UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
Indentures
On November 26, 2019, Scientific Games International, Inc. (“SGI”), a wholly owned subsidiary of Scientific Games Corporation (the “Company”), issued $1,200.0 million in aggregate principal amount of senior unsecured notes, which was comprised of $700.0 million of senior unsecured notes due 2028 (the “2028 Notes”) and $500.0 million of senior unsecured notes due 2029 (the “2029 Notes” and, together with the 2028 Notes, the “Notes”) in a private offering to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons under Regulation S under the Securities Act. The 2028 Notes were issued pursuant to an Indenture, dated as of November 26, 2019 (the “2028 Notes Indenture”), among SGI, as issuer, the Company, the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, and the 2029 Notes were issued pursuant to an Indenture, dated as of November 26, 2019 (the “2029 Notes Indenture” and, together with the 2028 Notes Indenture, the “Indentures”), among SGI, as issuer, the Company, the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee.
The 2028 Notes bear interest at the rate of 7.000% per annum, which accrues from November 26, 2019 and is payable semiannually in arrears on May 15 and November 15 of each year, beginning on May 15, 2020. The 2029 Notes bear interest at the rate of 7.250% per annum, which accrues from November 26, 2019 and is payable semiannually in arrears on May 15 and November 15 of each year, beginning on May 15, 2020.
SGI may redeem some or all of the 2028 Notes at any time prior to May 15, 2023, at a redemption price equal to 100% of the principal amount of the 2028 Notes plus accrued and unpaid interest, if any, to the date of redemption plus a “make whole” premium. SGI may redeem some or all of the 2028 Notes at any time on or after May 15, 2023 at the prices specified in the 2028 Notes Indenture. In addition, at any time on or prior to November 15, 2022, SGI may redeem up to 40% of the initially outstanding aggregate principal amount of the 2028 Notes at a redemption price of 107.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, with the net cash proceeds contributed to the capital of the Company from one or more equity offerings of the Company.
SGI may redeem some or all of the 2029 Notes at any time prior to November 15, 2024, at a redemption price equal to 100% of the principal amount of the 2029 Notes plus accrued and unpaid interest, if any, to the date of redemption plus a “make whole” premium. SGI may redeem some or all of the 2029 Notes at any time on or after November 15, 2024 at the prices specified in the 2029 Notes Indenture. In addition, at any time on or prior to November 15, 2022, SGI may redeem up to 40% of the initially outstanding aggregate principal amount of the 2029 Notes at a redemption price of 107.250% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, with the net cash proceeds contributed to the capital of the Company from one or more equity offerings of the Company.
Additionally, if a holder of the Notes is required to be licensed, qualified or found suitable under any applicable gaming laws or regulations and that holder does not become so licensed or qualified or is not found to be suitable, then SGI will have the right to, subject to certain notice provisions set forth in the Indentures, (i) require that holder dispose of all or a portion of those Notes or (ii) redeem the Notes of that holder at a redemption price calculated as set forth in the Indentures. If the Company or SGI experiences specific kinds of changes in control or the Company or any of its restricted subsidiaries sells certain of its assets, then SGI must offer to repurchase the Notes on the terms set forth in the Indentures.
The Notes are senior obligations of SGI, rank equally with all of its existing and future senior debt, and rank senior to all of its existing and future debt that is expressly subordinated to the Notes. The Notes are guaranteed on a senior unsecured basis by the Company and all of its wholly owned domestic restricted subsidiaries (other than SGI and certain immaterial subsidiaries), subject to customary exceptions. The guarantees of the Notes are the guarantors’ senior obligations, rank equally with all of their existing and future senior debt, and rank senior to all of their existing and future debt that is expressly subordinated to the guarantees of the Notes. The Notes are structurally subordinated to all of the liabilities of the Company’s non-guarantor subsidiaries.
The Indentures contain certain covenants that, among other things, limit the Company’s ability, and the ability of certain of its subsidiaries, to incur additional indebtedness, pay dividends or make distributions or certain other restricted payments, purchase or redeem capital stock, make investments or extend credit, engage in certain transactions with affiliates, consummate certain assets sales, effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all of its assets, or create certain liens and other encumbrances on its assets.
The Indentures contain events of default customary for agreements of their type (with customary grace periods, as applicable) and provide that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or SGI, all outstanding Notes will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare all of the Notes issued under such Indenture to be due and payable immediately.
The net proceeds of the Notes offering, together with cash on hand and borrowings under the existing revolving credit facility, will be used to redeem all $1,200 million of SGI’s outstanding 10.000% senior unsecured notes due 2022, redeem all $244 million of SGI’s outstanding 6.250% senior subordinated notes due 2020, pay accrued and unpaid interest thereon plus any related premiums, fees and expenses, and pay related fees and expenses of the Notes offering.
The foregoing descriptions of the Indentures do not purport to be complete and are qualified in their entirety by the full text of these agreements, copies of which are attached hereto as Exhibits 4.1 and 4.2, respectively, all of which are incorporated herein by reference.
Item 7.01. Regulation FD disclosure.
On November 26, 2019, the Company issued a press release announcing the closing of the issuance of the Notes. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained under Item 7.01 in this Current Report on Form 8-K (this “Report”), including Exhibit 99.1, is being furnished and, as a result, such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
This Report, including Exhibit 99.1, does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offering, solicitation or sale would be unlawful.
This Report, including Exhibit 99.1, contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. These forward-looking statements involve certain risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements, as discussed further in the press release attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SCIENTIFIC GAMES CORPORATION | |||
| Date: November 26, 2019 | By: | /s/ Michael A. Quartieri | |
| Name: | Michael A. Quartieri | ||
| Title: | Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary | ||