “Description of the Amortizing Notes—Repurchase
of Amortizing Notes at the Option of the Holder.” If we exercise our right to cause a combination termination redemption and the
holder of any Unit or separate amortizing note does not require us to repurchase such amortizing note, such amortizing note will remain
outstanding and beneficially owned by or registered in the name of, as the case may be, such holder. If we exercise our right to cause
a combination termination redemption and the holder of any Unit requires us to repurchase the amortizing note that is a component of
such Unit but the related repurchase date falls after the combination termination settlement date, such amortizing note will remain outstanding
(pending such repurchase date) and will be beneficially owned by or registered in the name of, as the case may be, such holder.
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The
combination redemption notice will specify, among other things:
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the
combination termination stock price;
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the
scheduled combination redemption settlement date;
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if
the redemption amount is determined pursuant to the first bullet point in the definition
thereof, the redemption amount;
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if
the redemption amount is determined pursuant to the second bullet point in the definition
thereof, the combination redemption rate, and, if applicable, the number of shares of our
common stock that would otherwise be included in the applicable redemption amount that will
be replaced with cash;
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that
holders of Units and separate amortizing notes will have the right to require us to repurchase
their amortizing notes that are a component of the Units or their separate amortizing notes,
as the case may be, as described under “Description of the Amortizing Notes—Repurchase
of Amortizing Notes at the Option of the Holder”;
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the
“repurchase price” and “repurchase date”, each as defined below under
“Description of the Amortizing Notes—Repurchase of Amortizing Notes at the Option
of the Holder”;
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the
last date on which holders of amortizing notes may exercise their repurchase right;
and
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the
procedures that holders of amortizing notes must follow to require us to repurchase their
amortizing notes.
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If
we do not specify a number of shares of common stock that will be replaced with cash in the combination redemption notice, we will be
deemed to have elected to settle the redemption amount solely in shares of common stock.
In
the event of a combination termination redemption, we will deliver the applicable redemption amount
on the combination redemption settlement date. “Redemption amount” per purchase contract means:
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if
the combination termination stock price is equal to or less than the reference price, an
amount of cash equal to (x) $50.00 less (y) the applicable repurchase price for
the amortizing notes; or
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if
the combination termination stock price is greater than the reference price, a number of
shares of our common stock equal to the combination redemption rate determined by reference
to the table set forth above in “—Early Settlement Upon a Fundamental Change”
(with reference to “ stock price” deemed to refer to the “ combination
termination stock price,” references to “ fundamental change early settlement
rate” deemed to refer to the “ combination redemption rate” and reference
to “ effective date” deemed to refer to the earlier of (1) the Long Stop
Date and (2) the Termination Date); provided that we may elect to pay cash
in lieu of delivering any or all of the shares of our common stock in an amount equal to
such number of shares multiplied by the redemption market value; provided
further that, if we so elect to pay cash, we will specify in the combination redemption
notice the number of shares of our common stock that will be replaced with cash.
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“Combination
termination stock price” means the arithmetic average of the daily VWAPs of our common stock over the five consecutive trading
day period ending on, and including, the trading day immediately preceding the earlier of (1) the
Long Stop Date and (2) the Termination Date.
“Redemption
market value” means the arithmetic average of the daily VWAPs of our common stock for the 20 consecutive trading days beginning
on, and including, the 21st scheduled trading day immediately preceding the scheduled combination
redemption settlement date.
“Combination
redemption settlement date” means:
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if
(x) the combination termination stock price is greater than the reference price and
(y) we elect to pay cash in lieu of delivering any or all of the shares of our common
stock that would otherwise be included in the redemption amount, the second business day
following the last trading day of the 20 consecutive trading day period used to determine
the redemption market value; or
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otherwise,
the scheduled combination redemption settlement date specified in the combination redemption
notice.
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“Scheduled
combination redemption settlement date” means:
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if
(x) the combination termination stock price is greater than the reference price and
(y) we elect to pay cash in lieu of delivering any or all of the shares of our common
stock that would otherwise be included in the redemption amount, a date that is least 30
and no more than 60 calendar days after the date of the combination redemption notice;
or
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otherwise,
a date that is at least 5 and no more than 30 calendar days after the date of the combination
redemption notice.
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The
person in whose name any shares of our common stock shall be issuable will be treated as the holder
of record of such shares as of 5:00 p.m., New York City time on:
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the
date of the combination redemption notice, if we have elected (or are deemed to have elected)
to settle the redemption amount solely in shares of our common stock, or
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the
last trading day in the 20 consecutive trading day period used to determine the redemption
market value, if we have elected to pay cash in lieu of delivering any of the shares of our
common stock that would otherwise be included in the redemption amount. Prior to such time,
the shares of common stock underlying each purchase contract will not be outstanding, and
the holder of such purchase contract will not have any voting rights, rights to dividends
or other distributions or other rights of a holder of our common stock by virtue of holding
such purchase contract, but, for the avoidance of doubt, the anti-dilution adjustments provided
herein under “—Adjustments to the Fixed Settlement Rates” below will continue
to apply to the purchase contracts prior to such time.
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Adjustments to
the Fixed Settlement Rates
The
fixed settlement rates will be adjusted as described below, except that we will not make any adjustments to the fixed settlement rates
if holders of the purchase contracts participate (other than in the case of a share split or share combination or (y) a tender or
exchange offer), at the same time and upon the same terms as holders of our common stock and solely as a result of holding the purchase
contracts, in any of the transactions described below without having to settle their purchase contracts as if they held a number of shares
of our common stock equal to the maximum settlement rate, multiplied by the number of purchase contracts held by such holders.
(a) If
we issue common stock to all or substantially all of the holders of our common stock as a dividend or other distribution, then each fixed
settlement rate in effect immediately prior to 5:00 p.m., New York City time, on the “record date” (as defined below) for
such dividend or distribution will be multiplied by a fraction:
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the
numerator of which is equal to (1) the number of shares of our common stock outstanding
immediately prior to 5:00 p.m., New York City time, on such record date; plus (2) the
total number of shares of our common stock constituting such dividend or other distribution;
and
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the
denominator of which is the number of shares of our common stock outstanding immediately
prior to 5:00 p.m., New York City time, on such record date.
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Any
adjustment made pursuant to this clause (a) will become effective immediately after 5:00 p.m., New York City time, on the record
date for such dividend or distribution. If any dividend or distribution described in this clause (a) is declared but not so paid
or made, each fixed settlement rate will be readjusted, effective as of the date our board of directors (or a committee thereof) publicly
announces its decision not to make such dividend or distribution, to such fixed settlement rate that would be in effect if such dividend
or distribution had not been declared. For the purposes of this clause (a), the number of shares of common stock outstanding immediately
prior to 5:00 p.m., New York City time, on the record date for such dividend or distribution will not include shares held in treasury
but will include any shares issuable in respect of any scrip certificates issued in lieu of fractions of shares
of common stock. We will not pay any such dividend or make any such distribution on shares of common stock held in treasury.
(b) If
we issue to all or substantially all holders of our common stock rights, options or warrants (other than rights, options or warrants
issued pursuant to a dividend reinvestment plan, shareholder rights plan, share purchase plan or other similar plans) entitling them,
for a period of up to 45 calendar days from the date of issuance of such rights, options or warrants, to subscribe for or purchase our
shares of common stock at less than the “current market price” (as defined below) of our common stock, then each fixed settlement
rate in effect immediately prior to 5:00 p.m., New York City time, on the record date for such issuance will be multiplied by a
fraction:
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the
numerator of which is equal to (1) the number of shares of common stock outstanding
immediately prior to 5:00 p.m., New York City time, on such record date, plus (2) the
total number of shares of our common stock issuable pursuant to such rights, options or warrants,
and
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the
denominator of which is equal to (1) the number of shares of common stock outstanding
immediately prior to 5:00 p.m., New York City time, on such record date, plus (2) the
number of shares of common stock equal to the quotient of the aggregate price payable to
exercise such rights, options or warrants divided by the current market price per share of
our common stock.
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Any
adjustment made pursuant to this clause (b) will be made successively whenever any such rights, options or warrants are issued and
will become effective immediately after 5:00 p.m., New York City time, on the record date for such issuance. In the event that such rights,
options or warrants described in this clause (b) are not so issued, each fixed settlement rate will be readjusted, effective as
of the date our board of directors (or a committee thereof) publicly announces its decision not to issue such rights, options or warrants,
to such fixed settlement rate that would then be in effect if such issuance had not been declared. To the extent that such rights, options
or warrants are not exercised prior to their expiration or shares of our common stock are otherwise not delivered pursuant to such rights,
options or warrants upon the exercise of such rights, options or warrants, each fixed settlement rate will be readjusted, effective as
of the date of such expiration or the date it is determined such shares will not be delivered, as the case may be, to such fixed settlement
rate that would then be in effect had the adjustment made upon the issuance of such rights, options or warrants been made on the basis
of the delivery of only the number of shares of our common stock actually delivered.
In
determining whether any rights, options or warrants entitle the holders thereof to subscribe for or purchase shares of our common stock
at less than the current market price per share of our common stock, and in determining the aggregate price payable to exercise such
rights, options or warrants, there will be taken into account any consideration received by us for such rights, options or warrants and
any amount payable on exercise or conversion thereof (the value of such consideration, if other than cash, to be determined by our board
of directors, or a committee thereof).
For
the purposes of this clause (b), the number of shares of common stock at the time outstanding will not include shares held in treasury
but will include any shares issuable in respect of any scrip certificates issued in lieu of fractions of shares of common stock. We will
not issue any such rights, options or warrants in respect of shares of common stock held in treasury.
(c) If
we subdivide or combine our common stock, then each fixed settlement rate in effect immediately prior to 9:00 a.m., New York City time,
on the effective date of such subdivision or combination will be multiplied by a fraction:
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the
numerator of which is the number of shares of our common stock that would be outstanding
immediately after, and solely as a result of, such subdivision or combination, and
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the
denominator of which is the number of shares of our common stock outstanding immediately
prior to 9:00 a.m., New York City time, on such effective date (before giving effect to such
subdivision or combination).
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Any
adjustment made pursuant to this clause (c) will become effective immediately after 9:00 a.m., New York City time, on the effective
date of such subdivision or combination.
(d) If
we distribute to all or substantially all holders of our common stock evidences of our indebtedness, shares of our capital stock (other
than our common stock), securities, cash or other assets, excluding:
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any
dividend or distribution as to which an adjustment was effected pursuant to clause (a) above;
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any
rights, options or warrants as to which an adjustment was effected pursuant to clause (b) above;
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any
dividend or distribution described in clause (e) below; and
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any
spin-off (as defined below) to which the provisions set forth below in this clause (d) shall
apply,
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then
each fixed settlement rate in effect immediately prior to 5:00 p.m., New York City time, on the record date for such distribution will
be multiplied by a fraction:
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the
numerator of which is the current market price per share of our common stock, and
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the
denominator of which is equal to (1) the current market price per share of our common
stock, minus (2) the fair market value (as determined by our board of directors,
or a committee thereof) on such record date of the portion of the evidences of indebtedness,
shares of capital stock, securities, cash or other assets so distributed applicable to one
share of our common stock.
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Any
adjustment made pursuant to the portion of this clause (d) above will become effective immediately after 5:00 p.m., New York City
time, on the record date for such distribution. In the event that such distribution is not so made, each fixed settlement
rate will be readjusted, effective as of the date our board of directors (or a committee thereof) publicly announces its decision not
to make such distribution, to such fixed settlement rate that would then be in effect if such distribution had not been declared. We
will not make any such distribution on shares of common stock held in treasury.
In
the event that we make a distribution to all or substantially all holders of our common stock consisting of capital stock of, or similar
equity interests in, or relating to, a subsidiary or other business unit of ours that, upon issuance, will be traded on a U.S. national
securities exchange (herein referred to as a “spin-off”), each fixed settlement rate in effect immediately prior to 5:00
p.m., New York City time, on the record date for such distribution will instead be multiplied by a fraction:
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the
numerator of which is equal to (1) the current market price per share of our common
stock, plus (2) the average of the closing prices (as defined below, as if references
to “common stock” therein were references to such capital stock or similar equity
interest so distributed) of the capital stock or similar equity interests so distributed
applicable to one share of our common stock over the 10 consecutive trading day period commencing
on, and including, the effective date of the spin-off (the “valuation period”),
and
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the
denominator of which is the current market price per share of our common stock.
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Any
adjustment made pursuant to this portion of clause (d) will become effective immediately after 5:00 p.m., New York City time, on
the last trading day of the valuation period; provided that if any date for determining the number of shares of our common
stock issuable to a holder occurs during the valuation period, references in the preceding paragraph to 10 trading days will be deemed
to be replaced with such lesser number of trading days as have elapsed from, and including, the effective date of such spin-off to, and
including, such determination date for purposes of determining the fixed settlement rates. In the event that such distribution described
in this clause (d) is not so made, each fixed settlement rate will be readjusted, effective as of the date our board of directors
(or a committee thereof) publicly announces its decision not to pay such distribution, to such fixed settlement rate that would then
be in effect if such distribution had not been declared. We will not make any such distribution on shares of common stock held in treasury.
(e) If
we make a distribution consisting exclusively of cash to all or substantially all holders of our
common stock (excluding (x) any cash that is distributed in a reorganization event (as described below) in exchange for shares of
our common stock and (y) any dividend or distribution in connection with our liquidation, dissolution or winding up), then each
fixed settlement rate in effect immediately prior to 5:00 p.m., New York City time, on the record date fixed for such distribution will
be multiplied by a fraction:
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the
numerator of which is the current market price per share of our common stock, and
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the
denominator of which is equal to (1) the current market price per share of our common
stock, minus (2) the amount of such distribution per share of our common stock.
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Any
adjustment made pursuant to this clause (e) will become effective immediately after 5:00 p.m., New York City time, on the record
date for such distribution. In the event that any distribution described in this clause (e) is not so made, each fixed settlement
rate will be readjusted, effective as of the date our board of directors (or a committee thereof) publicly announces its decision not
to pay such distribution, to such fixed settlement rate which would then be in effect if such distribution had not been declared. We
will not make any such distribution on shares of common stock held in treasury.
(f) If
we or any of our subsidiaries successfully complete a tender or exchange offer pursuant to a Schedule TO or registration statement on
Form S-4 for our common stock (excluding any securities convertible or exchangeable for our common stock and other than an odd-lot
tender offer), where the cash and the value of any other consideration included in the payment per share of our common stock validly
tendered or exchanged exceeds the current market price per share of our common stock, then each fixed settlement rate in effect immediately
prior to 5:00 p.m., New York City time, on the 10th trading day immediately following, and including, the trading day immediately following
the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “expiration date”)
will be multiplied by a fraction:
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the
numerator of which will be equal to the sum of:
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the
aggregate value of all cash and the fair market value (as determined by our board of directors,
or a committee thereof) on the expiration date of any other consideration paid or payable
for shares of common stock validly tendered or exchanged and not withdrawn as of the expiration
date; and
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the
current market price per share of our common stock; and
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the
number of shares of our common stock outstanding immediately after the last time tenders
or exchanges may be made pursuant to such tender or exchange offer (the “expiration
time”), after giving effect to the purchase of all shares accepted for purchase or
exchange in such tender or exchange offer, and
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the
denominator of which will be equal to the product of:
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the
current market price per share of our common stock; and
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the
number of shares of our common stock outstanding immediately prior to the expiration time
on the expiration date, prior to giving effect to the purchase of any shares accepted for
purchase or exchange in such tender or exchange offer.
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Any
adjustment made pursuant to this clause (f) will become effective immediately after 5:00 p.m., New York City time, on the 10th trading
day immediately following the expiration date; provided that if any date for determining the number of shares of our common
stock issuable to a holder occurs during the 10 trading days immediately following, and including, the trading day next succeeding the
expiration date, references in the preceding paragraph to 10 trading days will be deemed to be replaced with such lesser number of trading
days as have elapsed from, and including, the trading day immediately following such expiration date to, and including, such determination
date for purposes of determining the fixed settlement rates. In the event that we are, or one of our subsidiaries is, obligated to purchase
shares of our common stock pursuant to any such tender or exchange offer, but we are, or such subsidiary is, permanently prevented by
applicable law from effecting any such purchases, or all such purchases are rescinded, then each fixed settlement rate will be readjusted
to be such fixed settlement rate that would then be in effect if such tender or exchange offer had not been made.
Except
with respect to a spin-off, in cases where the fair market value of evidences of our indebtedness, our capital stock, securities, cash
or other assets as to which clauses (d) or (e) above apply, applicable to one share of common stock, distributed to stockholders
equals or exceeds the applicable current market price per share of our common stock, rather than being entitled to an adjustment in each
fixed settlement rate, holders of the purchase contracts will be entitled to receive (without settling such holders’ purchase contract)
on the date on which such evidences of indebtedness, capital stock, securities, cash or other assets are distributed to holders of our
common stock, for each purchase contract, the amount of such indebtedness, capital stock, securities, cash or other assets that such
holder would have received had such holder owned a number of shares of our common stock equal to the maximum settlement rate on the record
date for such distribution.
To
the extent that we have a rights plan in effect with respect to our common stock on any date for determining the number of shares of
our common stock issuable to a holder, you will receive, in addition to our common stock, the rights under the rights plan, unless, prior
to such determination date, the rights have separated from our common stock, in which case each fixed settlement rate will be adjusted
at the time of separation as if we made a distribution to all holders of our common stock as described in clause (d) above, subject
to readjustment in the event of the expiration, termination or redemption of such rights.
The
“current market price” per share of our common stock on any day means:
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with
respect to clause (b) above, the average of the closing prices of our common stock over
the 10 consecutive trading day period ending on, and including, the trading day immediately
preceding the date of announcement of the issuance requiring such computation;
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with
respect to clauses (d) (in the event of an adjustment not relating to a spin-off) and
(e) above, the average of the closing prices of our common stock over the 10 consecutive
trading day period ending on, and including, the trading day immediately preceding the earlier
of the ex-date and the record date for the issuance or distribution requiring such computation;
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with
respect to clause (d) above (in the event of an adjustment relating to a spin-off only),
the average of the closing prices of our common stock over the 10 consecutive trading day
period commencing on, and including, the effective date of such spin-off; and
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with
respect to clause (f) above, the average of the closing prices of our common stock over
the 10 consecutive trading day period commencing on, and including, the trading day immediately
following the expiration date for the tender or exchange offer.
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The
“closing price” per share of our common stock on any day means the closing sale price per share (or if no closing sale price
is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average
ask prices) on that date as reported in composite transactions for the NYSE or, if our common stock is not then listed on the NYSE, the
principal other U.S. national or regional securities exchange on which our common stock is traded. If our common stock is not listed
for trading on a U.S. national or regional securities exchange on the relevant date, the “closing price” will be the last
quoted bid price for our common stock on the principal other market on which our common stock is then traded. If our common stock is
not so quoted, the “closing price” will be the average of the mid-point of the last bid and ask prices for our common stock
on the relevant date from each of at least three nationally recognized independent investment banking firms selected by us for this purpose.
“Trading
day” for purposes of this “—Adjustments to the Fixed Settlement Rates” section means a day on which (1) trading
in our common stock (or other security for which a closing sale price must be determined) generally occurs on the NYSE or, if our common
stock (or such other security) is not then listed on the NYSE, on the principal other U.S. national or regional securities exchange on
which our common stock (or such other security) is then listed or, if our common stock (or such other security) is not then listed on
a U.S. national or regional securities exchange, on the principal other market on which our common stock (or such other security) is
then traded, and (2) a closing price for our common stock (or closing sale price for such other security) is available on such securities
exchange or market. If our common stock (or such other security) is not so listed or traded, “trading day” means a “business
day.”
The
term “ex-date,” when used with respect to any issuance or distribution, means the first date on which shares of our common
stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance or distribution
in question from us or, if applicable, from the seller of our common stock on such exchange or market (in the form of due bills or otherwise)
as determined by such exchange or market.
The
term “record date” means, when used with respect to any dividend, distribution or other transaction or event in which the
holders of our common stock (or other applicable security) have the right to receive any cash, securities or other property or in which
our common stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property,
the date fixed for determination of holders of our common stock (or other applicable security) entitled to receive such cash, securities
or other property (whether such date is fixed by our board of directors or a committee thereof, or by statute, contract or otherwise).
Recapitalizations,
Reclassifications and Changes of our Common Stock
In
the event of:
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any
consolidation or combination of us with or into another person (other than a combination
or consolidation in which we are the continuing or surviving corporation and in which the
shares of our common stock outstanding immediately prior to the combination or consolidation
are not exchanged for cash, securities or other property of us or another person);
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any
sale, transfer, lease or conveyance to another person of all or substantially all of our
property and assets;
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any
reclassification of our common stock into securities, including securities other than our
common stock; or
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any
statutory exchange of our securities with another person (other than in connection with a
combination or acquisition);
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in each case, as
a result of which our common stock would be converted into, or exchanged for, securities, cash or other property (each, a “reorganization
event”), each purchase contract outstanding immediately prior to such reorganization event will, without the consent of the holders
of the purchase contracts, become a contract to purchase the kind of securities, cash and/or other property that a holder of common stock
would have been entitled to receive immediately prior to such reorganization event (such securities, cash and other property, the “exchange
property”) and, prior to or at the effective time of such reorganization event, we or the successor or purchasing person, as the
case may be, shall execute with the purchase contract agent and the trustee a supplemental agreement pursuant to the purchase contract
agreement and the purchase contracts to provide for such change in the right to settle the purchase contracts. For purposes of the foregoing,
the type and amount of exchange property in the case of any reorganization event that causes our common stock to be converted into, or
exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of shareholder election)
will be deemed to be the weighted average of the types and amounts of consideration actually received by the holders of our common stock.
The number of units of exchange property we will deliver for each purchase contract settled or redeemed (if we elect not to deliver solely
cash in respect of such redemption) following the effective date of such reorganization event will be equal to the number of shares of
our common stock we would otherwise be required to deliver as determined by the fixed settlement rates then in effect on the applicable
determination date, or such other settlement rates or redemption rates as provided herein (without interest thereon and without any right
to dividends or distributions thereon which have a record date prior to 5:00 p.m., New York City time, on the determination date). Each
fixed settlement rate will be determined using the applicable market value of a unit of exchange property that a holder of one share
of our common stock would have received in such reorganization event, and such value will be determined (1) in the case of any publicly
traded securities that comprise all or part of the exchange property, based on the daily VWAP of such securities, (2) in the case
of any cash that comprises all or part of the exchange property, based on the amount of such cash; and (3) in the case of any
other property that comprises all or part of the exchange property, based on the value of such property, as determined by a nationally
recognized independent investment banking firm retained by us for this purpose. In addition, if the exchange property in respect of any
reorganization event includes, in whole or in part, securities of another entity, we shall amend the terms of the purchase contract agreement
and the purchase contracts, without the consent of holders thereof, to (x) provide for anti-dilution and other adjustments that
shall be as nearly equivalent as practicable, as determined by the officer executing such amendment, to the adjustments described above
under the heading “—Adjustments to the Fixed Settlement Rates” and (y) otherwise modify the terms of the purchase
contract agreement and the purchase contracts to reflect the substitution of the applicable exchange property for our common stock (or
other exchange property then underlying the purchase contracts). In establishing such anti- dilution and other adjustments referenced
in the immediately preceding sentence, such officer shall act in a commercially reasonable manner and in good faith.
In
addition, subject to applicable law and the applicable listing standards of the NYSE (or any other securities exchange where the common
stock is listed in accordance with the provisions of the purchase contract agreement), we may make such increases in each fixed settlement
rate as we determine to be in our best interests or we deem advisable in order to avoid or diminish any income tax to holders of our
common stock resulting from any dividend or distribution of shares of our common stock (or issuance of rights, options or warrants to
acquire shares of our common stock) or from any event treated as such for income tax purposes or for any other reason. We may only make
such a discretionary adjustment if we make the same proportionate adjustment to each fixed settlement rate.
If
the settlement rates are adjusted as a result of a distribution that is taxable to our common stockholders, such as a cash dividend,
you generally will be deemed to have received for U.S. federal income tax purposes a taxable dividend without the receipt of any cash.
In addition, a failure to adjust (or to adjust adequately) the settlement rates after an event that increases your proportionate interest
in us could be treated as a deemed taxable dividend to you. You may also be deemed to have received a taxable dividend in the event we
make certain other adjustments to the settlement rates of the purchase contracts. For example, if a fundamental change occurs prior to
the maturity date, under some circumstances, we will increase the settlement rate for purchase contracts settled in connection with the
fundamental change. Such increase may also be treated as a distribution subject to U.S. federal income tax as a dividend. See “Certain
United States Federal Income Tax Considerations.” If you are a “non-U.S. Holder” (as defined in “Certain United
States Federal Income Tax Considerations”), U.S. federal withholding tax at a rate of 30 percent (or at a lower rate if an applicable
income tax treaty so provides and an applicable withholding agent has received proper certification as to the application of that treaty)
generally will apply to the gross amount of deemed or constructive dividends received by you. If an applicable withholding agent pays
such withholding taxes on your behalf with respect to such deemed or constructive dividends, the withholding agent may withhold any such
withholding tax from any cash to be paid to, or common stock to be delivered to, you, or set-off such amount against certain other funds
or assets belonging to you.
Adjustments
to each fixed settlement rate will be calculated to the nearest 1/10,000th of a share. No adjustment in the fixed settlement rates will
be required unless the adjustment would require an increase or decrease of at least one percent. If any adjustment is not required to
be made because it would not change the fixed settlement rates by at least one percent, then the adjustment will be carried forward and
taken into account in any subsequent adjustment; provided that, on any date for determining the number of shares of our common stock
issuable to a holder (including any date for determining the amount of cash payable in connection with a combination termination redemption),
adjustments to the fixed settlement rates will be made with respect to any such adjustment carried forward and which has not been taken
into account before such determination date.
The
fixed settlement rates will only be adjusted as set forth above and will not be adjusted:
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upon
the issuance of any common stock pursuant to any present or future plan providing for the
reinvestment of dividends or interest payable on our securities and the investment of additional
optional amounts in common stock under any plan;
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upon
the issuance of any common stock or rights, options or warrants to purchase those shares
pursuant to any present or future employee, director or consultant benefit plan or program
of or assumed by us or any of our subsidiaries;
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upon
the repurchase of any shares of our common stock pursuant to an open market share repurchase
program or other buy-back transaction that is not a tender offer or exchange offer of the
nature described in clause (f) above;
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for
the sale or issuance of shares of our common stock, or securities convertible into or exercisable
for shares of our common stock, for cash, including at a price per share less than the fair
market value thereof or otherwise or in an acquisition, except as described in one of clauses
(a) through (f) above;
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for
a third party tender offer;
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upon
the issuance of any common stock pursuant to any option, warrant, right or exercisable, exchangeable
or convertible security outstanding as of the date the Units were first issued; or
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solely
for a change in, or elimination of, the par value of our common stock.
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Whenever
the fixed settlement rates are adjusted, we will deliver to the purchase contract agent a certificate setting forth in reasonable detail
the method by which the adjustment to each fixed settlement rate was determined and setting forth each revised fixed settlement rate.
In addition, we will, within five business days of any event requiring such adjustment, provide or cause to be provided written notice
of the adjustment to the holders of the Units and separate purchase contracts and describe in reasonable detail the method by which each
fixed settlement rate was adjusted.
Each
adjustment to each fixed settlement rate will result in a corresponding adjustment to the early settlement rate and the early mandatory
settlement rate. Whenever we are required to calculate the closing prices, the daily VWAPs or any other prices or amounts over a span
of multiple days (including, without limitation, the applicable market value, the redemption market value, the “stock price”
or the “combination termination stock price”), our board of directors (or a committee thereof) will make appropriate adjustments,
if any, to each to account for any adjustment to the fixed settlement rates if the related record date, ex-date, effective date or expiration
date occurs during the period in which the closing prices, the daily VWAPs or such other prices or amounts are to be calculated.
Fractional Shares
No
fractional shares of our common stock will be issued to holders upon settlement or redemption of the purchase contracts. In lieu of fractional
shares otherwise issuable, holders will be entitled to receive an amount in cash equal to the fraction of a share of our common stock,
calculated on an aggregate basis in respect of the purchase contracts being settled or redeemed (provided that, so long as the Units
are in global form, we may elect to aggregate Units for purposes of these calculations on any basis permitted by the applicable procedures
of DTC), multiplied by the daily VWAP of our common stock on the trading day immediately preceding the mandatory settlement date,
early settlement date, fundamental change early settlement date, early mandatory settlement date or combination redemption settlement
date, as the case may be.
Legal Holidays
In
any case where the mandatory settlement date, early settlement date, fundamental change early settlement date, early mandatory settlement
date or combination redemption settlement date, as the case may be, shall not be a business day, notwithstanding any term to the contrary
in the purchase contract agreement or purchase contract, the settlement or redemption of the purchase contracts shall not be effected
on such date, but instead shall be effected on the next succeeding business day with the same force and effect as if made on such settlement
date, and no interest or other amounts shall accrue or be payable by us or to any holder in respect of such delay.
Consequences
of Bankruptcy
Pursuant
to the terms of the purchase contract agreement, the mandatory settlement date for each purchase contract, whether held separately or
as part of a Unit, will automatically accelerate upon the occurrence of specified events of bankruptcy, insolvency or reorganization
with respect to us. Pursuant to the terms of the purchase contract agreement, upon acceleration, holders will be entitled under the terms
of the purchase contracts to receive a number of shares of our common stock per purchase contract equal to the maximum settlement rate
in effect immediately prior to such acceleration (regardless of the market value of our common stock at that time). However, a bankruptcy
court may prevent us from delivering our common stock in settlement of the accelerated purchase contracts. In such event, a holder would
have a damage claim against us for the value of the common stock that we would have otherwise been required to deliver upon settlement
of the purchase contracts. Any such damage claim that holders have against us following such acceleration will rank pari passu with the
claims of holders of our common stock in the relevant bankruptcy proceeding. As such, to the extent we fail to deliver common stock to
you upon such an acceleration, you will only be able to recover damages to the extent holders of our common stock receive any recovery.
Modification
The
purchase contract agreement will contain provisions permitting us, the purchase contract agent and the trustee to modify the purchase
contract agreement or the purchase contracts without the consent of the holders of purchase contracts (whether held separately or as
a component of Units) for any of the following purposes:
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to
evidence the succession of another person to us, and the assumption by any such successor
of the covenants and obligations of ours in the purchase contract agreement and the units
and separate purchase contracts, if any;
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to
add to the covenants for the benefit of holders of purchase contracts or to surrender any
of our rights or powers under the agreement;
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to
evidence and provide for the acceptance of appointment of a successor purchase contract agent;
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upon
the occurrence of a reorganization event, solely (1) to provide that each purchase contract
will become a contract to purchase exchange property and (2) to effect the related changes
to the terms of the purchase contracts, in each case, as required by the applicable provisions
of the purchase contract agreement;
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to
conform the provisions of the purchase contract agreement to the “Description of the
Purchase Contracts” and “Description of the Units” sections in the preliminary
prospectus supplement, as supplemented by the related pricing term sheet;
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to
cure any ambiguity or manifest error, to correct or supplement any provisions that may be
inconsistent; and
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to
make any other provisions with respect to such matters or questions, so long as such action
does not adversely affect the interest of the holders.
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The
purchase contract agreement will contain provisions permitting us, the purchase contract agent and the trustee, with the consent of the
holders of not less than a majority of the purchase contracts at the time outstanding, to modify the terms of the purchase contracts
or the purchase contract agreement. However, no such modification may, without the consent of the holder of each outstanding purchase
contract affected by the modification,
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reduce
the number of shares of common stock deliverable upon settlement of the purchase contract
(except to the extent expressly provided in the anti-dilution adjustments);
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change
the mandatory settlement date, or adversely modify the right to settle purchase contracts
early or the fundamental change early settlement right;
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reduce
the redemption amount or adversely modify the right of any holder to receive such amount
if we elect to redeem the purchase contract in connection with a combination termination
redemption;
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reduce
the above-stated percentage of outstanding purchase contracts the consent of the holders
of which is required for the modification or amendment of the provisions of the purchase
contracts or the purchase contract agreement; or
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impair
the right to institute suit for the enforcement of the purchase contracts.
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In
executing any supplement, modification or amendment to the purchase contract agreement, the purchase contract agent and trustee shall
be provided an officers’ certificate and an opinion of counsel stating that the execution of such supplemental agreement is authorized
or permitted by the purchase contract agreement and does not violate the purchase contract agreement, and that any and all conditions
precedent to the execution and delivery of such supplement, modification or amendment have been satisfied. Neither the purchase contract
agent nor the trustee shall be obligated to execute or deliver any such supplement, modification or amendment that adversely affects
the purchase contract agent’s or the trustee’s rights, duties, liabilities, indemnities, or immunities under the purchase
contract agreement.
Consolidation,
Combination, Sale or Conveyance
Under
the purchase contract agreement, we are permitted to consolidate with or merge with or into another company. We are also permitted to
sell, assign, transfer, lease or convey all or substantially all of our assets to another company. However, if we take any of these actions,
we must meet the following conditions:
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the
successor entity to such consolidation or combination, or the entity which acquires all or
substantially all of our assets, shall expressly assume all of our obligations under the
purchase contracts and the purchase contract agreement via a supplement to the purchase contract
agreement;
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the
successor entity to such consolidation or combination, or the entity which acquires all or
substantially all of our assets, shall be a corporation organized and existing under the
laws of the United States or any state thereof or the District of Columbia; and
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immediately
after the combination, consolidation, sale, assignment, transfer, lease or conveyance, no
default has occurred and is continuing under the purchase contracts or the purchase contract
agreement.
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Reservation of
Common Stock
We
will at all times reserve and keep available out of our authorized and unissued common stock, solely for issuance upon settlement or
redemption of the purchase contracts, the number of shares of common stock that would be issuable upon the settlement of all purchase
contracts then outstanding, assuming settlement at the maximum settlement rate.
Governing Law
The
purchase contract agreement, the Units and the purchase contracts will be governed by, and construed in accordance with, the laws of
the State of New York.
Waiver of Jury
Trial
The
purchase contract agreement will provide that we, the purchase contract agent and the trustee will waive its respective rights to trial
by jury in any action or proceeding arising out of or related to the purchase contracts, the purchase contract agreement or the transactions
contemplated thereby, to the maximum extent permitted by law.
Information Concerning
the Purchase Contract Agent
U.S.
Bank National Association will be the purchase contract agent. The purchase contract agent will
act as the agent for the holders of Units and separate purchase contracts from time to time but shall have no fiduciary relationship
to the holder of the Units or any other party. The purchase contract agreement will not obligate the purchase contract agent to exercise
any discretionary actions in connection with a default under the terms of the purchase contracts or the purchase contract agreement.
The
purchase contract agreement will contain provisions limiting the liability of the purchase contract agent. The purchase contract agreement
will contain provisions under which the purchase contract agent may resign or be replaced. This resignation or replacement would be effective
upon the acceptance of appointment by a successor purchase contract agent.
We
maintain banking relationships in the ordinary course of business with the purchase contract agent and its affiliates.
Calculations
in Respect of Purchase Contracts
We
will be responsible for making all calculations called for under the Units and any separate purchase contracts. Neither the purchase
contract agent nor the trustee will have no obligation to make, review or verify any such calculations. All such calculations made by
us will be made in good faith and, absent manifest error, will be final and binding on the purchase contract agent, the trustee and the
holders of the Units and any separate purchase contracts. We will provide a schedule of such calculations to the purchase contract agent
and the trustee and the purchase contract agent and the trustee will be entitled to conclusively rely upon the accuracy of such calculations
without independent verification.
Description
of the Amortizing Notes
The
amortizing notes will be issued by us pursuant to an indenture dated as of , 2021,
between us, as issuer, and U.S. Bank National Association, as trustee, and a related supplemental indenture, to be dated the date of
first issuance of the Units, between us, as issuer, and U.S. Bank National Association, as trustee, under which the amortizing notes
will be issued (collectively referred to herein as the “indenture”).
The
following summary of the terms of the amortizing notes taken together with the description under “Description of Debt Securities”
in the accompanying prospectus contains a description of all of the material terms of the amortizing notes but is not complete and is
subject to, and is qualified in its entirety by reference to, all of the provisions of the indenture, including the definitions in the
indenture of certain terms. We refer you to the form of base indenture, which has been filed as an exhibit to the registration statement
of which this prospectus supplement forms a part, and the supplemental indenture, which will be filed as an exhibit to a current report
on Form 8-K and incorporated by reference as an exhibit to that registration statement. A copy of the base indenture is, and a copy
of the supplemental indenture will be, available as described under “Where You Can Find More Information.”
As
used in this section, the terms “we,” “us” and “our” mean Bally’s Corporation and do not include
any subsidiary of Bally’s Corporation.
General
The
amortizing notes will be issued as a separate series of senior debt securities under the indenture. The amortizing notes will be issued
by us in an aggregate initial principal amount of $ (or up to $ if
the underwriters exercise their option to purchase additional Units). The final installment payment date will be April 15, 2024.
We may not redeem the amortizing notes, and no sinking fund is provided for the amortizing notes.
Each
amortizing note will initially form a part of a Unit. Each Unit may be separated by a holder into its constituent purchase contract and
amortizing note on any business day during the period beginning on, and including, the business day immediately following the date of
initial issuance of the Units to, but excluding, the second scheduled trading day immediately preceding April 15, 2024 or, if earlier,
the second scheduled trading day immediately preceding any “early mandatory settlement date” or any “combination redemption
settlement date.” Following such separation, amortizing notes may be transferred separately from amortizing notes.
Amortizing
notes may only be issued in certificated form in exchange for a global security under the circumstances described under
“Book-Entry Procedures and Settlement.” In the event that amortizing notes are issued in certificated form, such
amortizing notes may be transferred or exchanged at the corporate trust office of the trustee described below. Payments on
amortizing notes issued as a global security will be made to DTC, to a successor depositary or, in the event that no depositary is
used, to a paying agent for the amortizing notes. In the event amortizing notes are issued in certificated form, installments will
be payable, the transfer of the amortizing notes will be registrable and amortizing notes will be exchangeable for amortizing notes
of other denominations of a like aggregate principal amount at the corporate trust office of the trustee (cts.transfers@usbank.com). Installment payments on
certificated amortizing notes may be made at our option by check mailed to the address of the persons entitled thereto. See
“Book-Entry Procedures and Settlement.”
There
are no covenants or provisions in the indenture that would afford the holders of the amortizing notes protection in the event of a highly
leveraged transaction, reorganization, restructuring, combination or similar transaction involving us that may adversely affect such
holders.
Ranking
The
amortizing notes will be our direct, unsecured and unsubordinated obligations and will rank equally with all of our existing and future
other unsecured and unsubordinated indebtedness. The amortizing notes will be effectively subordinated to any of our existing and future
secured indebtedness, to the extent of the assets securing such indebtedness, and will be effectively subordinated to all liabilities
of our subsidiaries, including trade payables.
As
of December 31, 2020, we had $1,129 million of debt outstanding. As of December 31, 2020,
our subsidiaries (1) had approximately $503 million of outstanding liabilities and (2) as adjusted for this offering,
would have had $548 million of outstanding liabilities, in each case including trade payables, but excluding intercompany liabilities
and deferred gains.
Installment Payments
Each
amortizing note will have an initial principal amount of $ . On each January 15,
April 15, July 15 and October 15, commencing on July 15, 2021 (each, an “installment
payment date”), we will pay, in cash, equal quarterly installments of $ on each
amortizing note (except for the July 15, 2021 installment payment, which will be $ per
amortizing note). Each installment will constitute a payment of interest (at a rate of % per
annum) and a partial repayment of principal on the amortizing note, allocated as set forth on the amortization schedule set forth under
“—Amortization Schedule.” Installments will be paid to the person in whose name an amortizing note is registered as
of 5:00 p.m., New York City time, on the business day immediately preceding the related installment payment date (each, a “regular
record date”), subject to provisions allowing the establishment of a new record date in respect of any defaulted interest. If the
amortizing notes do not remain in book-entry only form, then we will have the right to elect that each regular record date will be each
January 1, April 1, July 1 and October 1 immediately preceding the relevant installment payment date by giving advance
written notice to the trustee and the holders.
Each
installment payment for any period will be computed on the basis of a 360-day year of twelve 30-day months. The installment payable for
any period shorter or longer than a full installment payment period will be computed on the basis of the actual number of days elapsed
per 30-day month. In the event that any date on which an installment is payable is not a business day, then payment of the installment
on such date will be made on the next succeeding day that is a business day, and without any interest or other payment in respect of
any such delay.
Amortization
Schedule
The
total installments of principal of and interest on the amortizing notes for each installment payment date are set forth below:
Scheduled
Installment Payment Date
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Amount
of Principal
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|
|
|
Amount
of Interest
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July 15, 2021
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$
|
|
|
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$
|
|
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October 15, 2021
|
|
$
|
|
|
|
$
|
|
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January 15, 2022
|
|
$
|
|
|
|
$
|
|
|
April 15, 2022
|
|
$
|
|
|
|
$
|
|
|
July 15, 2022
|
|
$
|
|
|
|
$
|
|
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October 15, 2022
|
|
$
|
|
|
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$
|
|
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January 15, 2023
|
|
$
|
|
|
|
$
|
|
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April 15, 2023
|
|
$
|
|
|
|
$
|
|
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July 15, 2023
|
|
$
|
|
|
|
$
|
|
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October 15, 2023
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|
$
|
|
|
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$
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|
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January 15, 2024
|
|
$
|
|
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$
|
|
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April 15, 2024
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$
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$
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Repurchase of
Amortizing Notes at the Option of the Holder
If
we elect to exercise our early mandatory settlement right with respect to, or cause a combination termination redemption of, the purchase
contracts, then holders of the amortizing notes (whether as components of Units or separate amortizing notes) will have the right (the
“repurchase right”) to require us to repurchase some or all of their amortizing notes for cash at the repurchase price per
amortizing note to be repurchased on the repurchase date, as described below. Holders may not require us to repurchase a portion of an
amortizing note. Holders will not have the right to require us to repurchase any or all of such holder’s amortizing notes in connection
with any early settlement of such holder’s purchase contracts at the holder’s option, as described above under “Description
of the Purchase Contracts—Early Settlement” and “Description of the Purchase Contracts—Early Settlement Upon
a Fundamental Change.”
The
“repurchase date” will be a date specified by us in the early mandatory settlement notice, or combination redemption notice,
as the case may be, which will be at least 20 but not more than 35 business days following the date of our early mandatory settlement
notice as described under “Description of the Purchase Contracts—Early Settlement at Our Option” or the date of the
combination redemption notice as described under “Description of the Purchase Contracts—Combination Termination Redemption,”
as the case may be (and which may or may not fall on the early mandatory settlement date or combination redemption settlement date, as
the case may be).
The
“repurchase price” per amortizing note to be repurchased will be equal to the principal amount of such amortizing note as
of the repurchase date, plus accrued and unpaid interest on such principal amount from, and including, the immediately preceding installment
payment date to, but not including, the repurchase date, calculated at an annual rate of %; provided that, if the repurchase date
falls after a regular record date for any installment payment and on or prior to the immediately succeeding installment payment date,
the installment payment payable on such installment payment date will be paid on such installment payment date to the holder as of such
regular record date and will not be included in the repurchase price per amortizing note.
To
exercise your repurchase right, you must deliver, on or before 5:00 p.m., New York City time, on the business day immediately preceding
the repurchase date, the amortizing notes to be repurchased (or the Units, if the early mandatory settlement date or combination redemption
settlement date, as the case may be, occurs on or after the repurchase date and you have not separated your Units into their constituent
components), together with a duly completed written repurchase notice in the form entitled “Form of Repurchase Notice”
on the reverse side of the amortizing notes (a “repurchase notice”), in each case, in accordance with appropriate DTC procedures,
unless you hold certificated amortizing notes (or Units), in which case you must deliver the amortizing notes to be repurchased (or Units),
duly endorsed for transfer, together with a repurchase notice, to the purchase contract agent. Your repurchase notice must state:
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if
certificated amortizing notes (or Units) have been issued, the certificate numbers of the
amortizing notes (or Units), or if not certificated, your repurchase notice must comply with
appropriate DTC procedures;
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the
number of amortizing notes to be repurchased; and
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that
the amortizing notes are to be repurchased by us pursuant to the applicable provisions of
the amortizing notes and the indenture.
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You
may withdraw any repurchase notice (in whole or in part) by a written, irrevocable notice of withdrawal delivered (in the case of an
amortizing note in global form, in accordance with the appropriate DTC procedures) on or before 5:00 p.m., New York City time, on the
business day immediately preceding the repurchase date. The notice of withdrawal must state:
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if
certificated amortizing notes (or Units) have been issued, the certificate numbers of the
withdrawn amortizing notes (or Units), or if not certificated, your notice must comply with
appropriate DTC procedures;
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the
number of the withdrawn amortizing notes; and
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the
number of amortizing notes, if any, that remain subject to the repurchase notice.
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We
will be required to repurchase the amortizing notes on the repurchase date. You will receive payment of the repurchase price on the later
of (1) the repurchase date and (2) the time of book-entry transfer or the delivery of the amortizing notes. If the trustee
holds money sufficient to pay the repurchase price of the amortizing notes to be purchased on the repurchase date, then:
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such
amortizing notes will cease to be outstanding and interest will cease to accrue (whether
or not book-entry transfer of the amortizing notes is made or whether or not the amortizing
notes are delivered to the trustee); and
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all
other rights of the holder will terminate (other than the right to receive the repurchase
price and, if the repurchase date falls between a regular record date and the corresponding
installment payment date, the related installment payment).
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Upon
repurchase of the amortizing note component of a Unit prior to the related combination redemption settlement date, if applicable, the
purchase contract component of such Unit will remain outstanding (pending such combination redemption settlement date) and beneficially
owned by or registered in the name of, as the case may be, the holder who elected repurchase of the related amortizing note and will
no longer constitute a part of the Unit.
In
connection with any repurchase offer pursuant to an early mandatory settlement notice or combination redemption notice, we will, if required,
comply with the provisions of the tender offer rules under the Exchange Act that may then be applicable.
No
amortizing notes may be repurchased at the option of holders if the principal amount thereof has been accelerated, and such acceleration
has not been rescinded, on or prior to the repurchase date (except in the case of an acceleration resulting from a default by us of the
payment of the repurchase price with respect to such amortizing notes).
Events of Default
In
addition to the “Events of Default” set forth in the section of the accompanying prospectus entitled “Description of
Debt Securities—Events of Default,” the following will be “Events of Default” under the indenture:
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default
in the payment of the repurchase price of any amortizing notes when the same shall become
due and payable;
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default
in the payment of any installment payment on any amortizing notes as and when the same shall
become due and payable and continuance of such failure for a period of 30 days; or
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·
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our
failure to give notice of a fundamental change as described under “Description of the
Purchase Contracts—Early Settlement Upon a Fundamental Change” when due;
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·
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our
failure to comply with any of our other agreements or covenants in, or provisions of, the
amortizing notes or the indenture and such failure continues for the period and after the
notice specified below, subject to extension relating to any failure to comply with the covenant
described under “—Reports” as described below;
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default
by us or any of our subsidiaries with respect to any mortgage, agreement or other instrument
under which there may be outstanding, or by which there may be secured or evidenced, any
indebtedness for money borrowed in excess of $25 million (or its foreign currency equivalent)
in the aggregate of us and/or any such subsidiary, whether such indebtedness now exists or
shall hereafter be created (1) resulting in such indebtedness becoming or being declared
due and payable or (2) constituting a failure to pay the principal or interest of any
such debt when due and payable at its stated maturity, upon required repurchase, upon declaration
of acceleration or otherwise, and such acceleration is not cured, waived, rescinded, stayed
or annulled or such indebtedness is not discharged, as applicable, within a period of 30
days after written notice of such indebtedness becoming due and payable or such failure,
as the case may be, has been received from the trustee or the holders of at least 25% in
principal amount of the amortizing notes then outstanding;
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a
final judgment or judgments that exceed $25 million or more, individually or in the aggregate,
for the payment of money having been entered by a court or courts of competent jurisdiction
against us and such judgment or judgments is not satisfied, stayed, annulled or rescinded
within 60 calendar days of being entered; or
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certain
events of bankruptcy, insolvency or reorganization of us or any of our significant subsidiaries.
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The
term “significant subsidiary” has the meaning set forth in Rule 1-02 of Regulation S-X under the Exchange Act.
A
default as described in the fourth bullet above will not be deemed an event of default until the trustee notifies us, or the holders
of at least 25% in principal amount of the then outstanding amortizing notes notify us in writing and the trustee, of the default and
we do not cure the default within 60 calendar days after receipt of the notice. The notice must specify the default, demand that it be
remedied and state that the notice is a “Notice of Default.” If such a default is cured within such time period, it ceases
and such written notice references us, as issuer, the Units and the indenture.
With
the exception of a payment default on the amortizing notes, the trustee will not be charged with knowledge of any default or event of
default or knowledge of any cure of any default or event of default unless an authorized officer of the trustee with direct responsibility
for the administration of the indenture has received written notice of such default or event of default from us or holders of 25% of
the outstanding amortizing notes.
If
an event of default (other than an event of default with respect to us described in the final bullet above), shall have occurred and
be continuing under the indenture, the trustee by written notice to us, or the holders of at least 25% in principal amount of the amortizing
notes then outstanding by written notice to us and the trustee, may declare all amortizing notes to be due and payable immediately. Upon
such declaration of acceleration, all future, scheduled installment payments on the amortizing notes will be due and payable immediately.
If an event of default with respect to us specified in the final bullet above occurs, such an amount will become automatically and immediately
due and payable without any declaration, notice or other act on the part of the trustee or any holder.
The
holders of a majority in principal amount of the amortizing notes then outstanding by written notice to the trustee and us may waive
any continuing default or event of default (other than any default or event of default in payment of installment payments) on the amortizing
notes under the indenture. Holders of a majority in principal amount of the then outstanding amortizing notes may rescind an acceleration
and its consequence (except an acceleration due to nonpayment of installment payments on the amortizing notes) if the rescission would
not conflict with any judgment or decree, if all existing events of default (other than the non-payment of accelerated installment payments)
have been cured or waived and if there has been deposited with the trustee a sum sufficient to pay its fees and expenses in connection
with such event of default.
The
holders may not enforce the provisions of the indenture or the amortizing notes except as provided in the indenture. Subject to certain
limitations, holders of a majority in principal amount of the amortizing notes then outstanding may direct the trustee in its exercise
of any trust or power; provided that such direction does not conflict with the terms of the indenture or involve the trustee in
personal liability.
The
trustee, within 30 calendar days after the occurrence of a default with respect to the amortizing notes, will mail or send to all holders,
at our expense, notice of all such defaults actually known to a responsible officer of the trustee, unless such defaults shall have been
cured or waived before the giving of such notice. However, the trustee may withhold from the holders notice of any continuing default
or event of default (except a default or event of default in payment of installment payments or that resulted from the failure to comply
with any obligations described under “Description of the Purchase Contracts—Early Settlement Upon a Fundamental Change”)
if the trustee determines that withholding such notice is in the holders’ interest.
Subject
to the provisions of the indenture relating to the duties of the trustee, if an event of default occurs and is continuing, the trustee
will be under no obligation to exercise any of the rights or powers under the indenture or the amortizing notes at the request or direction
of any of the holders unless such holders have offered and, if requested, provided to the trustee indemnity and/or security satisfactory
to it against any loss, liability or expense resulting from such exercise.
We
are required to deliver, within 120 calendar days after the end of each fiscal year, to the trustee an annual statement regarding compliance
with the indenture, and include in such statement, if any officer is aware of any default or event of default, a statement specifying
such default or event of default and what action we are taking or propose to take with respect thereto. In addition, we are required
to deliver to the trustee prompt written notice of the occurrence of any default or event of default.
Notwithstanding
the foregoing, the indenture will provide that, to the extent elected by us, the sole remedy for an event of default relating to the
failure to file any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act and for any failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act or of the covenant
described below in “—Reports”, will for the first 180 days after the occurrence of such an event of default consist
exclusively of the right to receive additional interest, at an annual rate of 0.25% of the principal amount of the notes during the first
90 days of the occurrence of such event of default on the notes and 0.50% of the principal amount of the notes from the 91st day until
the 180th day following the occurrence of such event of default on the notes. If we so elect, such additional interest will be payable
on all outstanding notes on the date on which an event of default relating to a failure to comply with the reporting obligations in the
indenture first occurs, which will be the 60th day after notice to us of our failure to so comply. On the 180th day after such event
of default (if the event of default relating to the reporting obligations is not cured or waived prior to such 180th day), the notes
will be subject to acceleration as provided above. The provisions of the indenture described in this paragraph will not affect the rights
of holders of notes in the event of the occurrence of any other event of default. In the event we do not elect to pay the additional
interest upon an event of default in accordance with this paragraph, the notes will be subject to acceleration as provided above.
Reports
The
indenture requires us to file with the trustee, within 15 days after we are required to file the same with the SEC (after giving effect
to any grace period provided by Rule 12b-25 under the Exchange Act), copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations
prescribe) which we may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act.
For purposes of this section, documents filed by us with the SEC via EDGAR system will be deemed to be filed with the trustee as of the
time such documents are filed via EDGAR, provided, however, that the trustee shall have no obligation whatsoever to determine if such
filing has occurred.
Delivery
of such reports, information and documents to the trustee is for informational purposes only and the trustee’s receipt of such
reports, information or documents shall not constitute constructive notice of any information contained therein or determinable from
information contained therein, including our compliance with any of our covenants under the indenture (as to which the trustee is entitled
to conclusively rely exclusively on an officer’s certificate).
Discharge and
Defeasance of Indenture
The
defeasance provisions described in the accompanying prospectus under “Description of Debt Securities—Discharge, Defeasance
and Covenant Defeasance” will be applicable to the amortizing notes; provided that (1) the coin or currency unit
to be deposited with the trustee under such provisions shall be U.S. dollars, (2) references therein to “principal”
shall be deemed to refer to “the portion of all future scheduled installment payments constituting the payment of principal in
respect of the amortizing notes and the portion of the repurchase price constituting the principal amount of the amortizing notes”
and (3) references therein to “interest” shall be deemed to refer to “the portion of all future scheduled installment
payments constituting the payment of interest in respect of the amortizing notes and the portion of the repurchase price constituting
the accrued but unpaid interest on the amortizing notes”.
Discharge and
Defeasance of Indenture
We
may discharge our obligations under the amortizing notes and the indenture (with the exception of any obligations which expressly survive
the termination of the indenture) by irrevocably depositing in trust with the trustee money or U.S. government obligations sufficient
to pay principal of, and interest on, the amortizing notes to maturity and the amortizing notes mature within one year, subject to meeting
certain other conditions.
The
indenture will also permit us to terminate all of our obligations under the indenture with respect to the amortizing notes except for
the rights of the holders of the amortizing notes to receive payments in respect of the principal of, premium, if any, and interest on
such amortizing notes when such payments are due solely out of the trust referred to below and certain other obligations (“legal
defeasance”), at any time by:
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·
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depositing
in trust with an escrow agent, under an irrevocable escrow agreement, money or U.S. government
obligations in an amount sufficient to pay principal of, and interest on, the amortizing
notes to their maturity; and
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complying
with certain other conditions, including delivery to the trustee of an opinion of counsel
or a ruling received from the Internal Revenue Service, to the effect that holders and beneficial
owners will not recognize income, gain or loss for U.S. federal income tax purposes as a
result of our exercise of such right and will be subject to U.S. federal income tax on the
same amount and in the same manner and at the same times as would have been the case otherwise,
which opinion of counsel is based upon a change in the applicable U.S. federal tax law since
, 2021.
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In
addition, the indenture will permit us to terminate all of our obligations under the indenture with respect to certain covenants and
events of default specified in the indenture (“covenant defeasance”) at any time by:
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depositing
in trust with the escrow agent, under an irrevocable escrow agreement, money or U.S. government
obligations in an amount sufficient to pay principal of, and interest on, the amortizing
notes to their maturity; and
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complying
with certain other conditions, including delivery to the trustee of an opinion of counsel
or a ruling received from the Internal Revenue Service, to the effect that holders and beneficial
owners will not recognize income, gain or loss for U.S. federal income tax purposes as a
result of the exercise of such right and will be subject to U.S. federal income tax on the
same amount and in the same manner and at the same times as would have been the case otherwise.
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Notwithstanding
the foregoing, no discharge, legal defeasance or covenant defeasance described above will affect the following obligations to, or rights
of, the holders of the amortizing notes:
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rights
of registration of transfer and exchange of amortizing notes;
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rights
of substitution of mutilated, defaced, destroyed, lost or stolen amortizing notes;
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rights
of holders of the amortizing notes to receive payments of principal thereof and interest
thereon, upon the original due dates therefor, but not upon acceleration;
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rights,
obligations, duties and immunities of the trustee;
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rights
of holders of amortizing notes that are beneficiaries with respect to property so deposited
with the trustee payable to all or any of them; and
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our
obligations to maintain an office or agency in respect of the amortizing notes.
|
We
may exercise the legal defeasance option with respect to the amortizing notes notwithstanding the prior exercise of the covenant defeasance
option with respect to the amortizing notes. If we exercise the legal defeasance option with respect to the amortizing notes, payment
of the amortizing notes may not be accelerated due to an event of default with respect to the amortizing notes. If we exercise the covenant
defeasance option with respect to the amortizing notes, payment of the amortizing notes may not be accelerated due to an event of default
with respect to the covenants to which such covenant defeasance is applicable. However, if acceleration were to occur by reason of another
event of default, the realizable value at the acceleration date of the cash and U.S. government obligations in the defeasance trust could
be less than the principal of and interest then due on the amortizing notes, in that the required deposit in the defeasance trust is
based upon scheduled cash flow rather than market value, which will vary depending upon interest rates and other factors.
Limitations on
Mergers, Consolidations and Sales of Assets
The
indenture will provide that we will not consolidate with or merge with or into or wind up into, whether or not we are the surviving corporation,
or sell, assign, convey, transfer or lease our properties and assets substantially as an entirety to any person in one transaction or
a series of related transactions, unless:
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the
successor corporation formed by the consolidation or into which we are merged or the person
which acquires by conveyance or transfer, or which leases our properties and assets substantially
as an entirety, is an entity organized and existing under the laws of the United States or
any State thereof or the District of Columbia and expressly assumes by a supplemental indenture
the due and punctual payment of all installment payments on the amortizing notes issued under
the indenture and the performance of every covenant in the indenture on our part to be performed
or observed; and
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immediately
after giving effect to such transaction, no event of default under the indenture, and no
event which, after notice or lapse of time, or both, would become an event of default, has
happened and is continuing.
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Although
there is a limited body of case law interpreting the phrase “substantially as an entirety,” there is no precise established
definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether
a particular transaction would involve the property or assets of a person “substantially as an entirety”.
Subject
to certain limitations, the successor company will succeed to, and be substituted for, us under the indenture and the amortizing notes.
We
will be released from our obligations under the indenture and the successor company will succeed to, and be substituted for, and may
exercise every right and power of, us under the indenture and the amortizing notes; provided that, in the case of a lease of all
or substantially all its assets, we will not be released from the obligation to pay the installment payments on the amortizing notes.
Modifications
and Amendments
We
and the trustee may amend or supplement the indenture or the amortizing notes without notice to or the consent of any holder to:
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cure
any ambiguity, omission, defect or inconsistency in the indenture; provided that such
amendments or supplements shall not adversely affect the interests of the holders in any
material respect;
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provide
for the assumption by a successor corporation of our obligations as set forth in “—Limitations
on Mergers, Consolidations and Sales of Assets”;
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comply
with any requirements of the SEC in connection with the qualification of the indenture under
the Trust Indenture Act;
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evidence
and provide for the acceptance of appointment with respect to the amortizing notes by a successor
trustee in accordance with the indenture, and add to or change any of the provisions of the
indenture as shall be necessary to provide for or facilitate the administration of the trusts
under the indenture by more than one trustee;
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provide
for uncertificated or unregistered securities and to make all appropriate changes for such
purpose; provided, that all amortizing notes are issued in registered form for purposes
of Section 163(f) of the United States Internal Revenue Code of 1986, as amended;
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secure
the amortizing notes;
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add
guarantees with respect to the amortizing notes;
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add
to our covenants or events of default for the benefit of the holders or surrender any right
or power conferred upon us;
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make
any change that does not adversely affect the rights of any holder in any material respect;
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provide
for the issuance of additional amortizing notes in accordance with the limitations set forth
in the indenture as of the date thereof; and
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conform
the provisions of the indenture to the “Description of the Amortizing Notes”
section in the preliminary prospectus supplement, as supplemented and/or amended by the related
pricing term sheet.
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Without
prior notice to any holders, we and the trustee may amend the indenture with respect to the amortizing notes with the written consent
of the holders of a majority in principal amount of the outstanding amortizing notes, and the holders of a majority in principal amount
of the outstanding amortizing notes by written notice to the trustee may waive future compliance by us with any provision of the indenture
with respect to the amortizing notes. However, without the consent of each holder affected thereby, an amendment or waiver may not:
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change
any installment payment date or the amount owed on any installment payment date,
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reduce
the principal amount of the amortizing notes or the rate of interest thereon;
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reduce
the above-stated percentage of outstanding amortizing notes the consent of whose holders
is necessary to modify or amend the indenture with respect to the amortizing notes;
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reduce
the percentage in principal amount of outstanding amortizing notes the consent of whose holders
is required for any supplemental indenture or for any waiver of compliance with certain provisions
of the indenture or certain events of default and their consequences provided for in the
indenture, or make any change to the indenture provision described in this sentence;
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change
the ranking of the amortizing notes;
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make
the amortizing notes payable in a currency other than that stated in the amortizing notes;
or
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reduce
the repurchase price or amend or modify in any manner adverse to the holders of the amortizing
notes our obligation to make such payment.
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It
is not be necessary for the consent of any holder to approve the particular form of any proposed amendment, supplement or waiver, but
it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver becomes effective, we
shall give to the holders affected thereby a notice briefly describing the amendment, supplement or waiver. We will mail or send supplemental
indentures to holders upon request. Any failure to mail or send such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver.
In
executing any proposed amendment, supplement or waiver to the indenture, the trustee shall be provided
an officers’ certificate and an opinion of counsel stating that the execution of such amendment, supplement or waiver is authorized
or permitted by the indenture and does not violate the indenture, and that any and all conditions precedent to the execution and delivery
of such amendment, supplement or waiver have been satisfied. The trustee shall not be obligated to execute or deliver any such supplement,
modification or amendment that adversely affects the trustee’s rights, duties, liabilities, indemnities, or immunities under the
indenture.
Information Concerning
the Trustee
U.S.
Bank National Association will be the trustee. Initially, the trustee will also act as the paying
agent, custodian and the registrar for the notes.
We
maintain banking relationships in the ordinary course of business with the trustee and its affiliates.
Governing Law
The
indenture and the amortizing notes will be governed by, and construed in accordance with, the laws of the State of New York.
Waiver of Jury
Trial
The
indenture will provide that each of we and the trustee will waive its respective rights to trial by jury in any action or proceeding
arising out of or related to the amortizing notes, the indenture or the transactions contemplated thereby, to the maximum extent permitted
by law.
Certain
United States Federal Income Tax Considerations
Subject
to the limitations, assumptions and qualifications described herein, the following is a summary of certain U.S. federal income tax considerations
relating to the purchase, ownership and disposition of Units, the amortizing notes and the purchase contracts that are or may be the
components of a Unit, and the ownership and disposition of shares of our common stock acquired under a purchase contract. This summary
does not purport to be a complete analysis of all the potential tax considerations relevant to holders of our Units, amortizing notes,
purchase contracts and common stock acquired under a purchase contract. The following discussion is based on the Internal Revenue Code
of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations thereunder (“Treasury
Regulations”), judicial decisions and published rulings of the U.S. Internal Revenue Service (the “IRS”), all as of
the date hereof, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the continuing
validity of this discussion.
This
discussion addresses only those Units, amortizing notes, purchase contracts and shares of our common stock acquired under a purchase
contract that are held as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment)
by a holder who purchases Units upon original issuance at their initial offering price, as indicated on the cover of this prospectus
supplement, and this discussion does not address all the U.S. federal income tax consequences that may be relevant to particular holders
in light of their individual circumstances (such as the effects of Section 451(b) of the Code) or to holders that are subject
to special rules, such as:
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banks
or other financial institutions;
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brokers
or dealers in securities;
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traders
in securities that elect to use a mark to market method of accounting;
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holders
that hold Units, amortizing notes, purchase contracts or shares of our common stock as part
of straddles, hedges, constructive sales, integrated transactions or conversion transactions;
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entities
or arrangements classified as partnerships for U.S. federal income tax purposes or other
pass-through entities such as subchapter S corporations (or investors in such entities or
arrangements);
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regulated
investment companies;
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real
estate investment trusts;
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controlled
foreign corporations, passive foreign investment companies or corporations that accumulate
earnings to avoid U.S. federal income tax;
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U.S.
Holders (as defined below) whose functional currency is not the U.S. dollar;
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tax-exempt
organizations or governmental organizations;
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“qualified
foreign pension funds” as defined in Section 897(l)(2) of the Code and entities
all of the
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interests
of which are held by qualified foreign pension funds;
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U.S.
expatriates and former citizens or former long-term residents of the United States, and
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holders
that acquired Units, amortizing notes, purchase contracts or shares of our common stock through
the exercise of an employee stock option or otherwise as compensation or through a tax-qualified
retirement plan.
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In
addition, the discussion does not address any alternative minimum tax or any state, local or foreign tax consequences of the purchase,
ownership and disposition of Units, amortizing notes, purchase contracts or shares of our common stock acquired under a purchase contract,
nor does it address the U.S. Medicare contribution tax on unearned income. Tax considerations under foreign, state or local laws or federal
laws other than U.S. federal income tax laws are not addressed in this prospectus. Holders should consult their tax advisors regarding
such tax considerations resulting from the purchase, ownership and disposition of Units, amortizing notes, purchase contracts or the
ownership and disposition of shares of our common stock acquired under a purchase contract.
If
an entity or other arrangement treated as a partnership for U.S. federal income tax purposes holds Units, amortizing notes, purchase
contracts or shares of our common stock acquired under a purchase contract, the tax treatment of a partner generally will depend on the
status of the partner and the activities of the partnership. If you are a partner of a partnership holding Units, amortizing notes, purchase
contracts or shares of our common stock acquired under a purchase contract, you should consult your tax advisor.
There
can be no assurance that the IRS will not challenge one or more of the tax consequences described herein (or that a court will not sustain
any such challenge), and we have not obtained, nor do we intend to obtain, a ruling from the IRS or an opinion of counsel with respect
to the U.S. federal income tax consequences to a holder of the purchase, ownership or disposition of Units, amortizing notes, purchase
contracts or shares of our common stock acquired under a purchase contract.
For
purposes of this discussion, a “U.S. Holder” is a beneficial owner of Units, amortizing notes, purchase contracts or shares
of our common stock acquired under a purchase contract, that, for U.S. federal income tax purposes, is:
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an
individual that is a citizen or resident of the United States;
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a
corporation, or an entity treated as a corporation, created or organized in or under the
laws of the United States, any state thereof or the District of Columbia;
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a
trust that (1) is subject to (A) the primary supervision of a court within the
United States and (B) the authority of one or more “United States persons”
(within the meaning of Section 7701(a)(30) of the Code) to control all substantial decisions
of the trust or (2) has a valid election in effect under applicable Treasury Regulations
to be treated as a United States person; or
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an
estate that is subject to U.S. federal income tax on its income regardless of its source.
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As
used herein, the term “non-U.S. Holder” means a beneficial owner, other than an entity treated as a partnership for U.S.
federal income tax purposes, of Units, amortizing notes, purchase contracts or shares of our common stock that is for U.S. federal income
tax purposes not a U.S. Holder.
PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES TO THEM
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF UNITS, AMORTIZING NOTES, PURCHASE CONTRACTS OR SHARES OF OUR COMMON STOCK ACQUIRED UNDER
A PURCHASE CONTRACT.
Characterization of Units and Amortizing
Notes
There
is no authority directly addressing the characterization of Units or instruments similar to Units for U.S. federal income tax purposes
and therefore the characterization of Units for these purposes is not entirely free from doubt. We intend to take the position that each
Unit will be treated as an investment unit composed of two separate instruments for U.S. federal income tax purposes: (1) a prepaid
purchase contract to acquire our common stock and (2) an amortizing note that is our indebtedness. Under this treatment, a holder
of Units will be treated as if it held each component of such Units for U.S. federal income tax purposes. By acquiring a Unit, you will
agree to treat (1) a Unit as an investment unit composed of two separate instruments in accordance with its form and (2) the
amortizing notes as indebtedness for U.S. federal income tax purposes.
If,
however, the components of a Unit were treated as a single instrument, or the amortizing notes were recharacterized as equity for U.S.
federal income tax purposes (even if the components of a Unit are respected as separate instruments for U.S. federal income tax purposes),
the U.S. federal income tax consequences could differ from the consequences described below. Specifically, if you are a U.S. Holder,
you could be required to recognize the entire amount of each installment payment on the amortizing notes, rather than merely the portion
of such payment denominated as interest, as income. In addition, if you are a non-U.S. Holder, payments of principal and interest made
to you on the amortizing notes could be subject to U.S. federal withholding tax. Even if the components of a Unit are respected as separate
instruments for U.S. federal income tax purposes, the purchase contracts could be treated as our stock on the date of issuance, in which
case the tax consequences of the purchase, ownership and disposition thereof would be substantially the same as the tax consequences
of ownership of our stock acquired under a purchase contract described herein, except that a holder’s holding period for the shares
of our common stock received under a purchase contract would include the period during which the U.S. Holder held the purchase contract.
Units
are complex financial instruments and no statutory, judicial or administrative authority directly addresses all aspects of the treatment
of Units or instruments similar to Units for U.S. federal income tax purposes, and no assurance can be given that the IRS will agree
with the tax consequences described herein. As a result, the U.S. federal income tax consequences of the purchase, ownership and disposition
of Units are unclear.
We
have not sought any rulings concerning the treatment of Units, and the tax consequences described herein are not binding on the IRS or
the courts, either of which could disagree with the explanations or conclusions contained in this summary. Accordingly, you should consult
your tax advisor regarding the consequences to you of the possible re-characterization of the components of a Unit as a single instrument.
Unless stated otherwise, the remainder of this discussion assumes the characterization of Units as two separate instruments and of the
amortizing notes as indebtedness for U.S. federal income tax purposes.
Allocation of
Purchase Price
The
issue price of each Unit will be the first price at which a substantial amount of the Units is sold to persons other than bond houses,
brokers or similar persons acting in the capacity of underwriters, placement agents or wholesalers. The issue price of each Unit will
be allocated between the amortizing note and the purchase contract based on their relative fair market values at the time of issuance.
Such allocation will establish your initial tax basis in the amortizing note and the purchase contract. We will report the initial fair
market value of each amortizing note as $ and the initial fair market value of the purchase contract as $ , as set forth
in the purchase contract agreement. This allocation is binding on you (but not on the IRS), unless you explicitly disclose a contrary
position on a statement attached to your timely filed United States federal income tax return. The remainder of this discussion assumes
that this allocation of the purchase price will be respected for U.S. federal income tax purposes.
U.S. Holders
The
following is a summary of certain U.S. federal income tax consequences that will apply to a U.S. Holder of Units, amortizing notes, purchase
contracts or shares of our common stock that were acquired under a purchase contract.
Units
Separation and
Recreation of Units
A
U.S. Holder will not recognize gain or loss by (1) separating a Unit into its components or (2) recreating a Unit as both procedures
are described under “Description of the Units—Separating and Recreating Units.”
Sale, Exchange
or Other Taxable Disposition of Units
Upon
a sale, exchange or other taxable disposition of Units, a U.S. Holder will be treated as having sold, exchanged or disposed of both the
purchase contracts and the amortizing notes that constitute such Units and will calculate gain or loss on the purchase contracts separately
from the gain or loss on the amortizing notes in proportion to their relative fair market values at the time of the disposition as described
below under “Amortizing Notes—Sale, Exchange or Other Taxable Disposition of the Amortizing Notes” and “Purchase
Contracts—Sale, Exchange or Other Taxable Disposition of Purchase Contracts.” It is thus possible that a U.S. Holder
could recognize a capital gain on one component of a Unit but a capital loss on the other component of a Unit.
Amortizing
Notes
Payments of Interest and Principal
on the Amortizing Notes
Stated
interest on an amortizing note generally will be taxable as ordinary income at the time it is accrued or received in accordance with
a U.S. Holder’s regular method of accounting for U.S. federal income tax purposes. Payments on the amortizing notes other than
stated interest (including the portion of each installment payment that is not treated as interest) will reduce a U.S. Holder’s
basis with respect to the amortizing notes. It is expected, and this discussion assumes, that the amortizing notes will not be issued
with more than a de minimis amount of original issue discount (“OID”). In general, however, if the amortizing notes
are issued with more than de minimis OID, a U.S. Holder will be required to include OID in gross income, as ordinary income, under
a “constant-yield method” before the receipt of cash attributable to such income, regardless of the U.S. Holder’s regular
method of accounting for U.S. federal income tax purposes.
Sale, Exchange or Other Taxable Disposition
of the Amortizing Notes
Upon
the sale, exchange or other taxable disposition of an amortizing note (including as part of a Unit), or in the event a U.S. Holder elects
to have us repurchase amortizing notes in connection with an early mandatory settlement or combination termination redemption, a U.S.
Holder generally will recognize capital gain or loss in an amount equal to the difference between (1) the amount of cash plus the
fair market value of any other property received (other than any amount received that is attributable to accrued but unpaid interest
not previously included in income, which will be taxable as ordinary interest income) and (2) such U.S. Holder’s adjusted
tax basis in the amortizing note at the time of the sale, exchange or other taxable disposition. A U.S. Holder’s tax basis in an
amortizing note generally will be the initial portion of the issue price of the Unit allocated to the amortizing note (as discussed above
under “Allocation of Purchase Price”), reduced by any cash payments previously received with respect to the amortizing note
(other than stated interest).
Any
capital gain or loss generally will be long-term capital gain or loss if at the time of the sale, exchange or other taxable disposition
of the amortizing note, the U.S. Holder has held the amortizing note for more than one year. Long-term capital gains of a non-corporate
U.S. Holder are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.
Purchase
Contracts
Acquisition
of Shares of Our Common Stock under a Purchase Contract
Except
as may occur pursuant to a combination termination redemption (as discussed above under “Description of the Purchase Contracts—Combination
Termination Redemption”), the purchase contracts are expected to physically settle. If a U.S. Holder receives solely shares of
our common stock (or shares of our common stock and cash in lieu of a fractional share) upon settlement of a purchase contract, the settlement
generally will not be a taxable event except that the receipt of cash in lieu of a fractional share will result in capital gain or loss,
measured by the difference between the cash received in lieu of the fractional share and the U.S. Holder’s tax basis in the fractional
share.
A
U.S. Holder’s tax basis in the common stock received upon settlement of a purchase contract (including any basis allocable to a
fractional share) will equal the holder’s adjusted tax basis in the purchase contract. A U.S. Holder’s tax basis in a fractional
share will be determined by allocating the U.S. Holder’s tax basis in the common stock between the common stock received upon settlement
and the fractional share, in accordance with their respective fair market values. A U.S. Holder’s adjusted tax basis in a purchase
contract generally will be the initial portion of the issue price of the Unit allocated to the purchase contract (as discussed above
under “Allocation of Purchase Price”), plus the amount, if any, included in income by the U.S. Holder on an adjustment to
the settlement rate of the purchase contract, as described below under “—Constructive Distributions.”
The
U.S. Holder’s holding period for the common stock received (including any fractional share deemed received) will commence on the
day after the date of receipt.
Possible
Cash or Combined Settlement in the Event of a Combination Termination Redemption
In
the event of a combination termination redemption, we may elect to pay cash in lieu of delivering any or all of the shares of our common
stock due in settlement of the purchase contracts (unless the “combination termination stock price” is equal to or less than
the reference price). In this case, the outstanding purchase contracts will be redeemed solely for cash, the treatment of which is discussed
below under “—Sale, Exchange or Other Taxable Disposition of Purchase Contracts”.
If
a U.S. Holder receives cash and common stock in settlement of a purchase contract, the tax treatment of the settlement is not certain.
A U.S. Holder should consult its tax advisor regarding the consequences of such a combined settlement.
A
combination termination redemption that results in a combined settlement could result in (1) the cash received in respect of a purchase
contract being treated as proceeds from the sale of a portion of the purchase contract and taxed in the manner described below under
“—Sale, Exchange or Other Taxable Disposition of Purchase Contracts” and (2) the common stock consideration being
treated as received on settlement of the other portion of the purchase contract and therefore generally not taxable to a U.S. Holder.
In that case, the U.S. Holder’s adjusted tax basis in the purchase contract would generally be allocated pro rata between the common
stock received and the portion of the purchase contract that is treated as sold for cash based on the fair market value of the shares
of our common stock and the cash. The holding period for our common stock received (including any fractional share deemed received) will
commence on the day after the date of receipt.
Alternatively,
it is possible that a combination termination redemption resulting in a combined settlement could result in a U.S. Holder recognizing
gain, but not loss, equal to the excess of the fair market value of the common stock and cash received over the U.S. Holder’s adjusted
tax basis in the purchase contract. In this case, generally the gain recognized would not exceed the amount of cash received. Any gain
generally would be long-term capital gain if, at the time of settlement the purchase contract has been held for more than one year. In
this case, (i) a U.S. Holder’s tax basis in the common stock received generally would equal its adjusted tax basis in the
purchase contract that was settled, reduced by the amount of any cash received, and increased by the amount of gain, if any, recognized;
(ii) the U.S. Holder’s holding period for common stock received would include the period during which it held the purchase
contract; and (iii) a U.S. Holder that is a “significant holder” would be subject to certain recordkeeping and information
reporting requirements with respect to the settlement.
Constructive
Distributions
A
U.S. Holder might be treated as receiving a constructive distribution from us if (1) the fixed settlement rates are adjusted and
as a result of such adjustment such holder’s proportionate interest in our assets or earnings and profits is increased and (2) the
adjustment is not made pursuant to a bona fide, reasonable anti-dilution formula. Certain of the possible settlement rate adjustments
(including, without limitation, adjustments in respect of taxable dividends to holders of shares of our common stock and adjustments
as discussed in “Description of the Purchase Contracts—Early Settlement Upon a Fundamental Change”) may not qualify
as being pursuant to a bona fide reasonable adjustment formula. Thus, under certain circumstances, an increase in the fixed settlement
rates might give rise to a constructive distribution to U.S. Holders even though such holders would not receive any cash related thereto.
In addition, in certain situations, a U.S. Holder might be treated as receiving a constructive distribution if we fail to adjust the
fixed settlement rates. Any constructive distribution will be taxable as a dividend,
return of capital or capital gain in accordance with the earnings and profits rules described below. Generally, a U.S. Holder’s
adjusted tax basis in a purchase contract will be increased to the extent any such constructive distribution is treated as a dividend.
It is not clear whether a constructive dividend deemed paid to a U.S. Holder would be eligible for the preferential tax rates applicable
to “qualified dividend income” of certain non-corporate U.S. Holders. It is also unclear whether a constructive dividend
deemed paid to a corporate U.S. Holder would be eligible for the dividends-received deduction.
Sale,
Exchange or Other Taxable Disposition of Purchase Contracts
Except
as described above under “—Acquisition of Shares of Our Common Stock under a Purchase Contract,” a U.S. Holder generally
will recognize gain or loss upon the sale, exchange or other taxable disposition of a purchase contract. A U.S. Holder generally will
recognize capital gain or loss upon the sale, exchange or other taxable disposition of a purchase contract (including as part of a Unit)
equal to the difference between the amount of cash and the fair market value of any property received upon the disposition, and the U.S.
Holder’s adjusted tax basis in the purchase contract. A U.S. Holder’s adjusted tax basis in a purchase contract generally
will be the initial portion of the issue price of the Unit allocated to the purchase contract (as discussed above under “Allocation
of Purchase Price”), plus the amount, if any, included in income by the U.S. Holder on an adjustment to the settlement rate of
the purchase contract, as described above under “—Constructive Distributions.” Any such capital gain or loss
generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the purchase contract exceeds one year.
Long-term capital gains of a non-corporate U.S. Holder are generally eligible for reduced rates of taxation. The deductibility of capital
losses is subject to limitations.
Common Stock
Acquired under a Purchase Contract
Distributions
on Shares of Our Common Stock
As
discussed above under “Dividend Policy,” we do not anticipate declaring or paying dividends to holders of our common stock
in the foreseeable future. However, if we do make distributions with respect to shares of our common
stock (other than certain pro rata distributions of common shares), such distributions generally will be included in a U.S. Holder’s
gross income as ordinary dividend income to the extent of the U.S. Holder’s share of our current or accumulated earnings and profits,
as determined for U.S. federal income tax purposes. To the extent a distribution exceeds current and accumulated earnings and profits,
the distribution will be treated as a non-taxable return of capital to the extent of the U.S. Holder’s adjusted basis in the shares
of our common stock, but not below zero. Any remaining amount will be treated
as gain from a sale or exchange of the shares of our common stock.
Dividends
paid by us with respect to our common stock generally will be eligible for the preferential tax rates applicable to “qualified
dividend income” of non-corporate U.S. Holders provided that the U.S. Holder meets certain holding period requirements. Dividends
received by corporate U.S. Holders with respect to our common stock will be eligible for the dividends-received deduction if the U.S.
Holder meets certain holding period and other applicable requirements.
Sale,
Exchange or Other Taxable Disposition of Shares of Our Common Stock
A
U.S. Holder generally will recognize taxable capital gain or loss upon the sale, exchange or other taxable disposition of shares of our
common stock in an amount equal to the difference between the amount of cash and the fair market value of any property received upon
the disposition and the U.S. Holder’s adjusted tax basis in the shares. Any such capital gain or loss recognized generally will
be long-term capital gain or loss if the U.S. Holder’s holding period for the shares exceeds one year. The deductibility of capital
losses is subject to limitations.
Information
Reporting and Backup Withholding
In
general, backup withholding and information reporting requirements may apply to certain payments on the amortizing notes, purchase contracts
and shares of our common stock acquired under a purchase contract, and to the receipt of proceeds on the sale or other taxable disposition
(including a retirement or redemption) of such instruments. Backup withholding (currently at a rate of 24 percent) may apply if a U.S.
Holder fails to furnish its taxpayer identification number, a U.S. Holder fails to certify under penalties of perjury that such taxpayer
identification number is correct and that such U.S. Holder is not subject to backup withholding (generally on a properly completed and
duly executed IRS Form W-9), the applicable withholding agent is notified by the IRS that the holder previously failed to properly
report payments of interest or dividends, or such U.S. Holder otherwise fails to comply with the applicable requirements of the backup
withholding rules.
Certain
U.S. Holders generally are not subject to backup withholding and information reporting requirements, provided that their exemptions from
backup withholding and information reporting are properly established. Backup withholding is not an additional tax. Any amounts withheld
from a payment to a U.S. Holder under the backup withholding rules generally will be allowed as a credit against such U.S. Holder’s
U.S. federal income tax liability and may entitle such U.S. Holder to a refund, provided the required information is furnished to the
IRS in a timely manner. U.S. Holders should consult their tax advisors regarding the application of backup withholding, the availability
of an exemption from backup withholding, and the procedure for obtaining such an exemption, if available.
Non-U.S. Holders
The
following is a summary of certain U.S. federal income tax consequences that will apply to a non-U.S. Holder of Units, amortizing notes,
purchase contracts or shares of our common stock that were acquired under a purchase contract.
Amortizing
Notes
Subject
to the discussion below under “—Information Reporting and Backup Withholding” and “FATCA,” payments to
a non-U.S. Holder of principal and interest generally will not be subject to U.S. federal income tax or withholding tax, provided that
in the case of interest:
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such
interest is not effectively connected with such non-U.S. Holder’s conduct of a trade
or business in the United States;
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such
non-U.S. Holder does not own, actually or constructively, 10% or more of the combined voting
power of all classes of our stock entitled to vote within the meaning of Section 871(h)(3)(B) of
the Code; and
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either
(1) such non-U.S. Holder certifies under penalties of perjury on a properly completed
and duly executed IRS Form W-8BEN or IRS Form W-8BEN-E (or appropriate successor
form), as applicable, that it is not a “United States person” (as defined in
the Code), and provides its name, address and U.S. taxpayer identification number (if any);
(2) a securities clearing organization, bank or other financial institution that holds
customers’ securities in the ordinary course of its trade or business and that holds
the amortizing notes on behalf of such non-U.S. Holder certifies under penalties of perjury
that the certification referred to in clause (1) above has been received from the non-U.S.
Holder and furnished to the applicable withholding agent a copy thereof; or (3) such
non-U.S. Holder holds its amortizing notes directly through a “qualified intermediary”
(within the meaning of applicable Treasury Regulations) and such qualified intermediary has
entered into a withholding agreement with the IRS and certain other conditions are satisfied.
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A
non-U.S. Holder that does not qualify for the exemption from withholding described above generally will be subject to withholding of
U.S. federal income tax at a rate of 30% on payments of interest on the amortizing notes. A non-U.S. Holder may be entitled to the benefits
of an income tax treaty under which interest on the amortizing notes is subject to a reduced rate of U.S. withholding tax or is exempt
from U.S. withholding tax. To establish such a reduced rate or exemption from withholding, a non-U.S. Holder generally must provide the
applicable withholding agent with a properly completed and duly executed IRS Form W-8BEN or IRS Form W-8BEN-E (or appropriate
successor form), as applicable, establishing the reduction or exemption from withholding under an applicable income tax treaty and comply
with any other applicable procedures. Alternatively, a non-U.S. Holder may be exempt from U.S. withholding tax if it provides the applicable
withholding agent with a properly completed and duly executed IRS Form W-8ECI (or appropriate successor form) certifying that interest
paid on the amortizing note is not subject to U.S. withholding tax because it is effectively connected with such non-U.S. Holder’s
conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, the non-U.S. Holder maintains
a permanent establishment in the United States to which such interest is attributable).
The
certifications described above must be provided to the applicable withholding agent prior to the payment of interest and must be updated
periodically. Non-U.S. Holders that do not timely provide the applicable withholding agent with the required certification, but that
qualify for a reduced rate under an applicable income tax treaty, may obtain a refund of any excess amounts withheld by timely filing
an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to and the
procedures for establishing benefits under any applicable income tax treaty.
Interest
on an amortizing note that is effectively connected with a non-U.S. Holder’s conduct of a trade or business in the United States
(and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base in the United States of
the non-U.S. Holder), generally will be subject to U.S. federal income tax on a net income basis at the U.S. federal income tax rates
generally applicable to a United States person and will not be subject to the withholding described above. Additionally, a non-U.S. Holder
that is a corporation may also be subject to a 30 percent branch profits tax on any effectively connected earnings attributable to the
interest unless reduced by treaty.
Purchase Contracts
Acquisition of
Shares of Our Common Stock under a Purchase Contract
Subject
to the discussion below under “—Information Reporting and Backup Withholding” and “FATCA,” a non-U.S. Holder
generally will not be subject to U.S. federal income tax upon the settlement of a purchase contract, provided that in the case of cash
received in lieu of a fractional share, a non-U.S. Holder may be subject to U.S. federal income tax on any gain resulting from
the receipt of such cash, measured by the difference between the cash received in lieu of the fractional share and the non-U.S. Holder’s
tax basis in the fractional share, if any condition described in the bullet points under “—Sale or Other Taxable Dispositions
of Units, Amortizing Notes, Purchase Contracts or Shares of Our Common Stock” is satisfied.
Adjustments to
the Fixed Settlement Rate of the Purchase Contracts
An
adjustment to the fixed settlement rates of a purchase contract that is treated as a taxable constructive distribution (as described
above under “—U.S. Holders—Purchase Contracts—Constructive Distributions”) may be subject to dividend
withholding or backup withholding as described below under “—Distributions on Shares of Our Common Stock,” “—Information
Reporting and Backup Withholding” and “FATCA.”
Because
a constructive dividend received by a non-U.S. Holder would not give rise to any cash from which any applicable withholding
tax could be satisfied, if an applicable withholding agent pays such withholding taxes on behalf of a non-U.S. Holder with
respect to such deemed or constructive dividends, the withholding agent may withhold any such withholding tax from any cash to be paid
to, or shares of our common stock to be delivered to, the non-U.S. Holder, or set-off such amount against certain other funds or assets
belonging to the non-U.S. Holder.
Common Stock
Acquired under a Purchase Contract
Distributions
on shares of our common stock to non-U.S. Holders generally will be treated as dividends for U.S. federal income tax purposes to the
extent of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, and will be subject to
withholding as described below. Distributions in excess of our current or accumulated earnings and profits as determined for U.S. federal
income tax purposes will be treated as a return of capital to the extent of the non-U.S. Holder’s adjusted tax basis in the shares
of our common stock and thereafter as capital gain, subject to the tax treatment described below under
“—Sale or Other Taxable Dispositions of Units, Amortizing Notes, Purchase Contracts or Shares of Our Common Stock”
Subject
to the discussion below under “—Information Reporting and Backup Withholding” and “FATCA,” U.S.
federal withholding tax at a rate of 30 percent (or at a lower rate if an applicable income tax treaty so provides and an applicable
withholding agent has received proper certification as to the application of that treaty) generally will apply to the gross amount of
dividends paid to a non-U.S. Holder of shares of our common stock.
Dividends
paid on our common stock that are effectively connected with a non-U.S. Holder’s conduct of a trade or business in the United States
(and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base in the United States of
the non-U.S. Holder) generally will be subject to U.S. federal income tax on a net income basis at
the U.S. federal income tax rates generally applicable to a United States person and will not be subject to the withholding described
above. Additionally, a non-U.S. Holder that is a corporation may also be subject to a 30 percent branch profits tax on any effectively
connected earnings attributable to the dividends unless reduced by treaty.
Generally,
to claim the benefit of any applicable treaty or an exemption from withholding because the income is effectively connected with the conduct
of a trade or business in the United States, a non-U.S. Holder must provide, before the distributions are made, a properly executed IRS
Form W-8BEN or IRS Form W-8BEN-E for treaty benefits, certifying under penalties of perjury that such holder is not a United
States person and is eligible for such benefits, or IRS Form W-8ECI for effectively connected income (or appropriate successor form).
These forms must be updated periodically. Non-U.S. Holders that qualify for an exemption from or reduced rate under an applicable income
tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S.
Holders should consult their tax advisors regarding their entitlement to and the procedures for establishing benefits under any applicable
income tax treaty and the requirements for claiming any such benefits.
Sale
or Other Taxable Dispositions of Units, Amortizing Notes, Purchase Contracts or Shares of Our Common Stock
The
sale, exchange or other taxable disposition of a Unit will be treated as a sale, exchange or disposition of the purchase contract and
amortizing note that constitute such Unit. Subject to the discussion below under “—Information Reporting and Backup
Withholding” and “FATCA,” a non-U.S. Holder will generally not be subject to U.S. federal income tax on gain recognized
on the disposition of amortizing notes, purchase contracts or shares of our common stock, unless:
·the non-U.S. Holder is an individual who is present
in the United States for 183 days or more during the taxable year of the exchange or disposition and meets certain other conditions;
·the gain is effectively connected with the non-U.S.
Holder’s conduct of trade or business in the United States and, if required by an applicable income tax treaty, is attributable
to a permanent establishment in the United States to which such gains are attributable; or
·in the case of gain from the disposition of the Units,
the purchase contracts, or shares of our common stock acquired under a purchase contract, we are or have been a United States real property
holding corporation (“USRPHC”) for U.S. federal income tax purposes at any time during the shorter of the five-year period
ending on the date of disposition of shares of our common stock and the period that the non-U.S. Holder held the shares of our common
stock.
Even
if we are or have been a USRPHC during the specified testing period, as long as our common stock is regularly traded on an established
securities market (such as the NYSE) at any time during the calendar year in which the disposition occurs, (i) a non-U.S. Holder
will not be subject to U.S. federal income tax on the disposition of shares of our common stock acquired under the purchase contract
if the holder does not own or has not owned (actually or constructively) more than five percent of our common stock at any time during
the shorter of the two periods mentioned above, and (ii) a non-U.S. Holder will not be subject to U.S. federal income tax on the
disposition of the Units or purchase contracts (x) if the Units or the purchase contracts (as applicable) are considered to be regularly
traded on an established securities market, and the holder has not held (actually or constructively) more than five percent of the total
fair market value of the outstanding Units or purchase contracts (as applicable) at any time during the shorter of the two periods mentioned
above, or (y) if the Units or the purchase contracts (as applicable) are not considered to be regularly traded on an established
securities market and shares of our common stock continue to be so traded, and on the date such holder originally acquires the Units
or the purchase contacts (as applicable) and on any date on which such holder makes subsequent acquisitions of the Units or the purchase
contracts, all Units or purchase contracts (as applicable) held (actually or constructively) by such holder after each such acquisition
have a fair market value of no more than five percent of the fair market value of our total outstanding common stock on each such acquisition
date. Though it is expected that the Units and our common stock will be treated as “regularly traded” on an established securities
market, no assurance can be given in this regard. We will not initially apply to list the separate purchase contracts on any securities
exchange or automated inter-dealer quotation system, but we may apply to list such separate purchase contracts in the future as described
under this prospectus supplement. Therefore, it is expected that the purchase contracts will not be treated as “regularly traded”
on an established securities market as of the date of this prospectus supplement. However, it is not entirely clear whether purchase
contracts could be treated as “regularly traded” on an established securities market by virtue of being a part of the Units
that are so treated.
Although
there can be no assurances, we believe we are not, and we do not currently anticipate becoming, a USRPHC. Because the determination of
whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of other business
assets, there can be no assurance that we are not currently or will not become a USRPHC in the future.
A
non-U.S. Holder described in the first bullet point immediately above will be subject to U.S. federal income tax on the non-U.S. Holder’s
gains (including gain from such disposition net of applicable United States source losses incurred on sales or exchanges of other capital
assets during the year, provided that the non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses)
at a flat rate of 30 percent (or a lower applicable income tax treaty rate).
If
the second or third bullet points above apply, a non-U.S. Holder will be subject to U.S. federal income tax on the gain recognized on
the disposition in the same manner in which citizens or residents of the United States would be subject to U.S. federal income tax (or
at a lower rate if an applicable income treaty so provides). Additionally, a non-U.S. Holder that is a corporation may also be subject
to a 30 percent branch profits tax on effectively connected earnings attributable to the gains described in the second bullet point unless
reduced by treaty. Although a 15 percent withholding tax generally applies to gross proceeds from the sale or other taxable disposition
of the stock of a USRPHC, the 15 percent withholding tax on gross proceeds generally will not apply to the disposition of shares of our
common stock acquired under the purchase contract so long as our common stock is regularly traded on an established securities market
(such as the NYSE). However, the exception described in the previous sentence may not apply to certain dispositions of Units or the purchase
contracts if the Units or the purchase contracts are not considered regularly traded on an established securities market and the non-U.S.
Holder exceeds the ownership limits described in clause (y) above.
Information
Reporting and Backup Withholding
Generally,
the amount of interest on the amortizing notes, deemed distributions (if any) on a purchase contract and distributions on shares of our
common stock to non-U.S. Holders and the amount of tax (if any) withheld with respect to those payments must be reported annually to
the IRS and to the non-U.S. Holders. Copies of the information returns reporting such interest, deemed distributions, distributions and
withholding may also be made available to the tax authorities in a country in which the non-U.S. Holder resides under the provisions
of an applicable income tax treaty.
In
certain circumstances, a non-U.S. Holder may be subject to information reporting and/or backup withholding tax in connection with payments
on the amortizing notes, purchase contracts and shares of our common stock, or on the receipt of proceeds on the sale or other taxable
disposition (including a retirement or redemption) of such instruments, unless such non-U.S. Holder certifies its non-U.S. status under
penalty of perjury on a properly completed IRS Form W-8BEN or IRS Form W-8BEN-E (or appropriate successor form), as applicable,
or otherwise establishes and satisfies the requirements of an exemption.
Backup
withholding is not an additional tax. Any amounts withheld from a payment to a non-U.S. Holder under the backup withholding rules generally
will be allowed as a credit against such non-U.S. Holder’s U.S. federal income tax liability and may entitle such non-U.S. Holder
to a refund, provided that the required information is furnished to the IRS in a timely manner. Non-U.S. Holders should consult their
tax advisors regarding the application of backup withholding, the availability of an exemption from backup withholding, and the procedure
for obtaining such an exemption, if available.
FATCA
Under
Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance issued thereunder (“FATCA”),
a 30 percent withholding tax may be imposed on certain payments made (or deemed made) on, or, subject to the proposed regulations described
below, in connection with the proceeds from a sale or disposition (or deemed disposition) of, Units, amortizing notes, purchase contracts
or shares of our common stock acquired under the purchase contracts, that are paid to a “foreign financial institution” or
a “non-financial foreign entity” unless (1) the non-financial foreign entity provides the applicable payor or financial
institution with certain documentation and identifying information relating to its substantial U.S. owners or otherwise certifies that
it does not have any substantial U.S. owners, (2) the foreign financial institution enters into an agreement with the Department
of Treasury to, among other things, report certain information regarding its accounts with or interests held by certain United States
persons and by certain non-U.S. entities that are wholly or partially owned by United States persons, and it establishes its compliance
with these rules by providing to the applicable payor or financial institution with an IRS Form W-8BEN, IRS Form W-8BEN-E
or other applicable IRS Form W-8 (or appropriate successor form) or (c) the foreign financial institution or the non-financial
foreign entity qualifies for an exemption from these rules and establishes such exemption by providing the applicable payor or financial
institution with an IRS Form W-8BEN, IRS Form W-8BEN-E or other applicable IRS Form W-8 (or appropriate successor
form). The rules relating to FATCA described above may be modified by an applicable intergovernmental agreement between the United
States and the jurisdiction in which the non-U.S. Holder is resident.
The
IRS issued proposed Treasury Regulations that eliminate withholding on payments of gross proceeds. Pursuant to the proposed Treasury
Regulations, a withholding agent may (but is not required to) rely on this proposed change to FATCA withholding until the final regulations
are issued or the proposed regulations are withdrawn.
We
will not pay any additional amounts to non-U.S. Holders in respect of any amounts withheld, including pursuant to FATCA. Non-U.S. Holders
are urged to consult their tax advisors regarding how FATCA may apply to the purchase, ownership and disposition of Units, amortizing
notes, purchase contracts or shares of our common stock acquired under a purchase contract.
The
preceding discussion is not a complete analysis or discussion of all potential tax considerations that may be important to you. Thus,
you are strongly encouraged to consult your tax advisor as to the specific tax consequences resulting from the purchase, ownership and
disposition of Units, amortizing notes, purchase contracts or shares of our common stock acquired under the purchase contracts, including
tax return reporting requirements, the applicability and effect of federal, state, local, and other tax laws and the effect of any proposed
changes in the tax laws.
Certain
ERISA Considerations
The
following summary regarding certain aspects of the United States Employee Retirement Income Security Act of 1974, as amended, or “ERISA,”
and the Code is based on ERISA, the Code, judicial decisions and United States Department of Labor and IRS regulations and rulings that
are in existence on the date of this prospectus. This summary is general in nature and does not address every issue pertaining to ERISA
and the Code that may be applicable to us, the Units, the common stock issuable upon settlement of the purchase contracts, the amortizing
notes, or a particular investor. Accordingly, each prospective investor, including plan fiduciaries, should consult with his, her or
its own advisors or counsel with respect to the advisability of an investment in the Units, and potentially adverse consequences of such
investment, including, without limitation, certain ERISA-related issues that affect or may affect the investor with respect to this investment
and the possible effects of changes in the applicable laws.
General
fiduciary matters
ERISA
and the Code impose certain requirements on employee benefit plans that are subject to Title I of ERISA, plans subject to Section 4975
of the Code and entities that are deemed to hold the assets of such plans, each such employee benefit plan, plan or entity, a Plan, and
on those persons who are “fiduciaries” with respect to Plans. A fiduciary of a Plan subject to Title I of ERISA should consider
whether an investment in the Units, the common stock issuable upon settlement of the purchase contracts, and the amortizing notes,
satisfies ERISA’s general fiduciary requirements, including, but not limited to, the requirement of investment prudence and
diversification and the requirement that such a Plan’s investments be made in accordance with the documents governing the Plan.
Prohibited
transaction issues
An
investor who is considering acquiring the Units with the assets of a Plan must consider whether the acquisition and holding of the Units,
the common stock issuable upon settlement of the purchase contracts, and the amortizing notes, will constitute or result in a non-exempt
prohibited transaction. Section 406(a) of ERISA and Sections 4975(c)(1)(A), (B), (C) and (D) of the Code prohibit
certain transactions that involve a Plan and a “party in interest” as defined in Section 3(14) of ERISA or a “disqualified
person” as defined in Section 4975(e)(2) of the Code with respect to such Plan. Examples of such prohibited transactions
include, but are not limited to, sales or exchanges of property (such as the Units) or extensions of credit between a Plan and a party
in interest or disqualified person. Section 406(b) of ERISA and Sections 4975(c)(1)(E) and (F) of the Code generally
prohibit a fiduciary with respect to a Plan from dealing with the assets of the Plan for its own benefit (for example when a fiduciary
of a Plan uses its position to cause the Plan to make investments in connection with which the fiduciary, or a party related to the fiduciary,
receives a fee or other consideration). Such parties in interest or disqualified persons could include, without limitation, the Company,
the trustee, the underwriters, and the purchase contract agent or any of their respective affiliates.
ERISA
and the Code contain certain exemptions from the prohibited transactions described above, and the Department of Labor has issued several
exemptions, although certain exemptions do not provide relief from the prohibitions on self-dealing contained in Section 406(b) of
ERISA and Sections 4975(c)(1)(E) and (F) of the Code. Such exemptions include Section 408(b)(17) of ERISA and Section 4975(d)(20)
of the Code pertaining to certain transactions with non-fiduciary service providers; Department of Labor Prohibited Transaction Class Exemption,
or PTCE, 95-60, applicable to transactions involving insurance company general accounts; PTCE 90-1, regarding investments by insurance
company pooled separate accounts; PTCE 91-38, regarding investments by bank collective investment funds; PTCE 84-14, regarding investments
effected by a qualified professional asset manager; and PTCE 96-23, regarding investments effected by an in-house asset manager. There
can be no assurance that any of these exemptions or any other exemption will be available with respect to the acquisition or holding
of the Units, even if the specified conditions are met. Under Section 4975 of the Code, excise taxes or other penalties and liabilities
may be imposed on disqualified persons who participate in non-exempt prohibited transactions (other than a fiduciary acting only as such).
A fiduciary of a Plan that engages in such non-exempt prohibited transactions may also be subject to penalties and liabilities under
ERISA and the Code. Furthermore, each person acting on behalf of a Plan that acquires the Units acknowledges that none of us, the trustee,
the underwriters, or the purchase contract agent nor any of their respective affiliates has provided or will provide investment advice,
or is otherwise acting in a fiduciary capacity, in connection with the acquisition of the Units by any Plan. In addition, each such person
acknowledges that the Plan investor’s fiduciary is exercising its own independent judgment in evaluating the acquisition of the
Units.
As
a general rule, governmental plans, as defined in Section 3(32) of ERISA, or Governmental Plans, church plans, as defined in Section 3(33)
of ERISA, that have not made an election under Section 410(d) of the Code, or Church Plans, and non-U.S. plans are not subject
to the requirements of ERISA or Section 4975 of the Code. Accordingly, assets of such plans generally may be invested in the Units
without regard to the fiduciary and prohibited transaction considerations under ERISA and Section 4975 of the Code described above.
However, Governmental Plans, Church Plans or non-U.S. plans may be subject to other United States federal, state or local laws or non-U.S.
laws that regulate their investments, or a Similar Law. A fiduciary of a Governmental Plan, a Church Plan or a non-U.S. plan should make
its own determination as to the requirements, if any, under any Similar Law applicable to the acquisition of the Units.
Because
of the foregoing, neither the Units or their constituent parts may not be purchased or held by any person investing assets of any Plan,
unless such purchase and holding will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975
of the Code or a similar violation of any applicable Similar Laws.
Representation
Accordingly,
by its acceptance of the Units, common stock issued upon settlement of the purchase contracts or amortizing notes, each purchaser and
subsequent transferee will be deemed to have represented and warranted that either (1) no portion of the assets used by such purchaser
or transferee to acquire or hold the Units, the common stock upon settlement of the purchase contracts or amortizing notes, or any interest
therein constitutes assets of any Plan, Governmental Plan, Church Plan or non-U.S. plan or (2) (1) the acquisition, holding
and disposition of the Units, common stock issuable upon settlement of the purchase contracts or amortizing notes by such purchaser or
transferee will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code or a similar violation under any applicable Similar Laws and (2) acknowledge and agree that neither the issuer, underwriters
or any of their respective affiliates is, or is undertaking to be, a fiduciary with respect to any Plan, Governmental Plan, Church Plan
or non-U.S. plan in connection with such plan’s acquisition, holding or disposition of the Units, common stock issuable upon settlement
of the purchase contracts or amortizing notes, as applicable.
Neither
this discussion nor anything provided in this prospectus supplement is, or is intended to be, investment advice directed at any potential
Plan, Governmental Plan, Church Plan, or non-U.S. plan purchasers, or at such purchasers generally, and such purchasers of the Units
or any of its constituent parts should consult and rely on their own counsel and advisers as to whether such an investment is suitable
for the Plan. The sale of any of the Units, common stock issuable upon settlement of the purchase contracts or amortizing notes to any
Plan, Governmental Plan, Church Plan or non-U.S. plan is in no respect a representation by us, an underwriter or any of our or their
affiliates or representatives that such an investment meets all relevant legal requirements with respect to investments by such plans
generally or any particular plan, or that such investment is prudent or appropriate for plans generally or any particular plan.
Book-Entry
Procedures and Settlement
The
Units, the separate purchase contracts and the separate amortizing notes will initially be issued under a book-entry system in the form
of global securities. We will register the global securities in the name of The Depository Trust Company, New York, New York, or DTC,
or its nominee and will deposit the global securities with that depositary.
Following
the issuance of a global security in registered form, the depositary will credit the accounts of its participants with the Units, the
separate purchase contracts and the separate amortizing notes, as the case may be, upon our instructions. Only persons who hold directly
or indirectly through financial institutions that are participants in the depositary can hold beneficial interests in the global securities.
Because the laws of some jurisdictions require certain types of purchasers to take physical delivery of such securities in definitive
form, you may encounter difficulties in your ability to own, transfer or pledge beneficial interests in a global security.
So
long as the depositary or its nominee is the registered owner of a global security, we, the trustee and the purchase contract agent will
treat the depositary as the sole owner or holder of the Units, the separate purchase contracts and the separate amortizing notes, as
the case may be. Therefore, except as set forth below, you will not be entitled to have Units, separate purchase contracts or separate
amortizing notes registered in your name or to receive physical delivery of certificates representing the Units, the separate purchase
contracts or the separate amortizing notes. Accordingly, you will have to rely on the procedures of the depositary and the participant
in the depositary through whom you hold your beneficial interest in order to exercise any rights of a holder under the indenture or the
purchase contract agreement, as the case may be. We understand that under existing practices, the depositary would act upon the instructions
of a participant or authorize that participant to take any action that a holder is entitled to take.
As
long as the separate amortizing notes are represented by the global securities, we will pay installments on those separate amortizing
notes to or as directed by DTC as the registered holder of the global securities. Payments to DTC will be in immediately available funds
by wire transfer. DTC will credit the relevant accounts of their participants on the applicable date. Neither we nor the trustee will
be responsible for making any payments to participants or customers of participants or for maintaining any records relating to the holdings
of participants and their customers, and you will have to rely on the procedures of the depositary and its participants.
Settlement
Secondary
market trading between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled in immediately
available funds using DTC’s Same-Day Funds Settlement System.
Definitive Securities and Paying Agents
Book-entry securities
represented by a global security will be exchanged for definitive (paper) securities only if:
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·
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the
depositary is at any time unwilling or unable to continue as depositary for such security
or ceases to be a clearing agency registered under the Exchange Act, and a successor depositary
registered as a clearing agency under the Exchange Act is not appointed by us within 90 days;
or
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·
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an
Event of Default with respect to the amortizing notes, or any failure on the part of us to
observe or perform any covenant or agreement in the purchase contracts, has occurred and
is continuing and a beneficial owner requests that its amortizing notes and/or purchase contracts,
as the case may be, be issued in physical, certificated form.
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The
global security will be exchangeable in whole for definitive securities in registered form, with the same terms and of an equal aggregate
principal amount. Definitive Units, separate purchase contracts or separate amortizing notes, as the case may be, will be registered
in the name or names of the person or persons specified by the depositary in a written instruction to the registrar of the securities.
The depositary may base its written instruction upon directions it receives from its participants.
If
any of the events described above occurs, then the beneficial owners will be notified through the chain of intermediaries that definitive
securities are available and notice will be published as described below under “—Notices.” Beneficial owners of book-entry
Units, separate purchase contracts or separate amortizing notes, as the case may be, will then be entitled (1) to receive physical
delivery in certificated form of definitive Units, separate purchase contracts or separate amortizing notes, as the case may be, equal
in aggregate amount of Units, separate purchase contracts or separate amortizing notes, as the case may be, to their beneficial interest
and (2) to have the definitive securities registered in their names. Thereafter, the holders of the definitive Units, separate purchase
contracts and separate amortizing notes, as the case may be, will be recognized as the “holders” of the Units, separate amortizing
notes and separate purchase contracts for purposes of the purchase contract agreement and indenture, respectively.
Each
of the purchase contract agreement and indenture provides for the replacement of a mutilated, lost, stolen or destroyed definitive security,
so long as the applicant furnishes to us and the trustee such security and/or indemnity and such evidence of ownership as we and it may
require.
In
the event definitive separate amortizing notes are issued, the holders thereof will be able to receive installment payments at the office
of our paying agent. The final installment payment of a definitive separate amortizing note may be made only against surrender of the
separate amortizing note to one of our paying agents. We also have the option of making installment payments by mailing checks to the
registered holders of the separate certificated amortizing notes.
In
the event definitive Units, separate purchase contracts or separate amortizing notes are issued, the holders thereof will be able to
transfer their securities, in whole or in part, by surrendering such securities for registration of transfer at the office specified
in the purchase contract agreement or the indenture, as applicable. A form of such instrument of transfer will be obtainable at the relevant
office. Upon surrender, we will execute, and upon receipt of written instructions from us, the purchase contract agent and the trustee
will authenticate and deliver, new Units, separate purchase contracts or separate amortizing notes, as the case may be, to the designated
transferee in the amount being transferred, and a new security for any amount not being transferred will be issued to the transferor.
Such new securities will be delivered free of charge at the relevant office, as requested by the owner of such new Units, separate purchase
contracts or separate amortizing notes. We will not charge any fee for the registration of transfer or exchange, except that we may require
the payment of a sum sufficient to cover any applicable tax or other governmental charge payable in connection with the transfer.
Notices
So
long as the global securities are held with DTC or any other clearing system, notices to holders of securities represented by a beneficial
interest in the global securities may be given by delivery of the relevant notice to DTC or the alternative clearing system, as the case
may be. So long as the amortizing notes are in the form of global securities, any notice will be deemed to have been given on the date
given to DTC or the alternative clearing system, as the case may be.
Underwriting
Under
the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus supplement, the underwriters
named below, for whom Deutsche Bank Securities Inc. (“Deutsche Bank Securities”) and Goldman Sachs & Co. LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, the number of Units indicated
below:
Underwriters
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Number
of Units
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Deutsche Bank Securities
Inc.
|
|
|
|
|
Goldman
Sachs & Co. LLC
|
|
|
|
|
Barclays Capital
Inc.
|
|
|
|
|
Citizens Capital
Markets, Inc.
|
|
|
|
|
Truist Securities,
Inc.
|
|
|
|
|
Fifth Third Securities,
Inc.
|
|
|
|
|
Capital One Securities,
Inc.
|
|
|
|
|
Total:
|
|
|
|
|
The
underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,”
respectively. The underwriters are offering the Units subject to their receipt and acceptance of the Units from us, subject to the underwriters' right to reject any order in whole or in part and subject to prior sale. The
underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the Units offered
by this prospectus supplement are subject to the approval of certain legal matters by their counsel and to certain other conditions.
The underwriters are obligated to take and pay for all of the Units offered by this prospectus supplement if any such Units are taken.
However, the underwriters are not required to take or pay for the Units covered by the underwriters’ option to purchase additional
Units described below.
The
underwriters initially propose to offer part of the Units directly to the public at the offering price listed on the cover page of
this prospectus supplement and part to certain dealers at a price that represents a concession not in excess of $ per Unit under
the public offering price. After the initial offering of the Units, the offering price and other selling terms may from time to time
be varied by the representatives.
We
have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus supplement, to purchase up to
additional Units at the public offering price listed on the cover page of this prospectus supplement, less underwriting discounts
and commissions. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase
about the same percentage of the additional Units as the number listed next to the underwriter’s name in the preceding table bears
to the total number of Units listed next to the names of all underwriters in the preceding table.
The
following table shows the per Unit and total public offering price, underwriting discounts and commissions, and proceeds before expenses
to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional
Units.
|
|
|
|
|
|
Total
|
|
|
|
Per
Unit
|
|
|
|
No
Exercise
|
|
|
|
Full
Exercise
|
|
Public offering price
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Underwriting discounts and commissions
to be paid by us
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Proceeds, before expenses, to
us
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
The
estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $
. We have agreed to reimburse the underwriters for certain of their expenses in an amount up to $25,000.
We
have applied to list the Units on the NYSE under the symbol “BALX”, subject to satisfaction of its minimum listing standards
with respect to the Units. If approved for listing, we expect trading on the NYSE to begin within 30 calendar days after the Units are
first issued. We will not initially apply to list the separate purchase contracts or the separate amortizing notes on any securities
exchange or automated inter-dealer quotation system, but we may apply to list such separate purchase contracts and separate amortizing
notes in the future as described under “Description of the Units—Listing of Securities.” Prior to this offering, there
has been no public market for the Units.
Our common stock
is listed on the NYSE under the symbol “BALY.”
Our
CEO, CFO, directors and Standard General L.P. have agreed that, without the prior written consent of Deutsche Bank Securities on behalf
of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 60 days after the
date of this prospectus supplement (the “restricted period”):
|
a.
|
offer,
pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer
or dispose of, directly or indirectly, any shares of common stock or any securities convertible
into or exercisable or exchangeable for shares of common stock;
|
|
b.
|
file
any registration statement with the Securities and Exchange Commission relating to the offering
of any shares of common stock or any securities convertible into or exercisable or exchangeable
for common stock (other than a registration statement on Form S-8 or Form S-4);
or
|
|
c.
|
enter
into any swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the common stock.
|
whether any such
transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition,
we and each such person agrees that, without the prior written consent of Deutsche Bank Securities on behalf of the underwriters, we
or such other person will not, during the restricted period, make any demand for, or exercise any right with respect to, the registration
of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.
The restrictions
described in the immediately preceding paragraph to do not apply to:
|
a.
|
the
sale of the Units to the underwriters and any shares of common stock issued pursuant to the
terms of the purchase contracts;
|
|
b.
|
the
sale of the shares of common stock to the underwriters in the Common Stock Offering;
|
|
c.
|
the
Common Stock Offering shares (1) as a
bona fide gift, (2) to a trust for the benefit of the holder or his or her family, (3) by
will or other testamentary document or intestate succession, or by operation of law, and
(4) to a family member;
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|
d.
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(1) the
issuance by the Company of shares of common stock upon the exercise of an option or a warrant
or the conversion of a security outstanding on the date of this prospectus supplement, and
the transfer of shares to satisfy any payment or withholding obligation in connection with
the exercise or settlement of any equity awards, and (2) the issuance of compensatory
awards of equity-linked securities, options, restricted stock and restricted stock units,
in each case pursuant to stock plans described in this prospectus supplement or the documents
incorporated by reference herein;
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|
e.
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transactions
by any person other than us relating to shares of common stock or other securities acquired in open market transactions after the completion
of the offering of the shares; provided that no filing under Section 16(a) of the Exchange Act is required or voluntarily made
in connection with subsequent sales of the common stock or other securities acquired in such open market transactions;
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|
f.
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(1) the
sale of shares pursuant to any contract, instruction or plan in effect on the date hereof
that satisfies the requirements of Rule 10b5-1 under the Exchange Act (or private sales
of such shares in lieu thereof in conjunction with a termination of such 10b5-1 plan) and
(2) facilitating the establishment of a trading plan on behalf of a shareholder, officer
or director of the Company pursuant to Rule 10b5-1 under the Exchange Act for the transfer
of shares of common stock, provided that (a) such plan does not provide for the transfer
of common stock during the restricted period and (b) to the extent a public announcement
or filing under the Exchange Act, if any, is required of or voluntarily made by the Company
regarding the establishment of such plan, such announcement or filing shall include a statement
to the effect that no transfer of common stock may be made under such plan during the restricted
period (for the sake of clarification, any other required regulatory filing will not be deemed
voluntary);
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|
g.
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the
transfer of shares of common stock or any security convertible into common stock by a holder that is corporation, partnership, limited
liability company, trust or other business entity, to a corporation, partnership, limited liability company or other business entity
that is an affiliate (as defined in Rule 405 promulgated under the under the Securities Act) of the holder, or to any investment fund
or other entity that controls or is controlled by, or is under common control with, the holder, or is wholly-owned by the holder or affiliates
of the holder (including, for the avoidance of doubt, where the holder is a partnership, to its general partner or a successor partnership
or fund, or any other funds managed by such partnership); or
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|
h.
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the
agreement to issue or issuance of common stock, preferred stock, convertible debt or other equity-linked security in exchange for the
assets of, or a majority or controlling portion of the equity of, another entity, and the filing of a registration statement on Form
S- 4 or other appropriate form required by the Securities Act, and any amendments thereto in connection therewith, provided, that (a)
the aggregate number of securities that the Company may agree to issue or issue pursuant to this clause (i) shall not exceed 15% of the
total number of shares of the Company's common stock issued and outstanding immediately following the completion of the transactions
contemplated by this prospectus supplement and (b) the recipients of such securities received during the restricted period pursuant to
this clause (i) agree in writing with the representative prior to the receipt of such securities not to sell, offer, dispose of or otherwise
transfer any such securities during the restricted period without the prior written consent of the representative, provided further,
that such 15% limitation in this clause (i) and the requirements of the preceding clause (i)(b) shall not apply to any securities that
the Company may issue or agree to issue as consideration for its acquisition of, or in exchange for the common stock of, Gamesys or any
other pending acquisition.
|
Deutsche
Bank Securities in its sole discretion, may release the common stock and other securities subject to the lock-up agreements described
above in whole or in part at any time.
In
order to facilitate the offering of the Units, the underwriters may engage in transactions that stabilize, maintain or otherwise affect
the price of the Units. Specifically, the underwriters may sell more Units than they are obligated to purchase under the underwriting
agreement, creating a short position. A short sale is covered if the short position is no greater than the number of Units available
for purchase by the underwriters under the option. The underwriters can close out a covered short sale by exercising the option or purchasing
Units in the open market. In determining the source of Units to close out a covered short sale, the underwriters will consider, among
other things, the open market price of Units compared to the price available under the option. The underwriters may also sell Units in
excess of the option, creating a naked short position. The underwriters must close out any naked short position by purchasing Units in
the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure
on the price of the Units in the open market after pricing that could adversely affect investors who purchase in this offering. As an
additional means of facilitating this offering, the underwriters may bid for, and purchase, Units in the open market to stabilize the
price of the Units. These activities may raise or maintain the market price of the Units above independent market levels or prevent or
retard a decline in the market price of the Units. The underwriters are not required to engage in these activities and may end any of
these activities at any time.
We
and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.
A
prospectus supplement in electronic format may be made available on websites maintained by one or more underwriters, or selling group
members, if any, participating in this offering. The representatives may agree to allocate a number of Units to underwriters for sale
to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make
Internet distributions on the same basis as other allocations.
The
underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment,
hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed,
and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive
customary fees and expenses. In that regard, certain of the underwriters or their respective affiliates are acting as our financial advisors
in connection with the Combination and they are or may become agents, arrangers, bookrunners or lenders under Bridge Commitment to fund
a portion of the Combination. A portion of the proceeds from this offering and any proceeds from the Common Stock Offering will be used
to reduce the Bridge Commitment, and to pay the fees, costs and expenses incurred in connection thereto. As a result, certain of the
underwriters or their respective affiliates will receive a portion of the net proceeds from this offering and/or the Common Stock Offering.
In
addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold
a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments
(including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions
in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters
and their respective affiliates may also make investment recommendations or publish or express independent research views in respect
of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such
securities and instruments.
Selling Restrictions
European Economic Area
The
securities are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available
to any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is
one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID
II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the “Insurance Distribution Directive”),
where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified
investor as defined in Directive 2017/1129 (as amended, the “EU Prospectus Regulation”). Consequently no key information document
required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the securities or otherwise
making them available to retail investors in the EEA has been prepared and therefore offering or selling the securities or otherwise making
them available to any retail investor in the EEA may be unlawful under the PRIIPS Regulation. This document has been prepared on the basis
that any offer of securities in the EEA will be made pursuant to an exemption under the EU Prospectus Regulation from the requirement
to publish a prospectus for offers of securities. This document is not a prospectus for the purposes of the EU Prospectus Regulation.
United Kingdom
The
securities are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available
to any retail investor in the UK. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal)
Act 2018, as amended (“EUWA”); (ii) a customer within the meaning of the provisions of the Financial Services and Markets
Act 2000 (the “FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer
would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of
domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms
part of domestic law by virtue of the EUWA (the "UK Prospectus Regulation"). Consequently no key information document required
by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering
or selling the securities or otherwise making them available to retail investors in the UK has been prepared and therefore offering or
selling the securities or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.
This document has been prepared on the basis that any offer of securities in the UK will be made pursuant to an exemption under
the UK Prospectus Regulation from the requirement to publish a prospectus for offers of securities. This document is not a prospectus
for the purposes of the UK Prospectus Regulation.
In the UK, the offering is
only addressed to, and is directed only at, “qualified investors” within the meaning of Article 2(e) of the UK Prospectus
Regulation, who are also (i) persons having professional experience in matters relating to investments who fall within the definition
of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (the “Order”); (ii) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high
value trusts as described in Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the
Order; or (iii) persons to whom it may otherwise lawfully be communicated (all such persons being referred to as “relevant persons”).
This document must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which
this document relates is available only to relevant persons and will be engaged in only with relevant persons.
Any invitation or inducement
to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the securities
may only be communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to us. All applicable
provisions of the FSMA must be complied with in respect to anything done by any person in relation to the securities in, from or otherwise
involving the UK.
Canada
The
securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors,
as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted
clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale
of the securities must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements
of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus
supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised
by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser
should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory of these rights
or consult with a legal advisor.
Pursuant
to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the
disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Hong Kong
The
Units may not be offered or sold in Hong Kong by means of any document other than (1) in circumstances which do not constitute an
offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong
Kong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitute an invitation to the public
within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“Securities and Futures Ordinance”),
or (2) to “professional investors” as defined in the Securities and Futures Ordinance and any rules made thereunder,
or (3) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding
Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the Units may be issued or may be
in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the
contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws
of Hong Kong) other than with respect to Units which are or are intended to be disposed of only to persons outside Hong Kong or only
to “professional investors” in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.
Singapore
This
prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other
document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Units may not be circulated
or distributed, nor may the Units be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly
or indirectly, to persons in Singapore other than (1) to an institutional investor (as defined under Section 4A of the Securities
and Futures Act, Chapter 289 of Singapore (the “SFA”)) under Section 274 of the SFA, (2) to a relevant person (as
defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A)
of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (3) otherwise pursuant to, and in
accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA.
Where
the Units are subscribed or purchased under Section 275 of the SFA by a relevant person which is a corporation (which is not an
accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as defined in Section 239(1) of
the SFA) of that corporation shall not be transferable for 6 months after that corporation has acquired the Units under Section 275
of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of
the SFA), (2) where such transfer arises from an offer in that corporation’s securities pursuant to Section 275(1A) of
the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as
specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of
Investments) (Shares and Debentures) Regulations 2005 of Singapore (“Regulation 32”).
Where
the Units are subscribed or purchased under Section 275 of the SFA by a relevant person which is a trust (where the trustee is not
an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of
the trust is an accredited investor, the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferable
for 6 months after that trust has acquired the Units under Section 275 of the SFA except: (1) to an institutional investor
under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer
arises from an offer that is made on terms that such rights or interest are acquired at a consideration of not less than S$200,000 (or
its equivalent in a foreign currency) for each transaction (whether such amount is to be paid for in cash or by exchange of securities
or other assets), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of
law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.
Japan
No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended)
(the “FIEA”) has been made or will be made with respect to the offering of the shares of common stock.
Accordingly, the shares
of common stock have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan
or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation
or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or
for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements, and otherwise in compliance
with all applicable laws, regulations and guidelines of Japan in effect at the relevant time. The offering of shares of common stock shall
be made as a private placement for small number of investors as prescribed under Article 2, Paragraph 3, Item 2, Sub-item C of the FIEA,
under which the shares of common stock may be offered to up to 49 offerees in Japan. Subject to the foregoing, the shares of common stock
may be offered in Japan to qualified institutional investors (“QIIs”) defined under the FIEA, with the exclusion from the
counting of the 49 offerees above. Any QII who acquired the shares of common stock shall not assign such shares to any party other than
another QII(s).
Israel
The
securities offered by this prospectus supplement and the accompanying prospectus have not been approved or disapproved by the Israeli
Securities Authority (the “ISA”), nor have such securities been registered for sale in Israel. The ISA has not issued permits,
approvals or licenses in connection with the offering or publishing this prospectus supplement and the accompanying prospectus; nor has
it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of
the securities being offered. The Units will not be offered or sold, directly or indirectly, to the public in Israel, except that the
underwriter may offer and sell such Units to Israeli investors who qualify, in accordance with the Israeli Securities Law as “qualified
investors” (as defined in the First Appendix to the Israeli Securities Law) and completed and signed a questionnaire regarding
such qualification and delivered it to the underwriter. Any resale in Israel, directly or indirectly, to the public of the securities
offered by this prospectus supplement and the accompanying prospectus is subject to restrictions on transferability and must be effected
only in compliance with the Israeli securities laws and regulations.
Legal
Matters
The
validity of the Units offered hereby and certain legal matters in connection with this offering will be passed upon for us by Jones Day.
Certain legal matters will be passed upon for the underwriters by Latham & Watkins LLP.
Experts
The
consolidated financial statements of Bally’s Corporation incorporated
in this prospectus supplement by reference from the Bally’s Corporation Annual Report on Form 10-K have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their report, which is incorporated herein by reference. Such
financial statements have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting
and auditing.
The
financial statements of Gamesys Group plc as of December 31, 2020 and 2019 and for each of the two years in the period ended December 31,
2020, incorporated in this prospectus supplement by reference to Bally's Corporation's Current Report on Form 8-K dated April 13,
2021, have been so incorporated in reliance on the report of BDO LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting. BDO LLP, London, United Kingdom, is a member of the Institute of Chartered Accountants in England
and Wales.
The
financial statements of Columbia Properties Tahoe, LLC d/b/a MontBleu Casino Resort & Spa, as of and for the year ended December 31,
2020 incorporated in this prospectus supplement by reference from the Bally’s Corporation Current Report on Form 8-K
dated March 16, 2021 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The
combined financial statements of IOC – Kansas City, Inc. and Rainbow Casino – Vicksburg Partnership, L.P. at December 31,
2019 and 2018, and for each of the two years in the period ended December 31, 2019, the financial
statements of Eldorado Resort Casino Shreveport JTV at December 31, 2019 and 2018 and for each of the two years in the period ended
December 31, 2019, and the financial statements of Columbia Properties Tahoe, LLC at December 31, 2019 and for the year then
ended, incorporated by reference in this Prospectus Supplement and Registration Statement of Bally’s Corporation have been audited
by Ernst & Young LLP, independent auditors, as set forth in their reports thereon incorporated by reference herein, and have
been incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and
auditing.
Where
You Can Find Additional Information
We
file annual, quarterly and current reports and other information with the SEC under the Exchange Act. This material is available from
the SEC’s website at http://www.sec.gov or from our website at www.ballys.com. Information available on our website, other than
the reports we file pursuant to the Exchange Act that are incorporated by reference in this prospectus, does not constitute a part of
this prospectus.
We
will provide to each person, including any beneficial owner, to whom a prospectus is delivered, upon written or oral request at no cost
to the requester, a copy of any or all of the reports or documents that have been incorporated by reference in this prospectus but not
delivered with this prospectus. Requests for these reports or documents must be made to our investor relations team at 100 Westminster
Street, Providence, Rhode Island 02903 or by telephone at (401) 475-8474.
Any
statement contained or incorporated by reference in this prospectus shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus, or in any subsequently filed document which also is incorporated
herein by reference, modifies or supersedes such earlier statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus. Any statement made in this prospectus concerning the contents
of any contract, agreement or other document is only a summary of the actual contract, agreement or other document. If we have filed
or incorporated by reference any contract, agreement or other document as an exhibit to the registration statement, you should read the
exhibit for a more complete understanding of the document or matter involved. Each statement regarding a contract, agreement or other
document is qualified by reference to the actual document.
You
should not assume that the information contained in this prospectus and the documents incorporated into this prospectus by reference
is correct on any date after their respective dates, even though this prospectus is delivered, or securities are sold, on a later date.
Incorporation
by Reference of Certain Documents
The
SEC allows us to “incorporate by reference” information into this prospectus supplement, which means that we can disclose
important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference
is deemed to be part of this prospectus supplement, except for any information superseded by information contained directly in this prospectus
supplement or any subsequently filed document deemed incorporated by reference or a free writing prospectus prepared by or on behalf
of us. This prospectus supplement incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about us and
our finances.
We incorporate by
reference in this prospectus the following documents or information filed or to be filed with the SEC:
|
·
|
our Current Reports on
Form 8-K filed January 13,
2021, January 22,
2021, January 25,
2021, February 3,
2021, February 8,
2021, February 12,
2021, February 26,
2021, March 16,
2021 and April 13, 2021; and
|
We
also incorporate by reference into this prospectus supplement all documents that are filed by us with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act (1) after the date of the registration statement of which this prospectus forms a part
and prior to effectiveness of the registration statement, and (2) after the date of this prospectus and any accompanying prospectus
supplement and before the termination of the offering shall also be deemed to be incorporated herein by reference. We are not, however,
incorporating by reference any documents or portions thereof, whether specifically listed above or filed in the
future, that are not deemed “filed” with the SEC, including our audit and compensation committee reports and performance
graph or any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or certain exhibits furnished pursuant to Item 9.01
of Form 8-K.
The
SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC.
Upon
request, we will provide without charge to each person, including any beneficial owner, to whom a copy of this prospectus supplement
is delivered a copy of the documents incorporated by reference in this prospectus supplement. You may request a copy of these filings,
and any exhibits we have specifically incorporated by reference as an exhibit in the accompanying prospectus, by writing or telephoning
us at the following:
100 Westminster Street,
Providence, Rhode Island 02903
(401) 475-8474
PROSPECTUS
Bally’s
Corporation
Common Stock
Warrants
Subscription Rights
Stock Purchase Contracts
Stock Purchase Units
Units
Debt Securities
We may offer and
sell from time to time in one or more offerings shares of our common stock, warrants, subscription rights, stock purchase contracts,
stock purchase units, units or debt securities. Each time any shares of our common stock, warrants, subscription rights, stock purchase
contracts, stock purchase units, units or debt securities are offered pursuant to this prospectus, we will provide a prospectus supplement
and attach it to this prospectus.
This prospectus
describes the general manner in which these securities may be offered and sold. We will provide the specific terms of the securities
in supplements to this prospectus to the extent those terms are not described in this prospectus or are different from the terms described
in this prospectus. The prospectus supplements may also add to, update or change information contained in this prospectus. Any of these
securities may be offered together or separately and in one or more series, if any, in amounts, at prices and on other terms to be determined
at the time of the offering. In addition, we may supplement, update or change any of the information contained in this prospectus by
incorporating information by reference in this prospectus. You should read this prospectus, the related supplements and any incorporated
documents carefully before you invest. This prospectus is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
We may offer these
securities directly to investors, through agents, underwriters or dealers, or through a combination of these methods, on a continued
or delayed basis. Each applicable prospectus supplement will provide the terms of the plan of distribution relating to the offering.
If any agents, dealers or underwriters are involved in the sale of any securities, the applicable prospectus supplement will set forth
their names and any applicable commissions or discounts. Our proceeds from the sale of these securities also will be set forth in the
applicable prospectus supplement.
Our common stock
is listed on the New York Stock Exchange (“NYSE”) under the symbol “BALY.” On March 17, 2021, the closing sale
price of our common stock on NYSE was $72.12 per share. You are urged to obtain current market quotations for our common stock.
Investing
in our securities involves risks. See “Risk Factors” BEGINNING on page 2 and any risk factors included in any accompanying
prospectus supplement and in the documents incorporated by reference in this prospectus for a discussion of the factors you should carefully
consider before investing in our securities.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy
or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of
this prospectus is March 18, 2021
Table
of Contents
Page
ABOUT
THIS PROSPECTUS
This prospectus
is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission (the “SEC”) utilizing
a “shelf” registration process. Under this shelf registration process, we may offer and sell from time to time any combination
of the securities described in this prospectus in one or more offerings in amounts, at prices and on terms that we determine at the time
of the offering. This prospectus and the documents we incorporate by reference into this prospectus provide you with a general description
of the securities under this shelf registration statement. We may provide a prospectus supplement and may also provide you with a free
writing prospectus that will contain specific information about the terms of that offering. The prospectus supplement or free writing
prospectus, if any, may also add, update or change information contained in this prospectus. Before purchasing any securities, you should
carefully read both this prospectus, any applicable accompanying prospectus supplement and any free writing prospectus prepared by or
on behalf of us, together with the additional information described under the headings “ Incorporation of Certain Documents by
Reference” and “Where You Can Find Additional Information.”
You should rely
only on the information contained or incorporated by reference in this prospectus and any applicable accompanying prospectus supplement
or any free writing prospectus prepared by us. We have not authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not rely on it. We are not making offers to sell the securities
in any jurisdiction where an offer or solicitation is not permitted. The information in this prospectus is accurate only as of the date
on the front cover. You should not assume that the information contained in this prospectus, including any information incorporated in
this prospectus by reference, any applicable accompanying prospectus supplement or any free writing prospectus prepared by us, is accurate
as of any date other than the date on the front of these documents, unless the information specifically indicates that another date applies.
Our business, financial condition, results of operations and prospects may have changed since such date. Neither the delivery of this
prospectus nor any sale made under it implies that there has been no change in our affairs or that the information in this prospectus
is correct as of any date after the date of this prospectus. We encourage you to consult your own counsel, accountant and other advisors
for legal, tax, business, financial and related advice regarding an investment in our securities.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the information incorporated by reference herein includes forward-looking statements within the meaning of the securities
laws. Forward-looking statements are statements as to matters that are not historical facts, and include statements about our plans,
objectives, expectations and intentions.
Forward-looking
statements are not guarantees and are subject to risks and uncertainties. Forward-looking statements are based on our current expectations
and assumptions. Although we believe that our expectations and assumptions are reasonable at this time, they should not be regarded as
representations that our expectations will be achieved. Actual results may vary materially. Forward-looking statements speak only as
of the date of this prospectus and we do not undertake to update or revise them as more information becomes available, except as required
by law.
Important
factors beyond those that apply to most businesses, some of which are beyond our control, that could cause actual results to differ materially
from our expectations and assumptions include, without limitation:
|
·
|
uncertainties
surrounding the COVID-19 pandemic, including limitations on our operations, increased costs,
changes in customer attitudes, impact on our employees and the ongoing impact of COVID-19
on general economic conditions;
|
|
·
|
unexpected
costs, difficulties integrating and other events impacting our recently completed and proposed
acquisitions and our ability to realize anticipated benefits;
|
|
·
|
risks
associated with our rapid growth, including those affecting customer and employee retention,
integration and controls;
|
|
·
|
risks
associated with the impact of the digitalization of gaming on our casino operations, our
expansion into iGaming and sports betting and the highly competitive and rapidly changing
aspects of our new interactive businesses generally;
|
|
·
|
the
very substantial regulatory restrictions applicable to us, including costs of compliance;
|
|
·
|
restrictions
and limitations in agreements to which we are subject, including our debt, could significantly
affect our ability to operate our business and our liquidity; and
|
|
·
|
other
risks identified in Part I. Item 1A. “Risk Factors” of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2020 as filed with SEC on March
10, 2021.
|
The
foregoing list of important factors is not exclusive and does not include matters like changes in general economic conditions that affect
substantially all gaming businesses.
You
should not to place undue reliance on our forward-looking statements.
THE
COMPANY
Our objective is
to be one of the leading omni-channel gaming and interactive entertainment companies in the United States.
We are already a
leading owner and operator of land-based casinos in seven states in the United States:
Property
|
|
Location
|
|
Type
|
|
Built/
Acquired
|
|
|
Gaming
Square Footage
|
|
|
Slot
Machines
|
|
|
Table
Games
|
|
|
Hotel
Rooms
|
|
|
Food
and Beverage Outlets
|
|
|
Race-book
|
|
Sports-book
|
Twin River Casino
Hotel
|
|
Lincoln, RI
|
|
Casino and
Hotel
|
|
|
2007
|
|
|
|
168,072
|
|
|
|
4,067
|
|
|
|
114
|
|
|
|
136
|
|
|
|
21
|
|
|
Yes
|
|
Yes
|
Hard Rock Biloxi
|
|
Biloxi, MS
|
|
Casino and Resort
|
|
|
2007
|
|
|
|
50,984
|
|
|
|
983
|
|
|
|
55
|
|
|
|
479
|
|
|
|
18
|
|
|
No
|
|
Yes
|
Tiverton Casino Hotel
|
|
Tiverton, RI
|
|
Casino and Hotel
|
|
|
2018
|
|
|
|
33,840
|
|
|
|
1,000
|
|
|
|
32
|
|
|
|
83
|
|
|
|
7
|
|
|
Yes
|
|
Yes
|
Dover Downs Hotel and Casino
|
|
Dover, DE
|
|
Casino, Hotel and Raceway
|
|
|
2019
|
|
|
|
84,075
|
|
|
|
2,060
|
|
|
|
37
|
|
|
|
500
|
|
|
|
14
|
|
|
Yes
|
|
Yes
|
Black
Hawk Casinos(1)
|
|
Black Hawk, CO
|
|
3 Casinos
|
|
|
Multiple
|
|
|
|
34,632
|
|
|
|
570
|
|
|
|
33
|
|
|
|
—
|
|
|
|
8
|
|
|
No
|
|
Yes
|
Casino KC
|
|
Kansas City, MO
|
|
Casino
|
|
|
2020
|
|
|
|
39,788
|
|
|
|
848
|
|
|
|
17
|
|
|
|
—
|
|
|
|
3
|
|
|
No
|
|
No
|
Casino Vicksburg
|
|
Vicksburg, MS
|
|
Casino and Hotel
|
|
|
2020
|
|
|
|
32,608
|
|
|
|
499
|
|
|
|
8
|
|
|
|
89
|
|
|
|
4
|
|
|
No
|
|
Yes
|
Bally’s Atlantic
City
|
|
Atlantic City, NJ
|
|
Casino and Hotel
|
|
|
2020
|
|
|
|
83,569
|
|
|
|
1,481
|
|
|
|
93
|
|
|
|
1,214
|
|
|
|
10
|
|
|
No
|
|
Yes
|
Eldorado Resort Casino
Shreveport
|
|
Shreveport, LA
|
|
Casino and Hotel
|
|
|
2020
|
|
|
|
49,916
|
|
|
|
1,382
|
|
|
|
54
|
|
|
|
403
|
|
|
|
6
|
|
|
No
|
|
No
|
___________________________
|
(1)
|
Includes
the Golden Gates, Golden Gulch and Mardi Gras casinos.
|
We
acquired the rights to the name “Bally’s” in 2020 as part of our strategy to become the leading U.S. full-service sports
betting/iGaming company with physical casinos and online gaming solutions united under a single, prominent brand. We took other key steps
to build our iGaming and sports betting business in the past year, including:
|
·
|
entering
into a strategic partnership with Sinclair Broadcast Group to leverage the Bally’s
brand and combine our sports betting technology with Sinclair’s expansive natural footprint,
which includes 188 local TV stations, 19 regional sports networks, the STIRR streaming service,
the Tennis Channel and five stadium digital TV and internet sports networks;
|
|
·
|
signing
definitive agreements to acquire Bet.Works, a sports betting platform provider to operators
in Colorado, New Jersey, Indiana and Iowa, and Monkey Knife Fight, the third-largest fantasy
sports platform in North America. and
|
|
·
|
acquiring
SportCaller, a leading B2B free-to-play game provider, in early 2021.
|
We
are a Delaware corporation with our global headquarters in Providence, Rhode Island.
RISK
FACTORS
In considering whether
or not to purchase our securities, you should carefully consider the risks described under “Risk Factors” in any prospectus
supplement and in the documents we incorporate by reference in this prospectus and any prospectus supplement, as well as the other information
included or incorporated by reference in this prospectus and any prospectus supplement.
USE
OF PROCEEDS
We intend to use
the net proceeds from the sales of the securities described in this prospectus as set forth in the applicable prospectus supplement.
DESCRIPTION
OF CAPITAL STOCK
The following is
a summary of our capital stock and important provisions of our Amended and Restated Certificate of Incorporation (the “Certificate
of Incorporation”), our Amended and Restated Bylaws (the “Bylaws”) and the applicable provisions of the General Corporation
Law of the State of Delaware (the “DGCL”). Our Certificate of Incorporation and our Bylaws govern the rights of our stockholders.
For information on how to obtain a copy of our Certificate of Incorporation and our Bylaws, see “Where You Can Find Additional
Information.”
The summary does
not purport to be complete and is subject to, and qualified in its entirety by reference to the complete text of our Certificate of Incorporation
and our Bylaws, and by provisions of applicable law.
General
Our authorized capital
stock consists of 100,000,000 shares of common stock, par value $0.01 per share. The outstanding shares of our common stock are duly
authorized, validly issued, fully paid and non-assessable.
Common Stock
Dividend Rights
Dividends may be
declared by our board of directors from time to time.
Voting Rights
Each share of common
stock is entitled to one vote. At each stockholders meeting, all matters will be decided by a majority of the votes (except with respect
to the election of directors, who are elected by a plurality of the votes) cast at such meeting by the holders of shares of capital stock
present or represented by proxy and entitled to vote thereon with a quorum being present (except in cases where a greater number of votes
is required by law, our Certificate of Incorporation or our Bylaws).
Other Rights
Our common stock
has no preemptive rights or no cumulative voting rights and there are no redemption, sinking fund or conversion provisions in our Certificate
of Incorporation or our Bylaws.
Delaware Anti-Takeover Law
We are subject to
Section 203 of the DGCL. Section 203 generally prohibits a public Delaware corporation from engaging in a “business combination”
with an “interested stockholder” for a period of three years after the date of the transaction in which the person became
an interested stockholder, unless:
|
·
|
prior
to the date of the transaction, the board of directors of the corporation approved either
the business combination or the transaction which resulted in the stockholder becoming an
interested stockholder;
|
|
·
|
upon
consummation of the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of determining
the number of shares outstanding (1) shares owned by persons who are directors and also
officers and (2) shares owned by employee stock plans in which employee participants
do not have the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or
|
|
·
|
on
or subsequent to the date of the transaction, the business combination is approved by the
board of directors and authorized at an annual or special meeting of stockholders, and not
by written consent, by the affirmative vote of at least 66⅔% of the outstanding voting
stock which is not owned by the interested stockholder.
|
Section 203
defines a business combination to include:
|
·
|
any
merger or consolidation involving the corporation and the interested stockholder;
|
|
·
|
any
sale, transfer, pledge or other disposition involving the interested stockholder of 10% or
more of the assets of the corporation;
|
|
·
|
subject
to exceptions, any transaction that results in the issuance or transfer by the corporation
of any stock of the corporation to the interested stockholder; and
|
|
·
|
the
receipt by the interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation.
|
In general, Section
203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the
corporation or any entity or person affiliated with or controlling or controlled by the entity or person.
Anti-takeover Effects of Certain
Provisions of our Certificate of Incorporation and our Bylaws
In addition to regulatory
requirements applicable to us and the ownership of our shares and some provisions of the DGCL, our Certificate of Incorporation and our
Bylaws could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which
are summarized below, are intended to discourage coercive takeover practices and inadequate takeover bids. These provisions are also
designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors.
Requirements for Advance Notification
of Stockholder Nominations and Proposals and Director Qualification Requirements
Our Bylaws establish
advance notice procedures with respect to stockholder proposals, other than proposals made by or at the direction of our board of directors.
Proper notice must be timely, in proper written form, and must set forth certain details of the nomination or proposal. The Chairman
of the meeting may determine that a nomination or proposal was defective and should be disregarded. In addition, our Bylaws provide that
no person may serve as a member of our board of directors, or be elected or nominated for such a position, unless, at the time of such
service, election or nomination, such person has been licensed by applicable regulatory authorities. Together, these provisions may have
the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed, and may also discourage
or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise
attempting to obtain control of us.
Classified Board of Directors
Our Certificate
of Incorporation provides that our board of directors is divided into three classes, each of which will hold office for a three-year
term.
Calling Special Stockholder Meetings
Our Bylaws provide
that special meetings of our stockholders may be called only by the Chairman of our board of directors, by a majority of the whole board
or by holders of our common stock who hold at least 20% of the outstanding common stock entitled to vote generally in the election of
directors.
Removal of Directors
Our Bylaws state
that any director or the entire board of directors may be removed only for cause by the holders of a majority of the shares then entitled
to vote at an election of directors.
Limitation on Financial Interest
Our Certificate
of Incorporation and Bylaws provide that we may not permit any person or entities to acquire a direct or indirect entity or economic
interest in us equal to or greater than 5% of any class of equity or economic interests without the approval of the relevant gaming authorities
(subject to certain specified exceptions). Any transfer of shares of our common stock that results in a person acquiring more than such
5% threshold shall not be recognized until the relevant gaming authorities have consented to such transfer. Our Certificate of Incorporation
also provides that an additional license or consent from the gaming authorities is required for ownership equal to or greater than 20%
of any class of our equity interests. In addition, our Bylaws also include limitations and restrictions on ownership of common stock
relating to regulatory requirements and licenses, including restrictions on transfers that would violate applicable gaming laws and repurchase
rights in the event that stockholders are determined to be unsuitable to hold our common shares. Our Bylaws impose additional restrictions
to ensure compliance with relevant gaming and regulatory requirements including our ability to withhold dividend payments and redeem
or purchase a holder’s common stock if a gaming authority or the Board of Directors determines the holder to be an “unsuitable
person” as defined in certain gaming laws.
Limitation of Liability of Officers
and Directors; Indemnification
Our Certificate
of Incorporation states that a director will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to us or our stockholders, (2) for
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under Section 174 of the
DGCL or (4) for any transaction from which the director derived any improper personal benefit. The DGCL also prohibits limitations on
director liability for acts or omissions which resulted in a violation of a statute prohibiting the declaration of certain dividends,
certain payments to stockholders after dissolution and particular types of loans. The effect of these provisions is to eliminate our
rights and the rights of our stockholders (through stockholders’ derivative suits on our behalf) to recover monetary damages against
a director for breach of fiduciary duty as a director (including breaches resulting from grossly negligent behavior), except in the situations
described above. If the DGCL is amended to authorize, with the approval of a corporation’s stockholders, further reductions in
the liability of a corporation’s directors for breach of fiduciary duty, then our directors will not be liable for any such breach
to the fullest extent permitted by the DGCL as so amended. Any repeal or modification of the foregoing provisions of our Certificate
of Incorporation by our stockholders will not adversely affect any right or protection of our directors existing at the time of such
repeal or modification. We have also entered into agreements to indemnify our directors and officers, as well as our employees and agents,
to the fullest extent permitted or required by Delaware law. To the extent the indemnification for liabilities arising under the Securities
Act of 1933, as amended (the “Securities Act”) may be granted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
Choice of Forum
Our Bylaws state
that unless the board of directors consents in writing to the selection of an alternative forum, the sole and exclusive forum for (1)
any derivative action or proceeding brought on behalf of the Company, (2) any action asserting a claim of breach of a fiduciary duty
owed by any director, officer or other employee to us or our stockholders, (3) an action asserting a claim arising pursuant to any provision
of the DGCL or our Certificate of Incorporation or our Bylaws (as any of the foregoing may be amended from time to time), or (4) any
action asserting a claim governed by the internal affairs doctrine, will be the Court of Chancery in the State of Delaware (or, if the
Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware).
The exclusive forum
selection provided by our bylaws does not limit the scope of exclusive federal or concurrent jurisdiction for actions brought under federal
securities laws. For example, Section 27 of the Exchange Act of 1934, as amended (the “Exchange Act”) creates exclusive federal
jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder,
and as such, the exclusive forum selection discussed above would not apply to such suits. Furthermore, Section 22 of the Securities Act
provides for concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by
the Securities Act or the rules and regulations thereunder, and as such, the exclusive forum selection discussed above would not apply
to such suits.
Transfer Agent and Registrar
The transfer agent
and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
Listing
Our common stock
is listed on the NYSE under the symbol “BALY.”
DESCRIPTION
OF WARRANTS
We may issue warrants
to purchase common stock or debt securities. Each warrant will entitle the holder to purchase for cash the amount of common stock, or
units at the exercise price stated or determinable in a prospectus supplement for the warrants. Warrants may be issued independently
or together with any other securities and may be attached to, or separate from, such securities. Each series of warrants will be issued
under a separate warrant agreement to be entered into between us and a warrant agent or purchaser.
The terms of any
warrants to be issued and a description of the material provisions of the applicable warrant agreement will be set forth in the applicable
prospectus supplement. These terms will include some or all of the following:
|
·
|
the
title of the warrants;
|
|
·
|
the
price or prices at which the warrants will be issued;
|
|
·
|
the
designation, amount and terms of the securities for which the warrants are exercisable;
|
|
·
|
the
designation and terms of the other securities, if any, with which the warrants are to be
issued and the number of warrants issued with each other security;
|
|
·
|
the
aggregate number of warrants;
|
|
·
|
any
provisions for adjustment of the number or amount of securities receivable upon exercise
of the warrants or the exercise price of the warrants;
|
|
·
|
the
price or prices at which the securities purchasable upon exercise of the warrants will be
separately transferable, if applicable;
|
|
·
|
if
applicable, a discussion of material U.S. federal income tax considerations;
|
|
·
|
the
date on which the right to exercise the warrants will commence, and the date on which the
right will expire;
|
|
·
|
the
maximum or minimum number of warrants that may be exercised at any time;
|
|
·
|
information
with respect to book-entry procedures, if any; and
|
|
·
|
any
other terms of the warrants, including terms, procedures and limitations relating to the
exchange and exercise of the warrants.
|
DESCRIPTION
OF SUBSCRIPTION RIGHTS
The following description,
together with the additional information we may include in any applicable prospectus supplement, summarizes the material terms and provisions
of the subscription rights that we may offer under an applicable prospectus. While the terms we have summarized below will apply generally
to any subscription rights that we may offer, we will describe the particular terms of any subscription rights in more detail in the
applicable prospectus supplement and any related free writing prospectus. The terms of any subscription rights offered under a prospectus
supplement may differ from the terms described below. However, no prospectus supplement will fundamentally change the terms that are
set forth in this prospectus or offer a security that is not described in this prospectus at the time of its effectiveness.
We may issue subscription
rights to purchase our common stock or debt securities. These subscription rights may be offered independently or together with any other
security offered hereby and may or may not be transferable by the stockholder receiving the subscription rights in such offering. In
connection with any offering of subscription rights, we may enter into a standby arrangement with one or more underwriters or other purchasers
pursuant to which the underwriters or other purchasers may be required to purchase any securities remaining unsubscribed for after such
offering.
The prospectus supplement
relating to any subscription rights we offer, if any, will, to the extent applicable, include specific terms relating to the offering,
including some or all of the following:
|
·
|
the
price, if any, for the subscription rights;
|
|
·
|
the
exercise price payable for our common stock upon the exercise of the subscription rights;
|
|
·
|
the
number of subscription rights to be issued to each stockholder;
|
|
·
|
the
number of shares and terms of our common stock which may be purchased per each subscription
right;
|
|
·
|
the
extent to which the subscription rights are transferable;
|
|
·
|
any
other terms of the subscription rights, including the terms, procedures and limitations relating
to the exchange and exercise of the subscription rights;
|
|
·
|
the
date on which the right to exercise the subscription rights shall commence, and the date
on which the subscription rights shall expire;
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the
extent to which the subscription rights may include an over-subscription privilege with respect
to unsubscribed securities or an over-allotment privilege to the extent the securities are
fully subscribed; and
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if
applicable, the material terms of any standby underwriting or purchase arrangement into which
we may enter in connection with the offering of subscription rights.
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The description
in the applicable prospectus supplement of any subscription rights we offer will not necessarily be complete and will be qualified in
its entirety by reference to the applicable subscription rights certificate, which will be filed with the SEC if we offer subscription
rights. We urge you to read the applicable subscription rights certificate and any applicable prospectus supplement in their entirety.
DESCRIPTION
OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock
purchase contracts, including contracts obligating holders to purchase from us, and obligating us to sell to the holders, a specified
number of shares of common stock at a future date or dates. We may fix the price per share of common stock and the number of shares of
common stock at the time the stock purchase contracts are issued or by reference to a specific formula set forth in the stock purchase
contracts. We may issue the stock purchase contracts separately or as part of units, which we refer to as “stock purchase units,”
consisting of a stock purchase contract and our debt securities or debt obligations of third parties, including U.S. treasury securities,
securing the holders’ obligations to purchase the common stock under the stock purchase contracts. The stock purchase contracts
may require holders to secure their obligations under the stock purchase contracts in a specified manner. The stock purchase contracts
also may require us to make periodic payments to the holders of the stock purchase units or vice versa, and such payments may be unsecured
or refunded on some basis.
The applicable prospectus
supplement will describe the terms of the stock purchase contracts or stock purchase units. The description in the prospectus supplement
will not necessarily be complete, and reference will be made to the stock purchase contracts and, if applicable, collateral or depositary
arrangements relating to the stock purchase contracts or stock purchase units. The applicable prospectus supplement will also describe
material U.S. federal income tax considerations applicable to the stock purchase units and the stock purchase contracts.
DESCRIPTION
OF UNITS
We may issue units
comprising one or more securities described in this prospectus in any combination (but not securities of third parties) as specified
in a related prospectus supplement or a free writing prospectus. Units will be issued pursuant to the terms of a unit agreement, which
may provide that the securities included in the unit may not be held or transferred separately at any time or at any time before a specified
date. A copy of the forms of the unit agreement and the unit certificate relating to any particular issue of units will be filed with
the SEC each time we issue units, and you should read those documents for provisions that may be important to you. For more information
on how you can obtain copies of the forms of the unit agreement and the related unit certificate, see “Where You Can Find Additional
Information.”
DESCRIPTION
OF DEBT SECURITIES
This prospectus
describes the general terms and provisions of our debt securities. When we offer to sell a particular series of debt securities, we will
describe the specific terms of the series in a supplement to this prospectus. We will also indicate in the supplement whether the general
terms and provisions described in this prospectus apply to a particular series of debt securities.
The debt securities
will be issued under an indenture, as it may be amended and supplemented from time to time. We have summarized select portions of the
indenture below. The summary is not complete, and is qualified in its entirety by reference to the indenture. The indenture will be subject
to and governed by the Trust Indenture Act of 1939, as amended. The form of indenture has been filed as an exhibit to the registration
statement of which this prospectus forms a part. You should read the indenture for provisions that may be important to you. Capitalized
terms used in the summary have the meanings specified in the indenture.
General
Unless otherwise
specified in a supplement to this prospectus, the debt securities will be our senior, direct, unsecured obligations and, as such, will
rank pari passu in right of payment with all of our existing and future senior unsecured indebtedness and senior in right of payment
to all of our subordinated indebtedness. The debt securities will be effectively subordinated to (1) all existing and future indebtedness
or other liabilities of our subsidiaries and (2) all of our existing and future secured indebtedness to the extent of the value of the
collateral securing that indebtedness.
The indenture does
not limit the aggregate principal amount of debt securities that may be issued under it and provides that debt securities may be issued
under it from time to time in one or more series. We may specify a maximum aggregate principal amount for the debt securities of any
series.
Unless otherwise
specified in the applicable prospectus supplement, the indenture does not afford the holders of the debt securities the right to require
us to repurchase or redeem the debt securities in the event of a highly-leveraged transaction.
We are not obligated
to issue all debt securities of one series at the same time and, unless otherwise provided in the applicable prospectus supplement, we
may reopen a series, without the consent of the holders of the outstanding debt securities of that series, for the issuance of additional
debt securities of that series. Additional debt securities of a particular series will have the same terms and conditions as outstanding
debt securities of such series, except for the issue date and, in some cases, the public offering price and the first interest payment
date, and will be consolidated with, and form a single series with, such outstanding debt securities; provided, however, that if such
additional debt securities are not fungible with the outstanding debt securities of such series for U.S. federal income tax purposes,
the additional debt securities will have a separate CUSIP number.
The applicable prospectus supplement
will set forth, among other things:
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the
title of the debt securities;
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the
price or prices (expressed as a percentage of the principal amount) at which we will issue
the debt securities;
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any
limit on the aggregate principal amount of the debt securities;
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the
date or dates on which the principal of the debt securities is payable;
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the
rate or rates (which may be fixed or variable) per annum or the method used to determine
the rate or rates (including any commodity,
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commodity
index, stock exchange index or financial index) at which the debt securities will bear interest,
the date or dates from which interest will accrue, the date or dates on which interest will
commence and be payable and any regular record date for the interest payable on any interest
payment date, and the basis of computation of interest if other than on the basis of a 360-day
year consisting of twelve 30-day months;
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the
place or places where the principal of, premium and interest, if any, on the debt securities
will be payable, where the debt securities may be surrendered for registration of transfer
or exchange and where notices and demands to or upon us in respect of the debt securities
and the indenture may be served, and the method of such payment, if by wire transfer, mail
or other means;
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the
period or periods within which, the price or prices at which and the terms and conditions
upon which we may redeem the debt securities;
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any
obligation we have to redeem or purchase the debt securities pursuant to any sinking fund
or analogous provisions or at the option of a holder of debt securities;
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the
dates on which and the price or prices at which we will repurchase debt securities at the
option of the holders of debt securities and other detailed terms and provisions of these
repurchase obligations;
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the
denominations in which the debt securities will be issuable, if other than minimum denominations
of $2,000 and integral multiples of $1,000 in excess thereof;
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the
forms of the debt securities in fully registered form (and whether the debt securities will
be issuable as global securities);
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the
portion of the principal amount of the debt securities payable upon declaration of acceleration
of the maturity date, if other than the principal amount;
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the
designation of the currency, currencies or currency units in which payment of the principal
of, premium and interest, if any, on the debt securities will be made if other than U.S.
dollars;
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whether
the debt securities may be exchangeable for and/or convertible into shares of our common
stock or any other security;
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any
provisions relating to any security provided for the debt securities, and any subordination
in right of payment, if any, of the debt securities;
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any
addition to or change in the events of default and acceleration provisions described under
“—Events of Default” below and in the indenture with respect to the debt
securities;
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any
addition to or change in the covenants described in this “Description of Debt Securities”
or in the indenture with respect to the debt securities;
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any
other terms of the debt securities (which may modify or delete any provision of the indenture
insofar as it applies to such debt securities); and
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any
depositaries, interest rate calculation agents, exchange rate calculation agents or other
agents with respect to the debt securities if other than those appointed in the indenture.
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The foregoing is
not intended to be an exclusive list of the terms that may be applicable to any offered debt securities.
We may issue debt
securities that provide for an amount less than their stated principal amount to be due and payable upon declaration of acceleration
of their maturity pursuant to the terms of the indenture. We will provide you with information on the federal income tax considerations
and other special considerations applicable to any of these debt securities in the applicable prospectus supplement.
If we denominate
the purchase price of any of the debt securities in a foreign currency or currencies, or if the principal of and any premium and interest
on any series of debt securities is payable in a foreign currency or currencies, we will provide you with information on the restrictions,
elections, general tax considerations, specific terms and other information with respect to that issue of debt securities and such foreign
currency or currencies in the applicable prospectus supplement.
Exchange and Transfer
Debt securities may be transferred or
exchanged at the office of the registrar or co-registrar designated by us.
We will not impose
a service charge for any transfer or exchange, but we may require holders to pay any tax or other governmental charges associated with
any transfer or exchange.
In the event of any redemption of debt
securities of any series, we will not be required to:
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issue,
register the transfer of, or exchange, any debt security of that series during a period beginning
at the opening of business 15 days before the day of sending of a notice of redemption and
ending at the close of business on the day such notice is sent; or
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register
the transfer of or, exchange any, debt security of that series selected, called or being
called for redemption, in whole or in part, except the unredeemed portion of any series being
redeemed in part.
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We will initially
appoint the trustee as the registrar. Any transfer agent, in addition to the registrar initially designated by us, will be named in the
applicable prospectus supplement. We may designate additional transfer agents or change transfer agents or change the office of the transfer
agent. However, we will be required to maintain a transfer agent in each place of payment for the debt securities of each series.
Global Securities
The debt securities
of any series may be represented, in whole or in part, by one or more global securities. Each global security will:
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be
registered in the name of a depositary that we will identify in a prospectus supplement;
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be
deposited with the trustee as custodian for the depositary or its nominee; and
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bear
any required legends.
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No global security
may be exchanged in whole or in part for debt securities registered in the name of any person other than the depositary or any nominee
unless:
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the
depositary has notified us that it is unwilling or unable to continue as depositary or has
ceased to be qualified to act as depositary, and in either case we fail to appoint a successor
depositary registered as a clearing agency under the Exchange Act within 90 days of such
event;
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we
execute and deliver to the trustee an officer’s certificate to the effect that such
global securities shall be so exchangeable; or
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an
event of default with respect to the debt securities represented by such global securities
shall have occurred and be continuing.
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As long as the depositary,
or its nominee, is the registered owner of a global security, the depositary or nominee will be considered the sole owned and holder
of the debt securities represented by the global security for all purposes under the indenture. Except in the above limited circumstances,
owners of beneficial interests in a global security:
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will
not be entitled to have the debt securities registered in their names;
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will
not be entitled to physical delivery of certificated debt securities; and
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will
not be considered to be holders of those debt securities under the indenture.
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Payments on a global
security will be made to the depositary or its nominee as the holder of the global security. Some jurisdictions have laws that require
that certain purchasers of securities take physical delivery of such securities in definitive form. These laws may impair the ability
to transfer beneficial interests in a global security.
Institutions that
have accounts with the depositary or its nominee are referred to as “participants.” Ownership of beneficial interests in
a global security will be limited to participants and to persons that may hold beneficial interests through participants. The depositary
will credit, on its book-entry registration and transfer system, the respective principal amounts of debt securities represented by the
global security to the accounts of its participants. Each person owning a beneficial interest in a global security must rely on the procedures
of the depositary (and, if such person is not a participant, on procedures of the participant through which such person owns its interest)
to exercise any rights of a holder under the indenture.
Ownership of beneficial
interests in a global security will be shown on and effected through records maintained by the depositary, with respect to participants’
interests, or by any participant, with respect to interests of persons held by participants on their behalf. Payments, transfers and
exchanges relating to beneficial interests in a global security will be subject to policies and procedures of the depositary. The depositary’s
policies and procedures may change from time to time. Neither we nor the trustee will have any responsibility or liability for the depositary’s
acts or omissions or any participant’s records with respect to beneficial interests in a global security.
Payment and Paying Agent
The provisions of
this subsection will apply to the debt securities unless otherwise indicated in the applicable prospectus supplement. Payment of interest
on a debt security on any interest payment date will be made to the person in whose name the debt security is registered at the close
of business on the regular record date. Payment on debt securities of a particular series will be payable at the office of a paying agent
or paying agents designated by us. However, at our option, we may pay interest by mailing a check to the record holder.
We may also name
any other paying agents in the applicable prospectus supplement. We may designate additional paying agents, change paying agents or change
the office of any paying agent. However, we will be required to maintain a paying agent in each place of payment for the debt securities
of a particular series.
Subject to applicable
abandoned property laws, all moneys paid by us to a paying agent for payment on any debt security that remain unclaimed at the end of
two years after such payment was due will be repaid to us. Thereafter, the holder may look only to us for such payment.
Consolidation, Merger and Sale of
Assets
Except as otherwise
set forth in the applicable prospectus supplement, we may not merge or consolidate with or into any other person, or sell, convey, transfer,
lease or otherwise dispose of all or substantially all of the properties and assets of us and our subsidiaries, taken as a whole, to
any person, unless:
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either
(1) the transaction is a merger or consolidation and we are the surviving entity or (2) the
successor or transferee is a U.S. corporation, limited liability company, partnership, trust
or other entity and the successor or transferee assumes our obligations under the debt securities
and the indenture pursuant to a supplemental indenture in form reasonably satisfactory to
the trustee;
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immediately
after giving effect to the transaction and treating our obligations in connection with or
as a result of such transaction as having been incurred as of the time of such transaction,
no default or event of default under the indenture shall have occurred and be continuing;
and
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an
officer’s certificate and an opinion of counsel have been delivered to the trustee
in connection with the foregoing.
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In the event of
any such transaction, if there is a successor or transferee, then the successor or transferee will expressly assume all of our obligations
under the indenture and automatically be substituted for us in the indenture and as issuer of the debt securities and may exercise every
right and power of ours under the indenture with the same effect as if such successor or transferee had been named in our place in the
indenture, and (except in the case of a lease) when such successor or transferee duly assumes all of our obligations under the debt securities
and the indenture, we will be relieved from all such obligations.
Events of Default
Event of default means, with respect
to any series of debt securities, any of the following:
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default
in the payment of any interest on any debt security of that series when it becomes due and
payable, and continuance of that default for a period of 30 days;
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default
in the payment of principal of, or premium on, any debt security of that series;
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default
in the performance or breach of any other covenant or warranty by us in the indenture or
any board resolution, supplemental indenture or officer’s certificate with respect
to such series (other than a covenant or warranty that has been included in the indenture
or board resolution, supplemental indenture or officer’s certificate solely for the
benefit of a series of debt securities other than that series), which default continues uncured
for a period of 90 days after (1) we receive written notice from the trustee or (2) we and
the trustee receive written notice from the holders of not less than 25% in aggregate principal
amount of the outstanding debt securities of that series as provided in the indenture;
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certain
events of bankruptcy, insolvency or reorganization of our company; and
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any
other event of default provided with respect to debt securities of that series that is described
in the applicable prospectus supplement.
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No event of default
with respect to a particular series of debt securities (except as to certain events of bankruptcy, insolvency or reorganization) necessarily
constitutes an event of default with respect to any other series of debt securities. The occurrence of an event of default may constitute
an event of default under our bank credit agreements in existence from time to time. In addition, the occurrence of certain events of
default or an acceleration under the indenture may constitute an event of default under certain of our other indebtedness outstanding
from time to time.
If an event of default
(other than an event of default resulting from certain events of bankruptcy, insolvency or reorganization of our company) with respect
to debt securities of any series at the time outstanding occurs and is continuing, then the trustee or the holders of not less than 25%
in aggregate principal amount of the outstanding debt securities of that series may, by a notice in writing to us (and to the trustee
if given by the holders), declare to be due and payable immediately the principal of, and accrued and unpaid interest, if any, on all
debt securities of that series. In the case of an event of default resulting from certain events of bankruptcy, insolvency or reorganization
of our company, the principal (or such specified amount) of and accrued and unpaid interest, if any, on all outstanding debt securities
will become and be immediately due and payable without any declaration or other act on the part of the trustee or any holder of outstanding
debt securities. At any time after a declaration of acceleration with respect to debt securities of any series has been made, the holders
of a majority in aggregate principal amount of the outstanding debt securities of that series may rescind and annul the acceleration
if (1) the rescission and annulment would not conflict with any judgment or decree already rendered, (2) if all events of default with
respect to that series, other than the non-payment of principal, interest or premium, if any, with respect to debt securities of that
series that has become due and payable solely because of the acceleration, have been cured or waived and all sums paid or advanced by
the trustee and the reasonable compensation expenses and disbursements of the trustee and its agents and counsel have been paid as provided
in the indenture and (3) if the Company has paid or deposited with the trustee a sum sufficient to pay (a) any overdue interest on the
debt securities of that series, (b) the principal amount of the debt securities of that series (except the principal, interest or premium
that has become due solely because of the acceleration) and (c) to the extent lawful and applicable, interest on overdue installments
of interest at the rate specified in the debt securities of that series.
The indenture provides
that the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder
of outstanding debt securities, unless the trustee receives security and/or indemnity satisfactory to it against any loss, liability
or expense. Subject to certain rights of the trustee, the holders of a majority in principal amount of the outstanding debt securities
of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee with respect to the debt securities of that series.
No holder of any
debt security of any series will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture or
for the appointment of a receiver or trustee, or for any remedy under the indenture, unless:
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that
holder has previously given to the trustee written notice of a continuing event of default
with respect to debt securities of that series; and
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the
holders of at least 25% in aggregate principal amount of the outstanding debt securities
of that series have made written request, and offered security and/or indemnity satisfactory
to the trustee, to institute the proceeding as trustee, and the trustee has not received
from the holders of a majority in aggregate principal amount of the outstanding debt securities
of that series a direction inconsistent with that request and has failed to institute the
proceeding within 60 days.
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Notwithstanding
the foregoing, the holder of any debt security will have an absolute and unconditional right to receive payment of the principal of,
and premium and any interest on, that debt security on or after the due dates expressed in that debt security and to institute suit for
the enforcement of such payment.
The indenture requires
us, within 120 days after the end of our fiscal year, to furnish to the trustee a statement as to compliance with the indenture. The
indenture provides that the trustee may withhold notice to the holders of debt securities of any series of any default or event of default
(except in payment on any debt securities of that series) with respect to debt securities of that series if it in good faith determines
that withholding notice is in the interest of the holders of those debt securities.
Modification and Waiver
We may amend or modify the indenture
without the consent of any holder of debt securities of the series affected by the modifications or amendments in order to:
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cure
any ambiguity or to correct or supplement any provision contained in the indenture or in
any supplemental indenture that may be defective or inconsistent with any other provision
contained therein, or to conform the provisions of the indenture to this “Description
of Debt Securities” or a description of the debt securities contained in the applicable
prospectus supplement, as evidenced by an officer’s certificate;
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provide
for uncertificated debt securities in addition to or in place of certificated debt securities;
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provide
for the assumption of our obligations by a successor, in the case of a merger or consolidation,
or transferee, in the case of a sale, conveyance, transfer, lease or other disposition of
all or substantially all of the properties and assets of us and our subsidiaries, taken as
a whole, and our discharge upon such assumption, as applicable, provided that the requirements
described under “—Consolidation, Merger and Sale of Assets” are complied
with;
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make
any change that would provide any additional rights or benefits to the holders of all or
any series of debt securities or that does not adversely affect the rights under the indenture
of any holder in any material respect;
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comply
with requirements of the SEC in order to effect or maintain the qualification of the indenture
under the Trust Indenture Act of 1939, as amended;
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provide
for the issuance of and establish the form and terms and conditions of additional debt securities
as permitted by the indenture;
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add
guarantees with respect to the debt securities or to provide security for the debt securities;
or
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evidence
and provide for the acceptance of appointment under the indenture by a successor trustee
with respect to the debt securities of one or more series and add to or change any of the
provisions of the indenture as would be necessary to provide for or facilitate the administration
of the trusts thereunder by more than one trustee.
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Other amendments
and modifications of the indenture or the debt securities issued may be made with the consent of the holders of at least a majority in
aggregate principal amount of the outstanding debt securities of the affected series, and our compliance with any provision of the indenture
with respect to the debt securities may be waived by written notice to the trustee by the holders of a majority in aggregate principal
amount of the outstanding debt securities of the affected series. However, no modification or amendment may, without the consent of the
holder of each outstanding debt security of the affected series:
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reduce
the principal amount, any premium or change the stated maturity of any debt security or alter
or waive any of the provisions with respect to the redemption or repurchase of the debt securities;
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reduce
the rate (or alter the method of computation) of or extend the time for payment of interest,
including defaulted interest, on any debt security;
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waive
a default or event of default in the payment of principal of or premium, if any, or interest
on the debt securities, except a rescission of acceleration of the debt securities by the
holders of at least a majority in aggregate principal amount of the then outstanding debt
securities of such series with respect to a nonpayment default and a waiver of the payment
default that resulted from such acceleration;
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make
the principal of or premium, if any or interest on any debt security payable in currency
other than that stated in the debt securities;
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change
any place of payment where the debt securities or interest thereon is payable;
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make
any change in the provisions of the indenture relating to waivers of past defaults or the
rights of holders of the debt securities to receive payments of principal of or premium,
interest, if any, on the debt securities and to institute suit for the enforcement of any
such payments;
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make
any change in the amendment and waiver provisions listed above; or
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reduce
the percentage in principal amount of any debt securities, the consent of the holders of
which is required for any of the foregoing modifications or otherwise necessary to modify
or amend the indenture or to waive any past defaults.
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Except for certain
specified provisions, the holders of at least a majority in principal amount of the outstanding debt securities of an affected series
may, on behalf of the holders of all debt securities of such series, waive our compliance with provisions of the indenture. Prior to
the acceleration of the maturity of the debt securities of any series pursuant to the terms of the indenture, the holders of a majority
in aggregate principal amount of the outstanding debt securities of such series may, on behalf of the holders of all the debt securities
of such series, waive any past default under the indenture with respect to such debt securities and its consequences, except (1) a default
with respect to such series in the payment of the principal of, or premium or any interest on, the debt securities of such series or
(2) a default or event of default in respect of a covenant or provision that cannot be modified or amended without the consent of all
of the holders of the outstanding debt securities of the affected series.
Defeasance of Debt Securities and
Certain Covenants in Certain Circumstances
Legal Defeasance
The indenture provides
that, in certain circumstances, we may be discharged from any and all obligations in respect of the debt securities of any series (except
for certain obligations to register the transfer or exchange of debt securities, to replace stolen, lost or mutilated debt securities,
and to maintain paying agencies and certain provisions relating to the treatment of funds held by paying agents). We will be so discharged
upon the deposit with the trustee, in trust, of money and/or U.S. government obligations that, through the payment of interest and principal
in accordance with their terms, will provide money in an amount sufficient in the written opinion of a nationally recognized firm of
independent public accountants, a nationally recognized investment bank or a nationally recognized appraisal firm to pay and discharge
each installment of principal, premium and interest in accordance with the terms of the indenture and the debt securities of that series.
This discharge may
occur only if, among other things, we have delivered to the trustee an opinion of counsel stating that we have received from, or there
has been published by, the United States Internal Revenue Service a ruling or, since the date of execution of the indenture, there has
been a change in the applicable United States federal income tax law, in either case to the effect that, and based thereon such opinion
shall confirm that, the beneficial owners of the debt securities of the applicable series will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of the deposit, defeasance and discharge and will be subject to U.S. federal income tax
on the same amounts and in the same manner and at the same times as would have been the case if the deposit, defeasance and discharge
had not occurred.
Defeasance of Certain Covenants
The indenture provides
that, upon compliance with certain conditions, we may be released from our obligation to comply with certain covenants set forth in the
indenture and any supplemental indenture, and any failure to comply with those covenants will not constitute a default or an event of
default with respect to the debt securities of the applicable series, or covenant defeasance.
The conditions include:
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depositing
with the trustee money and/or U.S. government obligations that, through the payment of interest
and principal in accordance with their terms, will provide money in an amount sufficient
in the written opinion of a nationally recognized firm of independent public accountants,
a nationally recognized investment bank or a nationally recognized appraisal firm to pay
and discharge each installment of principal of, premium and interest in accordance with the
terms of the indenture and the debt securities of the applicable series; and
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delivering
to the trustee an opinion of counsel to the effect that the beneficial owners of the debt
securities of the applicable series will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of the deposit and related covenant defeasance and will be
subject to U.S. federal income tax on the same amounts and in the same manner and at the
same times as would have been the case if the deposit and related covenant defeasance had
not occurred.
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PLAN
OF DISTRIBUTION
We may sell our securities in any one
or more of the following ways from time to time:
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to
or through underwriters;
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through
brokers or dealers;
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in
“at the market offerings” within the meaning of Rule 415(a)(4) under the Securities
Act, to or through market maker or into an existing trading market, on an exchange or otherwise;
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directly
by us to purchasers, including through a specific bidding, auction or other process;
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through
a combination of any of these methods of sale; or
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we
may issue the securities as a dividend or distribution or in a subscription rights offering
to our existing security holders.
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The applicable prospectus
supplement will contain the terms of the transaction, including the method of distribution of the securities offered, the proceeds we
will receive from the sale, the name or names of any underwriters, dealers, agents and the respective amounts of securities underwritten
or purchased by them, the initial public offering price of the securities, and the applicable agent’s commission, dealer’s
purchase price or underwriter’s discount. Any dealers and agents participating in the distribution of the securities may be deemed
to be underwriters, and compensation received by them on resale of the securities may be deemed to be underwriting discounts.
Any initial offering price, dealer purchase
price, discount or commission may be changed from time to time.
The securities may
be distributed from time to time in one or more transactions, at negotiated prices, at a fixed price or fixed prices (that may be subject
to change), at market prices prevailing at the time of sale, at various prices determined at the time of sale, at negotiated prices or
at prices related to prevailing market prices.
Offers to purchase
securities may be solicited directly by us or by agents designated by us from time to time. Unless otherwise indicated in the prospectus
supplement, any such agent will use its commercially reasonable efforts to solicit purchases for the period of its appointment or to
sell securities on a continuing basis. Agents may receive compensation in the form of commissions, discounts or concessions from us.
Agents may also receive compensation from the purchasers of the securities for whom they sell as principals. Each particular agent will
receive compensation in amounts negotiated in connection with the sale, which might be in excess of customary commissions. Any such agent
may be deemed to be an underwriter, as that term is defined in the Securities Act, of the securities so offered and sold. Accordingly,
any commission, discount or concession received by them and any profit on the resale of the securities purchased by them may be deemed
to be underwriting discounts or commissions under the Securities Act. We have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their securities. As of the date of this prospectus, there are no special
selling arrangements between any broker-dealer or other person and us. No period of time has been fixed within which the securities will
be offered and sold.
If underwriters
are utilized in the sale of any securities in respect of which this prospectus is being delivered, such securities will be acquired by
the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions,
at fixed public offering prices or at varying prices determined by the underwriters at the time of sale. Securities may be offered to
the public either through underwriting syndicates represented by managing underwriters or directly by one or more underwriters. If any
underwriter or underwriters are utilized in the sale of securities, unless otherwise indicated in the applicable prospectus supplement,
the obligations of the underwriters are subject to certain conditions precedent, and the underwriters will be obligated to purchase all
such securities if they purchase any of them.
If a dealer is utilized
in the sale of the securities in respect of which this prospectus is delivered, we will sell such securities to the dealer as principal.
The dealer may then resell such securities to the public at varying prices to be determined by such dealer at the time of resale. Transactions
through brokers or dealers may include block trades in which brokers or dealers will attempt to sell shares as agent but may position
and resell as principal to facilitate the transaction or in cross trades, in which the same broker or dealer acts as agent on both sides
of the trade. Any such dealer may be deemed to be an underwriter, as such term is defined in the Securities Act, of the securities so
offered and sold.
Offers to purchase
securities may be solicited directly by us, and the sale thereof may be made by us, directly to institutional investors or others who
may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof.
Agents, underwriters
and dealers may be entitled under relevant agreements with us to indemnification by us against certain liabilities, including liabilities
under the Securities Act, or to contribution with respect to payments which such agents, underwriters and dealers may be required to
make in respect thereof. The terms and conditions of any indemnification or contribution will be described in the applicable prospectus
supplement.
Underwriters, broker-dealers
or agents may receive compensation in the form of commissions, discounts or concessions from us. Underwriters, broker-dealers or agents
may also receive compensation from the purchasers of shares for whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular underwriter, broker-dealer or agent will be in amounts to be negotiated in connection with transactions
involving shares and might be in excess of customary commissions. In effecting sales, broker-dealers engaged by us may arrange for other
broker-dealers to participate in the resales.
Any securities offered
other than common stock will be a new issue and, other than the common stock, which is listed on NYSE, will have no established trading
market. We may elect to list any series of securities on an exchange, and in the case of the common stock, on any additional exchange,
but, unless otherwise specified in the applicable prospectus supplement and/or other offering material, we shall not be obligated to
do so. It is possible that one or more underwriters may make a market in a class or series of securities, but the underwriters will not
be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity
of, or the trading market for, any of the securities.
Agents, underwriters
and dealers may engage in transactions with, or perform services for, us or our subsidiaries in the ordinary course of business.
Any underwriter
may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation M under
the Exchange Act. Overallotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions
permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Short covering transactions
involve purchases of the securities in the open market after the distribution is completed to cover short positions. Penalty bids permit
the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a covering
transaction to cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be.
If commenced, the underwriters may discontinue any of the activities at any time. An underwriter may carry out these transactions on
NYSE, in the over-the-counter market or otherwise. The underwriters or agents, as the case may be, are not required to engage in these
activities and, if they engage in any of these activities, may end any of these activities at any time without notice.
The place and time
of delivery for securities will be set forth in the accompanying prospectus supplement. To comply with applicable state securities laws,
the securities offered by this prospectus will be sold, if necessary, in such jurisdictions only through registered or licensed brokers
or dealers. In addition, securities may not be sold in some states absent registration or pursuant to an exemption from applicable state
securities laws.
LEGAL
MATTERS
The validity of the securities offered
by this prospectus have been passed upon for us by Jones Day.
EXPERTS
The
consolidated financial statements of Bally’s Corporation incorporated in this prospectus by reference from the Bally’s Corporation
Annual Report on Form 10-K have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated
in their report, which is incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the
report of such firm given upon their authority as experts in accounting and auditing.
The
financial statements of Columbia Properties Tahoe, LLC d/b/a MontBleu Casino Resort & Spa, as
of and for the year ended December 31, 2020 incorporated in this prospectus by reference from the
Bally’s Corporation Current Report on Form 8-K dated March 16, 2021 have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The
combined financial statements of IOC – Kansas City, Inc. and Rainbow Casino – Vicksburg Partnership, L.P. at December 31,
2019 and 2018, and for each of the two years in the period ended December 31, 2019; the financial statements of Eldorado Resort Casino
Shreveport JTV at December 31, 2019 and 2018 and for each of the two years in the period ended December 31, 2019; and the financial statements
of Columbia Properties Tahoe, LLC d/b/a MontBleu Casino Resort & Spa at December 31, 2019 and for the year then ended; each incorporated
by reference in this prospectus and Registration Statement of Bally's Corporation have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon incorporated by reference herein, and have been incorporated herein by reference in reliance
upon such reports given on the authority of such firm as experts in accounting and auditing.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us
to “incorporate by reference” information into this prospectus and any accompanying prospectus supplement, which means that
we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated
by reference is deemed to be part of this prospectus and any accompanying prospectus supplement, except for any information superseded
by information contained directly in this prospectus, any accompanying prospectus supplement, any subsequently filed document deemed
incorporated by reference or a free writing prospectus prepared by or on behalf of us. This prospectus and any accompanying prospectus
supplement incorporates by reference the documents set forth below that we have previously filed with the SEC (other than information
deemed furnished and not filed in accordance with SEC rules, including Items 2.02 and 7.01 of Form 8-K or certain exhibits
furnished pursuant to Item 9.01 of Form 8-K). These documents contain important information about us and our finances.
We incorporate by
reference in this prospectus the following documents or information filed or to be filed with the SEC:
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our
Annual Report on Form 10-K
for the year ended December 31, 2020, filed March 10, 2021;
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the
portions of our Definitive Proxy Statement on Schedule
14A filed April 6, 2020 that are incorporated by reference into Part III of our Annual
Report on Form 10-K for the year ended December 31, 2019;
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our
Current Reports on Form 8-K filed January
13, 2021, January
22, 2021, January
25, 2021, February
3, 2021, February
8, 2021, February
12, 2021, February
26, 2021 and March
16, 2021; and
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the
description of our common stock contained in our Form
8-A filed with the SEC on March 27, 2019, as updated by the description of our common
stock contained in Exhibit
4.5 to the Form 10-K and including any amendments or reports filed for the purpose of
updating such description.
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We also incorporate
by reference into this prospectus all documents that are filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act (1) after the date of the registration statement of which this prospectus forms a part and prior to effectiveness
of the registration statement, and (2) after the date of this prospectus and any accompanying prospectus supplement and before the termination
of the offering shall also be deemed to be incorporated herein by reference. We are not, however, incorporating by reference any documents
or portions thereof, whether specifically listed above or filed in the future, that are not deemed “filed” with the SEC,
including any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or certain exhibits furnished pursuant to Item 9.01
of Form 8-K.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We file annual,
quarterly and current reports and other information with the SEC under the Exchange Act. This material is available from the SEC’s
website at http://www.sec.gov or from our website at www.ballys.com. Information available on our website, other than the reports we
file pursuant to the Exchange Act that are incorporated by reference in this prospectus, does not constitute a part of this prospectus.
We will provide
to each person, including any beneficial owner, to whom a prospectus is delivered, upon written or oral request at no cost to the requester,
a copy of any or all of the reports or documents that have been incorporated by reference in this prospectus but not delivered with this
prospectus. Requests for these reports or documents must be made to our investor relations team at 100 Westminster Street, Providence,
Rhode Island 02903 or by telephone at (401) 475-8474.
Any statement contained
or incorporated by reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent
that a statement contained in this prospectus, or in any subsequently filed document which also is incorporated herein by reference,
modifies or supersedes such earlier statement. Any statement so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this prospectus. Any statement made in this prospectus concerning the contents of any contract, agreement
or other document is only a summary of the actual contract, agreement or other document. If we have filed or incorporated by reference
any contract, agreement or other document as an exhibit to the registration statement, you should read the exhibit for a more complete
understanding of the document or matter involved. Each statement regarding a contract, agreement or other document is qualified by reference
to the actual document.
You should not assume
that the information contained in this prospectus and the documents incorporated into this prospectus by reference is correct on any
date after their respective dates, even though this prospectus is delivered, or securities are sold, on a later date.
Bally’s
Corporation
5,000,000 % Tangible Equity Units
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Joint Book-Running
Managers
Deutsche
Bank Securities
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Goldman Sachs & Co. LLC
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Barclays
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Citizens Capital Markets
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Truist Securities
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Fifth Third Securities
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Capital One Securities
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