|12 Months Ended|
Dec. 31, 2022
|SUBSEQUENT EVENT [Abstract]|
12. SUBSEQUENT EVENTS
The Temporary Casino Opens in Waukegan, Illinois. On February 17, 2023, the Company opened The Temporary to the public, marking the commencement of operations for its sixth reporting segment—Illinois.
Typical of many new casinos, The Temporary opened at less than full capacity. The Temporary continues to hire additional staff, which will allow it to augment the number of available games on The Temporary’s casino floor and increase the hours of operation for its casino and its amenities. The Company also expects to open The Temporary’s second restaurant in the next few weeks, followed by its fine-dining restaurant in the second quarter of 2023. When fully open, The Temporary will feature approximately 1,000 slot machines, 50 table games, a fine-dining restaurant, two additional restaurants, and a center bar.
Waukegan Ground Lease Commences through January 2122 and Option to Purchase. On January 18, 2023, the Company’s wholly-owned Illinois subsidiary, FHR Illinois, LLC, entered into a 99-year ground lease (the “Ground Lease”) for approximately 31.70 acres of land (the “City-Owned Parcel”) with the City of Waukegan in Illinois (the “City”). The City-Owned Parcel and an adjacent 9.95-acre parcel owned by the Company comprise the location of American Place, including The Temporary. The Ground Lease is a triple-net lease whereby the Company is required to pay all taxes, utilities, and expenses associated with the leased property. Annual rent under the Ground Lease is the greater of (i) $3.0 million (the “Annual Guaranteed Minimum Rent”), or (ii) 2.5% of Adjusted Gross Receipts (as defined) generated by either the Temporary or American Place. The Ground Lease is only terminable to the extent that the Development and Host Community Agreement (detailed below) with the City is terminated.
The Company has the right to purchase the City-Owned Parcel at any time during the term of the Ground Lease for $30 million, but if it does so prior to the opening of American Place, then it must continue to pay rent due to the City under the Ground Lease until the permanent casino is open. The Ground Lease contains customary terms with respect to taxes, leasehold mortgage, insurance, condemnation, and other terms and conditions typically found in long-term ground leases of similar nature.
American Place Development Agreement. Concurrent with the Ground Lease, the Company entered into a Development and Host Community Agreement (the “Development Agreement”) on January 18, 2023 with the City, as it relates to the development, construction and operation of The Temporary and American Place. The Development Agreement establishes terms and conditions related to the project, including project milestones requiring the completion of American Place’s construction within 36 months of The Temporary’s opening, with operations also commencing within three months of such completion. The Development Agreement also requires the Company to pay $150,000 for anticipated public works and public safety costs related to the opening of The Temporary and to make annual contributions to the City of at least $500,000 to support charitable programs and causes following the commencement of operations at American Place. Customary regulatory approvals were required to commence operations at The Temporary and will be required to commence operations at American Place. The Company has the right to terminate both the Development Agreement and the Ground Lease if it has complied with its obligations related to the application and pursuit of applicable regulatory approvals and either (i) such approvals are denied, materially delayed, or otherwise not approved; or (ii) the Company determines, in its reasonable judgment, that any necessary regulatory approvals cannot be obtained using its best efforts.
Additional Notes Issuance, Indenture Supplement, and Amendment of Credit Agreement. On February 21, 2023, the Company closed its private offering of $40.0 million of the Additional Notes. The Additional Notes were issued pursuant to the Amended Indenture, further amended as of February 21, 2023 (collectively, the “Indenture”), pursuant to which the Company had previously issued $410.0 million of Existing Notes. The Additional Notes are treated as a single series of senior secured debt securities with the Existing Notes and as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Proceeds from the offering, net of related expenses and discounts, were approximately $34 million.
Also on February 21, 2023, the Company entered into a Second Amendment to Credit Agreement with Capital One, which, among other things, increased the amount of additional indebtedness permitted under the Company’s First Amendment to Credit Agreement to allow for the sale and issuance of the Additional Notes.
Grand Lodge Casino Lease extended through December 2024. On February 13, 2023, we entered into a sixth amendment to the Hyatt lease that extended the term through December 31, 2024, after which time portions of the Hyatt Lake Tahoe are expected to undergo enhancement work. There were no changes in rent.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef