SCHEDULE 13D/A: Hall of Fame Resort & Entertainment Co to Go Private in $0.90 Per Share Cash Merger

Hall of Fame Resort & Entertainment Co has entered into a definitive merger agreement to be acquired by HOFV Holdings, LLC, a subsidiary of major shareholder CH Capital Lending, LLC, for $0.90 per share in cash, leading to its delisting from Nasdaq.

Summary

• Hall of Fame Resort & Entertainment Co (the "Issuer") has entered into an Agreement and Plan of Merger with HOFV Holdings, LLC ("Parent") and Omaha Merger Sub, Inc. ("Merger Sub"), with CH Capital Lending, LLC ("CHCL") acting as guarantor.
• The merger consideration for each outstanding share of Company Common Stock will be $0.90 in cash, without interest and subject to applicable withholding.
• Shares of Company Common Stock held in treasury, by Buyer Parties, or their affiliates will be cancelled without consideration.
• All outstanding 7.00% Series A Cumulative Redeemable Preferred Stock and 7.00% Series C Convertible Preferred Stock will be automatically cancelled without any conversion or consideration.
• Company Restricted Stock Unit Awards (RSUs) will be cancelled and converted into a cash payment equal to the number of RSUs multiplied by the $0.90 Merger Consideration.
• Public Warrants (Series A and B) and Private/Series X Warrants (not owned by Buyer affiliates) will become exercisable for the Merger Consideration; Series A Warrants expire on July 1, 2025, and Series B Warrants offer a Black Scholes Value purchase option.
• Warrants owned by affiliates of the Buyer Parties will be cancelled and extinguished without consideration.
• The merger is subject to customary closing conditions, including stockholder approval, financing of at least $20 million for Parent Acquisition Financing and $125 million for additional project level financing, and consummation of a Lease Restructuring.
• The Issuer's Board of Directors approved the merger based on the unanimous recommendation of a special committee of independent directors.
• Upon consummation, the Company Common Stock and Series A Warrants will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934.
• Stuart Lichter, a key reporting person, beneficially owns 14,152,264 shares, representing 73.1% of the class, through direct and indirect holdings in various entities including CH Capital Lending, LLC.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative. While the merger provides certainty and liquidity for common shareholders at a fixed price, the low cash consideration and the complete cancellation of preferred stock without consideration are significant negatives. The transaction appears to be a distressed take-private by a major lender/shareholder, which often implies underlying financial challenges.

Positives

• The merger provides a definitive cash exit for common stockholders at $0.90 per share, offering liquidity and certainty amidst potential ongoing operational challenges.
• The transaction is supported by a voting agreement from significant stockholders, increasing the likelihood of Requisite Stockholder Approval.

Negatives

• The 7.00% Series A Cumulative Redeemable Preferred Stock and 7.00% Series C Convertible Preferred Stock will be cancelled without any consideration, resulting in a complete loss for holders of these securities.
• The cash consideration of $0.90 per share for common stock may be perceived as low by some investors, especially given the company's prior trading history or potential future value.
• The delisting from Nasdaq will remove the company's public trading access, limiting future investment opportunities for current shareholders.

Risks

• The merger is contingent on obtaining Requisite Stockholder Approval, which, while supported by a voting agreement, is not guaranteed.
• The Buyer Parties' obligation to consummate the merger is conditioned on securing Parent Acquisition Financing of not less than $20 million and additional project level financing of not less than $125 million.
• Consummation of a Lease Restructuring is a condition precedent to the merger, and failure to achieve it could prevent closing.
• The merger could be terminated if a material adverse effect on the Issuer occurs after the agreement date.
• The agreement includes various termination rights for both parties, including failure to close by October 31, 2025, or if certain conditions related to financing or breaches of covenants are not met.
• The Issuer may terminate the agreement if its cash or key employee resources are not reasonably sufficient to continue operations through the closing date, and the Board determines winding down is consistent with fiduciary duties.

Future Outlook

The future outlook for Hall of Fame Resort & Entertainment Co is a transition to private ownership, with its common stock and Series A Warrants expected to be delisted from the Nasdaq Capital Market and deregistered under the Securities Exchange Act of 1934 upon the consummation of the merger. The transaction is anticipated to close by October 31, 2025, subject to various closing conditions including financing and stockholder approval.

Management Comments

• The Issuer's Board of Directors approved the Merger Agreement and the other transactions contemplated thereby based upon the unanimous recommendation of a special committee consisting only of independent and disinterested directors.
• Subject to the terms of the Merger Agreement, the Issuer Board resolved to recommend that the Issuer's stockholders vote in favor of adoption of the Merger Agreement and approval of the Merger.

Industry Context

This take-private transaction for Hall of Fame Resort & Entertainment Co, a company focused on sports and entertainment, reflects a trend where companies with significant debt or complex capital structures may opt for private ownership to facilitate restructuring, secure necessary financing, and pursue long-term strategic goals away from public market scrutiny. The involvement of a major lender (CH Capital Lending, LLC) as the acquirer suggests a potential debt-for-equity conversion or a strategic move to consolidate control and stabilize the company's financial position within the specialized entertainment and resort industry.

Management Changes

Related Party Transactions

• The merger involves CH Capital Lending, LLC ("CHCL") as the guarantor of Parent's obligations and Parent's wholly owned subsidiary, indicating a transaction with a significant existing shareholder and lender.
• Stuart Lichter, a key reporting person, has significant indirect beneficial ownership across multiple entities involved in the transaction, including CH Capital Lending, LLC, IRG, LLC, Midwest Lender Fund, LLC, and American Capital Center, LLC, highlighting a highly concentrated ownership and control structure in the acquiring party.
• The conditions to the merger include the requirement for Parent to receive executed termination agreements for certain scheduled related-party contracts, indicating existing dealings that will be unwound as part of the transaction.

Stakeholder Impact

• **Shareholders (Common Stock):** Will receive $0.90 cash per share, providing liquidity and certainty but potentially at a lower valuation than some might expect.
• **Shareholders (Preferred Stock):** Will have their Series A and Series C Preferred Stock cancelled without any consideration, resulting in a complete loss of their investment.
• **Warrant Holders:** Public warrant holders will have their warrants become exercisable for the merger consideration, with specific terms for Series A and B warrants. Private/Series X warrant holders (not affiliated with Buyer) will also have their warrants become exercisable for the merger consideration. Warrants held by Buyer affiliates will be cancelled without consideration.
• **Employees/Management:** Directors and officers of the Issuer and its subsidiaries are expected to resign at the effective time of the merger, indicating potential management changes.
• **Creditors:** The transaction involves significant financing conditions ($20M Parent Acquisition Financing, $125M additional project financing) and the conversion/cancellation of various debt instruments held by related parties, which will impact the company's capital structure and creditor relationships.

Next Steps

• The Issuer's stockholders must vote in favor of the adoption of the Merger Agreement and approval of the Merger (Requisite Stockholder Approval).
• The Buyer Parties must secure Parent Acquisition Financing of at least $20 million.
• The Buyer Parties must secure additional project level financing of at least $125 million.
• The Lease Restructuring must be consummated.
• Various third-party consents and resignation letters from Issuer directors/officers must be obtained.
• The merger is expected to be consummated by October 31, 2025.
• Upon consummation, the Company Common Stock and Series A Warrants will be delisted from Nasdaq and deregistered.

Key Dates

Recommendation

Keywords

Merger Agreement, Take-private, Hall of Fame Resort & Entertainment Co, HOFV Holdings, CH Capital Lending, Common Stock, Preferred Stock, Warrants, Delisting, SEC Filing, Schedule 13D, Corporate Action, Shareholder Vote, Financing Conditions