US$400,000,000 5¾% Senior Notes due 2026
Regulation S Notes: CUSIP G6019WSS8, ISIN USG6019WSS81
Rule 144A Notes: CUSIP 59010QAB2, ISIN US59010QAB23
Merlin Entertainments plc (the "Issuer") today announced that it will solicit (the "Solicitation") consents (the "Consents") from holders of the Notes to amend certain provisions (the "Proposed Amendments") contained in the indenture dated as of May 9, 2018 (the "Indenture"), between, among others, the Issuer and Deutsche Trustee Company Limited as trustee (the "Trustee"), governing the Notes.
The Consent Solicitation Statement
The Solicitation is being made solely on the terms and subject to the conditions set forth in the consent solicitation statement dated as of the date hereof (the "Consent Solicitation Statement"), copies of which are available from D.F. King & Co., Inc. (the "Information and Tabulation Agent") using the contact details below.
A copy of this announcement has been published today on the Issuer's website at: https://www.merlinentertainments.biz/recommended-offer/
Background to the Solicitation
The Solicitation is being undertaken in connection with the proposed acquisition by Motion Acquisition Limited ("Bidco") of the entire issued and to be issued share capital of the Issuer, other than the shares in the Issuer owned or controlled by KIRKBI Invest A/S (the "Acquisition"). Bidco is a newly incorporated company, formed on behalf of KIRKBI Invest A/S ("KIRKBI"), funds advised by Blackstone Core Equity Advisors L.L.C. ("Blackstone Core Equity Partners") and Canada Pension Plan Investment Board ("CPPIB" and together with KIRKBI and Blackstone Core Equity Partners, the "Consortium").
The Acquisition is expected to result in a Change of Control (as defined in the Indenture), which may trigger a Change of Control Repurchase Event (as defined in the Indenture).
The purpose of the Proposed Amendments is therefore to amend certain definitions in the Indenture to allow the Consortium to complete the Acquisition without the Acquisition causing a Change of Control and therefore without triggering a Change of Control Repurchase Event and the requirement under Section 4.9 of the Indenture for the Issuer to make a Change of Control Offer (as defined in the Indenture) to holders of the Notes ("Holders").
The effect of the Proposed Amendments will be that the Holders effectively waive any right to claim that a Change of Control has occurred following the Scheme Effective Date (as defined in the Consent Solicitation Statement) or the Takeover Offer Effective Date (as defined in the Consent Solicitation Statement), as applicable, which the Issuer at present expects to be during the fourth quarter of 2019.
Adoption under the Indenture of the Proposed Amendments requires the Consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding (the "Required Consents").
Timetable for the Solicitation
The Solicitation will expire at 5:00 p.m., New York City time, on September 17, 2019, unless extended by the Issuer in its sole discretion (such date and time, as it may be extended, the "Expiration Time"). The Issuer anticipates that promptly after receipt of the Required Consents on or prior to the Expiration Time (the "Effective Time"), it will give notice by way of an officer's certificate to the Trustee that the Required Consents have been received, and the Issuer and the Trustee will execute a supplement to the Indenture (the "Supplemental Indenture") at a convenient time as soon as practicable thereafter to give effect to the Proposed Amendments.
The Proposed Amendments will become operative upon payment of the Consent Payment (as defined below).
If the Proposed Amendments are approved and the Supplemental Indenture is executed, the Proposed Amendments will bind all holders of the Notes, including those that did not provide a Consent, but the Proposed Amendment will become operative only upon the payment of the Consent Payment. The Solicitation is subject to the satisfaction of certain customary conditions.
The consideration paid to Holders for any Consent validly delivered prior to the Expiration Time and not validly revoked prior to the Effective Time will be US$2.50 for each US$1,000 principal amount of the Notes (the "Consent Payment"), and will be payable by or on behalf of the Issuer on the Initial Closing Date or such earlier date after the Expiration Time as determined by the Issuer in its sole discretion.
If the Proposed Amendments become operative, the holders of the Notes who did not consent to the Proposed Amendments on or prior to the Expiration Time, and the holders of the Notes whose consents were revoked on or prior to the Effective Time, including any transferees of the Notes from such holders of the Notes, will still be bound by the Proposed Amendments and will not receive a Consent Payment.
If the Initial Closing Date does not occur on or prior to March 31, 2020, the Solicitation will automatically terminate and therefore (i) no Consent Payment will be paid, (ii) the Proposed Amendments will not become operative and (iii) the Supplemental Indenture will automatically terminate and no longer be effective.
No Consent Payment will be made unless the Acquisition and the other conditions described in the Consent Solicitation Statement to the payment thereof are satisfied or, if applicable, waived. Members of the Consortium have agreed to indemnify the Issuer for all fees, costs, expenses and liabilities incurred in relation to the Solicitation, subject to the terms of such arrangements.
Other Information Regarding the Issuer and the Acquisition
The Issuer and its subsidiaries (the "Group") are a global leader in location-based, family entertainment. As Europe's largest and the world's second-largest visitor attraction operator, the Group operates over 130 attractions, 20 hotels and 6 holiday villages in 25 countries and across 4 continents. The Group's purpose is to deliver memorable experiences to over 67 million guests around the world, through its iconic global and local brands, and the commitment and passion of its c.28,000 employees (peak season). The Group is headquartered in Poole, Dorset, United Kingdom.
For the 52 weeks ended December 29, 2018, the Group had revenues of £1.7 billion and underlying EBITDA of £494 million. Reflecting its longstanding strategy of diversification and global expansion, the Issuer generates approximately 70% of revenue from outside of the United Kingdom.
Bidco has informed the Issuer that on June 28, 2019, Bidco entered into an interim facilities agreement (as amended and supplemented from time to time) with, among others, Bank of America Merrill Lynch International Designated Activity Company and Deutsche Bank AG, London Branch (as interim lenders) and Deutsche Bank AG, London Branch (as interim facility agent and interim security agent) which provides for (i) certain interim term facilities in aggregate principal amounts equal to £2,177,000,000 (equivalent) (the "Interim Term Facilities") and (ii) an interim bridge facility in an aggregate principal amount equal to GBP 785,000,000 (equivalent) (the "Interim Bridge Facility"), in each case, to finance a portion of the purchase price for the Acquisition, refinance certain existing Indebtedness of the Group and pay fees and expenses in connection with the Acquisition and related transactions. Bidco has informed the Issuer that it is anticipated that the amount of gross proceeds from the Interim Bridge Facility, or any replacement thereof, utilized in connection with the Acquisition will be reduced to GBP 635,000,000 (equivalent) as the result of an increase in the equity investment to be made by the Consortium in connection with the Acquisition.
In connection with the Acquisition, the Issuer also understands that Bidco expects the Issuer to redeem the €500 million aggregate principal amount of its 2¾% Senior Notes due 2022 issued on March 19, 2015 and the additional €200 million aggregate principal amount of its 2¾% Senior Notes due 2022 issued on March 17, 2017 (collectively, the "2022 Notes"). On the basis of information given to the Issuer by Bidco, the Issuer expects to redeem the 2022 Notes in full on or about the Initial Closing Date.
On the basis of information provided by Bidco, the Issuer expects that following the Initial Closing Date, upon a grant of security interests in favor of the Interim Term Facilities or certain other Indebtedness of the Group, including any term loans entered into to refinance the Interim Term Loans (collectively, the "New Indebtedness"), it will grant equal and ratable security to the Notes to the extent required under the Indenture. The Issuer also understands that to the extent required under the Indenture, any Subsidiary of the Issuer that Guarantees the New Indebtedness but does not guarantee the Notes, will provide a Note Guarantee in favor of the Notes upon the terms described in the Indenture.
Terms and expressions used but not defined herein shall have the meanings given to them in the Consent Solicitation Statement or the Indenture, as applicable.
Copies of the Consent Solicitation Statement may be obtained from the Information and Tabulation Agent using the contact details below.
Holders of the Notes are urged to review the Consent Solicitation Statement for the detailed terms of the Solicitation and the procedures for consenting to the Proposed Amendments. Before making a decision with respect to the Solicitation, Holders should carefully consider all of the information in the Consent Solicitation Statement and, in particular, the risk factors described in the section entitled "Certain Significant Considerations". Any persons with questions regarding the Solicitation should contact Deutsche Bank AG, London Branch and Merrill Lynch International (the "Solicitation Agents") using the contact details below. The Solicitation Agents do not take responsibility for the contents of this announcement or make any representation or recommendation whatsoever regarding the Solicitation.
If any Holder is in any doubt as to the action it should take, it is recommended to seek its own advice, including as to any tax consequences, from its stockbroker, bank manager, solicitor, accountant or other independent adviser.
Under no circumstances shall this announcement or the Consent Solicitation Statement constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for the Notes in any jurisdiction.
The Solicitation is not being made to, and no consents are being solicited from, holders or beneficial owners of the Notes in any jurisdiction in which it is unlawful to make such solicitation or grant such consents. However, the Issuer may, in its sole discretion and in compliance with any applicable laws, take such actions as it may deem necessary to solicit consents in any jurisdiction and may extend the Solicitation to, and solicit consents from, persons in such jurisdiction.
The making of the Solicitation may be restricted by law in some jurisdictions. Persons into whose possession the consent solicitation statement comes must inform themselves about and observe these restrictions.
This announcement contains inside information within the meaning of Regulation (EU) No 596/2014 of 16 April 2014.
This announcement and the Consent Solicitation Statement include statements which are, or may be deemed to be, "forward-looking statements". Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of the Issuer about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects" or "does not expect", "is expected", "is subject to", "budget", "projects", "strategy", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Although the Issuer believes that the expectations reflected in such forward-looking statements are reasonable, the Issuer can give no assurance that such expectations will prove to be correct. By their nature, forward-looking statements involve known or unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. There can be no assurance that the transactions contemplated in this announcement (including the Acquisition) will be completed. The Issuer assumes no obligation to update any forward-looking statement included in this announcement to reflect events or circumstances arising after the date on which it was made.
For further information, contact:
The Solicitation Agents:
Deutsche Bank AG, London Branch
1 Great Winchester Street
London EC2N 2DB
Collect: +1 (212) 250-7527
Toll-Free: +1 (855) 287-1922
Telephone (UK): +44 207 545 8011
Attention: Liability Management
Merrill Lynch International
2 King Edward Street
London, EC1A 1HQ
Telephone: +44 207 996 5420
Attention: Liability Management Group
The Information and Tabulation Agent:
D.F. King & Co., Inc.
48 Wall Street
New York, NY 10005
Attn: Andrew Beck
Toll Free: +1 (800) 549-6864
All Others Call: +1 (212) 269-5550