Item 1.01. Entry into a Material Definitive Agreement.
The information set forth in Item 7.01 with regard to the Second Amendment (as
defined below) is incorporated by reference into this Item.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 7.01 with regard to the Second Amendment (as
defined below) is incorporated by reference into this Item.
Item 7.01. Regulation FD Disclosure.
On October 19, 2020, Dave & Buster's Entertainment, Inc. (the "Company") issued
a press release announcing the commencement of a private offering of senior
secured notes (the "Notes") by its indirect subsidiary, Dave & Buster's, Inc.
(the "Issuer"), a copy of which is attached hereto as Exhibit 99.1 and is
incorporated herein by reference. The Notes are being offered for sale in
transactions exempt from registration under the U.S. Securities Act of 1933, as
amended (the "Securities Act") to qualified institutional buyers pursuant to
Rule 144A under the Securities Act, and to non-U.S. persons outside the United
States in compliance with Regulation S under the Securities Act. As a result,
they may not be offered or sold in the United States or to, or for the benefit
of, any U.S. persons except pursuant to an applicable exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
The Notes will be guaranteed by the same subsidiaries of the Company that
currently guarantee its Term Loan Facility (the "Term Loan Facility") and
Revolving Credit Facility (the "Revolving Credit Facility," and, together with
the Term Loan Facility, the "Credit Facility").
In connection with the Notes offering, on October 16, 2020, the Issuer entered
into a second amendment (the "Second Amendment") to the Credit Facility, the
effectiveness of which is conditioned upon the issuance of the Notes. Among
other modifications, the Second Amendment provides that:
? the Revolving Credit Facility maturity date will be extended for two years
until August 17, 2024;
? the total leverage ratio will not be tested until the earlier of (a) the
fiscal quarter ending on or about April 30, 2022 or (b) at the Issuer's
election, the last date of the fiscal quarter immediately preceding the date on
which financial statements are delivered in which the total leverage ratio
covenant is less than or equal to 3.50:1.00 and the fixed charge coverage ratio
is not less than 1.25:1.00 (the period through the end of the applicable fiscal
quarter in (a) or (b) is referred to as the "Second Amendment Suspension
Period"), and at such time will commence at the following levels (the
"Applicable Financial Covenant Level"): for the fiscal quarter ending on or
about April 30, 2022, at the level of 4.75:1.00, for the fiscal quarter ending
on or about July 31, 2022, at the level of 4.00:1.00, for the fiscal quarters
ending on or about October 31, 2022 and January 31, 2023, at the level of
3.75:1.00 and thereafter (or at such earlier time at the Issuer's election) at
the existing level of 3.50:1.00;
? the fixed charge coverage ratio will not be tested until the end of the
Second Amendment Suspension Period, and at such time and for any fiscal quarter
ended thereafter, will commence at the existing level of 1.25:1.00;
? incremental debt under the Credit Facility may be incurred in an amount not
to exceed the sum of (i) up to $50 million; provided, amounts available under
this clause (i) may only be utilized if the secured net leverage ratio does not
exceed 3.50:1.00 calculated on a pro forma basis plus (ii) an unlimited amount
so long as the secured net leverage ratio does not exceed 2.75:1.00;
? during the period from the effective date of the Second Amendment until the
end of the Second Amendment Suspension Period, provide for monthly reporting of
(i) a calculation of the $150 million minimum liquidity covenant and (ii) 13
week cash flow information including a tabular presentation for the pertinent
periods of projected and actual cash flows and variance between the same;
? if the Issuer holds any cash and cash equivalents that is unrestricted on
the balance sheet (including cash and cash equivalents in deposit accounts
subject to control agreements in favor of the Credit Facility collateral agent
that is not otherwise restricted) in excess of $100 million then it shall apply
any amounts in excess of such threshold to repay the Revolving Credit Facility
(with ability to redraw);
? a carve out for purposes of certain elements of the definition of "Material
Adverse Effect" under the Credit Facility that the impact of the COVID-19
pandemic on the Issuer will be disregarded, will apply until quarterly financial
statements have been delivered for the fiscal quarter ending on or about April
30, 2023; and
? exceptions to a number of covenants (including incurrence of debt,
limitation on liens, limitation on restricted payments, junior debt repayments,
and limitation on sale/leasebacks, among others) will be unavailable to the
Issuer until such date (a) which is the earlier of the date financial statements
have been delivered for the fiscal quarter ending on or about April 30, 2023
demonstrating compliance with a total leverage ratio less than or equal to the
Applicable Financial Covenant Level and interest coverage ratio no less than
1.25:1.00 (or, at the Issuer's election, the date on which financial statements
have been delivered demonstrating compliance with a total leverage ratio less
than or equal to 3.50:1.00 and interest coverage ratio no less than 1.25:1.00)
and (b) no event of default has occurred and is continuing, with an exception to
allow for the issuance of the Notes.
The Revolving Credit Facility will bear interest at LIBOR plus 4.00%, with a
LIBOR floor of 1.00%, and the undrawn fee will be 0.50% per annum on the actual
daily amount of unused commitments under the Revolving Credit Facility, in each
case, until the date the financial statements are delivered for the fiscal
quarter ending on or about April 30, 2022 demonstrating compliance with a total
leverage ratio less than or equal to the Applicable Financial Covenant Level and
fixed charge coverage ratio not less than 1.25:1.00 (the "Financial Covenant
Suspension Increased Pricing Period"). In addition, during the same time period,
the Revolving Credit Facility shall be subject to an additional utilization fee
of 1.00% per annum on the actual daily outstanding principal amount of revolving
loans made, and the face amount of letters of credit issued, under the Revolving
Credit Facility (which utilization fee shall be due and payable on the maturity
date of the Revolving Credit Facility).
After the Financial Covenant Suspension Increased Pricing Period, the Revolving
Credit Facility will bear interest subject to a pricing grid based on a total
leverage ratio, at LIBOR plus a spread ranging from 1.25% to 3.00%, with a LIBOR
floor of 1.00%. In addition, no utilization fee will be payable with respect to
the Revolving Credit Facility after the Financial Covenant Suspension Increased
Pricing Period and the undrawn fee will be subject to a pricing grid ranging
from 0.20% to 0.40% per annum on the actual daily amount of the unused
commitments under the Revolving Credit Facility based on a total leverage ratio.
The effectiveness of the Second Amendment is also subject to the satisfaction of
certain conditions precedent, including the issuance of the Notes in an
aggregate principal amount of not less than $425,000,000, and application of
proceeds of the Notes to repay the Term Loan Facility in full and outstanding
loans under the Revolving Credit Facility in part. The Notes offering is also
cross-conditioned on the effectiveness of the Second Amendment.
Safe Harbor Statement.
Statements contained in this disclosure that state expectations or predictions
about the future are forward-looking statements intended to be covered by the
safe harbor provisions of the Securities Act and the Exchange Act. The
Registrant's actual results could differ materially from those projected in such
forward-looking statements. Factors that could affect those results include
"Risk Factors" and the other factors appearing in the documents that the
Registrant has filed with the Securities and Exchange Commission.
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