Item 1.01. Conclusion of a significant definitive agreement.
Term credit agreement
On September 2, 2022, GLP Capital, LP (“GLP”), the operating partnership of Gaming and Leisure Properties, Inc. (“GLPI”), entered into a term credit agreement (the “Term Credit Agreement ”) with Wells Fargo Bank, National Association, as administrative agent (“Term Loan Agent”), and other agents and lenders parties thereto from time to time, providing for a deferred draw credit facility of $600 million with a maturity date of September 2, 2027 (the “Term Credit Facility”). The term credit facility is guaranteed by GLPI.
Availability of loans under the Term Credit Facility is subject to customary conditions, including pro forma fulfillment of financial covenants, and receipt by the Term Lending Agent of a conditional guarantee of the Credit Facility. term by Bally’s Corporation (“Bally’s”) on a secondary basis, subject to the application of all remedies against GLP, GLPI and all sources other than Bally’s. Loans under the Term Credit Facility may be used only to finance a portion of the purchase price of the acquisition of one or more specified properties from Bally’s in one or a series of related transactions (the “Acquisition”) and to pay the fees, costs and expenses incurred in connection therewith.
Subject to customary conditions, including pro forma compliance with financial covenants, GLP may obtain additional term loan commitments and incur additional term loans under the term credit agreement, so long as the total amount of the principal of all term loans outstanding under the term credit facility does not exceed $1.2 billion plus up to $60 million of transaction fees and costs incurred in connection with the acquisition . There is currently no commitment with respect to these additional loans and commitments.
Interest Rates and Fees
Annual interest rates applicable to loans under the Term Credit Facility are, at GLP’s option, equal to either a rate based on SOFR or a base rate plus an applicable margin, which varies from 0.85% to 1.7% per year for SOFR loans. and 0.0% to 0.7% per annum for base rate loans, in each case, depending on the credit ratings assigned to the term credit facility. The currently applicable margin is 1.30% for SOFR loans and 0.30% for base rate loans. In addition, GLP will pay a commitment fee on unused commitments under the term credit facility at a rate ranging from 0.125% to 0.3% per annum, depending on the credit ratings assigned to the credit facility of time to time. The current rate of the commitment fee is 0.25%.
Amortization and installments
The term credit facility is not subject to interim amortization. GLP is required to prepay outstanding term loans with 100% of the net cash proceeds from the issuance of other debt securities which are unconditionally guaranteed by GLPI and conditionally guaranteed by Bally’s (“Alternative Acquisition Debt ”) that are received by GLPI, GLP or any of their affiliates after the funding date of the term loan facility (other than additional term loans under the term loan agreement and loans under under the Bridge Revolving Facility (as defined below)), except to the extent that such net cash proceeds are used to repay outstanding loans under the Bridge Revolving Facility. GLP is not otherwise obligated to repay borrowings under the Term Credit Facility prior to maturity. GLP may prepay all or part of the loans under the Term Credit Facility prior to maturity without premium or penalty, subject to reimbursement of all Lenders’ SOFR break fees and may re-borrow loans it has reimbursed. Unused covenants under the Term Credit Facility automatically terminate on August 31, 2023.
Certain covenants and events of default
The Term Credit Facility contains customary covenants which, among other things, restrict, subject to certain exceptions, the ability of GLPI and its subsidiaries, including GLP, to grant liens on their assets, incur indebtedness, sell assets, make acquisitions, mergers or consolidations, or pay certain dividends and make other restricted payments. Financial covenants include the following, which are measured quarterly on a rolling four-quarter basis: (i) maximum ratio of total debt to total asset value, (ii) maximum ratio of secured debt first lien on total asset value, (iii) maximum certain recourse debt to unencumbered asset value ratio, and (iv) minimum fixed charge coverage ratio. GLPI is required to maintain its status as a real estate investment trust (“REIT”) and is authorized to pay dividends to its shareholders as necessary in order to maintain its status as a REIT. GLPI is also authorized to pay other dividends