Item 1.01 Entry into a Material Definitive Agreement.
Additional Financing
On April 15, 2022 certain subsidiaries of Redbox Entertainment Inc., a Delaware
corporation (the "Company" or "Redbox") entered into the Sixth Amendment (as
defined below) to that certain Credit Agreement, dated October 20, 2017, with
HPS Investment Partners, LLC, a Delaware limited liability company ("HPS").
Pursuant to the Sixth Amendment, an additional $50,000,000 in financing under
the Credit Agreement will be made available to the Company. The information
contained in Item 2.03 is incorporated herein by reference.
Voting and Support Agreement
In connection with the Sixth Amendment, on April 15, 2022, the Company entered
into a Voting and Support Agreement (the "Voting and Support Agreement") with AP
VIII Aspen Holdings, L.P., a Delaware limited partnership ("Aspen") Seaport
Global SPAC, LLC, a Delaware limited liability company ("Seaport") and Redwood
Holdco, LP, a Delaware limited partnership ("Redwood", together with Seaport and
Aspen, the "Stockholders"), pursuant to which the Stockholders agreed to vote
their shares of the Company (i) in favor of any strategic transaction approved
and recommended by the Company's Board of Directors (the "Board"), or any
committee to which the Board delegates authority, subject to certain terms and
conditions (each, a "Transaction"), (ii) in opposition to any transaction
involving the Company that has not been approved and recommended by the Board,
and (iii) in favor of any directors that are proposed or nominated to the Board
by the Company at any annual meeting of the Company.
The Company further agreed, pursuant to the Voting and Support Agreement, to (i)
permanently reduce a portion of its revolving commitments in an amount equal to
$10,600,000 pursuant to that certain Credit, Security, Guaranty and Pledge
Agreement, dated as of December 29, 2020 (as amended by that certain Consent,
Waiver and Amendment to the Credit Agreement, dated as of May 16, 2021, the
"MUFG Credit Agreement"), among Redbox Entertainment, LLC, as borrower, the
guarantors referred to therein, the lenders referred to therein and MUFG Union
Bank, N.A., as administrative agent for the lenders therein, and (ii) among
other agreements, refrain from borrowing under the MUFG Credit Agreement without
the consent of Aspen and Redwood (other than with respect to certain scheduled
borrowings and borrowings to cover interest, fees and expenses).
Board of Directors
In connection with the execution of the Sixth Amendment, the Company agreed to
implement certain changes to the composition and size of the board of directors.
Waiver to Tax Receivable Agreement
In connection with the Company's entry into the Voting and Support Agreement,
Redwood permanently waived the "Early Termination Payment" by the Company (or an
affiliate) to Redwood that could have resulted from a provision in that certain
Tax Receivable Agreement dated as of October 22, 2021 ("TRA"), which would have
been triggered upon the change to the Board's composition as described herein.
Additionally, under the Voting and Support Agreement, the Company and Redwood
agreed, in connection with the consummation of a Transaction, to (a) terminate
the TRA upon the consummation of a Transaction and (b) waive all claims under
the TRA with such waiver being effective upon the consummation of such
Transaction.
Consent and Waivers to the Stockholders Agreement
Seaport and Redwood are parties to that certain Stockholders Agreement, dated
October 22, 2021 ("the "Stockholders Agreement") and have, along with their
applicable governing entities and Aspen (collectively, the "Consenting Parties",
and each, a "Consenting Party") agreed to provide such consents as required
under the Stockholders Agreement, and to waive certain rights, as applicable,
under the Stockholders Agreement, or under any other applicable organizational
document, stockholder agreement, investor rights or similar agreement which such
Consenting Party is a party or beneficiary, in connection with certain matters
related to the nomination, election and resignation of directors of the Company,
the size of the board of directors of the Company, entry into the Voting and
Support Agreement and entry into the waiver to the TRA, as applicable.
Additionally, the Consenting Parties, as applicable, waive certain consent
rights in connection with the additional financing.
Warrant Agreement
As a further condition to the effectiveness of the Sixth Amendment (as defined
below), the Company has agreed to issue HPS and certain affiliates warrants with
an exercise price of $0.0001 per share (the "Warrants") to purchase such number
of shares of Class A common stock of the Company ("Common Stock") not to exceed
19.9% of either (i) the total number of the Company's outstanding Equity
Interests (as defined in the Warrant Agreement) on the date hereof or (ii) the
total voting power of the outstanding Company's Equity Interests on the date
hereof without approval of the Company's stockholders. The number of shares of
Common Stock issuable upon exercise of the Warrants are subject to customary
anti-dilution provisions for stock splits, stock dividends and similar
transactions.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On April 15, 2022, Redwood Intermediate, LLC, a Delaware limited liability
company ("Holdings"), Redbox Automated Retail, LLC, a Delaware limited liability
company (the "Borrower"), and Redbox Incentives LLC, an Illinois limited
liability company, and HPS, entered into an Incremental Assumption and Amendment
Agreement No. 6, dated as April 15, 2022 (the "Sixth Amendment"), amending that
certain Credit Agreement, dated as of October 20, 2017 (as amended by that
certain Incremental Assumption and Amendment Agreement, dated as of September 7,
2018, that certain Amendment No. 2, dated as of September 30, 2020, that certain
Amendment No. 3, dated as of December 28, 2020, that certain Incremental
Assumption and Amendment Agreement No. 4, dated as of January 29, 2021, that
certain Amendment No. 5, dated as of May 16, 2021, and that certain Consent
Agreement to Amendment No. 5, dated as of October 11, 2021, the "Credit
Agreement" and, as further amended by the Sixth Amendment, the "Amended Credit
Agreement"), by and among, the Borrower, Holdings, the Lenders (as defined
therein) party thereto and HPS, in its capacities as administrative agent for
the Lenders and as Agent for the Secured Parties (as defined therein) (in such
capacities, the "Administrative Agent"), pursuant to which the Sixth Amendment
Incremental Revolving Lenders (as defined in the Amended Credit Agreement) will
make available to the Borrower Sixth Amendment Incremental Revolving Commitments
(as defined in the Amended Credit Agreement) in an aggregate amount equal to
$50,000,000, the proceeds of which will be used to make payments in accordance
with the Budget Plan (as defined in the Amended Credit Agreement) and pay
certain fees and expenses. The information contained in Item 1.01 is
incorporated herein by reference.
The foregoing descriptions of the Sixth Amendment, Voting and Support Agreement,
Warrant Agreement and related agreements discussed herein do not purport to be
complete and are qualified in their entirety by reference to the full text of
each agreement, copies of which will be subsequently filed with the Company's
next quarterly report.
Item 3.03 Material Modification to Rights of Security Holders
The information contained in Item 1.01 with respect to the Consent and Waivers
of the Stockholders Agreement is incorporated herein by reference.
Item 7.01 Regulation FD
The Company is filing on a concurrent basis its Annual Report on Form 10-K for
the fiscal year ended December 31, 2021. The Company expects to provide updated
financial results and guidance for fiscal year 2022 in conjunction with its
release of financial results for the first quarter for fiscal year 2022 in May.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this form may contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements include statements regarding the Company's current expectations
regarding the transaction described in this Form 8-K, actions relating to
exploration of strategic alternatives, and hopes, beliefs, intentions or
strategies regarding future events or future results. Forward-looking statements
are not guarantees of future actions, results, performance or events, which may
vary materially from those expressed or implied in such statements. Differences
may result from actions taken by the Company or its management, as well as from
risks and uncertainties beyond their control. Such risks and uncertainties
include, but are not limited to, the impact of the novel coronavirus and the
response to it by Redbox, consumers, and the industry; changes adversely
affecting the business in which Redbox is engaged; results and timing of
Redbox's exploration of strategic alternatives with respect to our corporate or
capital structure; fluctuations in Redbox's revenue and operating results;
unfavorable conditions or further disruptions in the capital and credit markets
and Redbox's ability to obtain additional capital on commercially reasonable
terms; Redbox's ability to generate cash, service indebtedness and incur
additional indebtedness; substantial doubt about Redbox's ability to continue as
a going concern; the risks associated with demand for Redbox's services and
vulnerability to industry downturns and regional or national downturns; the
ability to maintain the listing of our Class A common stock and Public Warrants
on Nasdaq; our success in retaining or recruiting, or changes required in, our
officers, key employees or directors; the risks associated with cyclical demand
for Redbox's services and vulnerability to industry downturns and regional or
national downturns; competition from existing and new competitors; Redbox's
ability to integrate any businesses it acquires; Redbox's dependence upon third
parties to provide certain content and services; intellectual property,
information technology and privacy requirements that may subject Redbox to
unanticipated liabilities; and general economic or political conditions. The
foregoing list of risks and uncertainties is illustrative but by no means
exhaustive. For more information on factors that may affect Redbox, please
review the "Risk Factors" and other disclosures described in Redbox's (and
previously Seaport Global Acquisition's) public reports filed with the SEC,
including the Annual Report on Form 10-K for the fiscal year ended December 31,
2021, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and the
definitive proxy statements filed with the SEC in connection with the
solicitation of proxies for the meeting of stockholders that approved the
business combination between Redbox and Seaport. These forward-looking
statements reflect Redbox's expectations as of the date of this release. Except
as required by laws, Redbox undertakes no obligation to update the information
provided herein.
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