HOFV
Hall of Fame Resort & Entertainment CO
NASDAQ
8-K: Hall of Fame Resort & Entertainment Secures $3.5 Million in Lease Amendments and Warrant Issuance
Sentiment:
Lease Amendment
29 February 2024 5:24 PM
Hall of Fame Resort & Entertainment Company has amended its waterpark lease agreement, securing $3.5 million in funding and issuing warrants to its landlord.
Worse than expected
The company has increased its debt and diluted its equity through the warrant issuance.
The company has increased its base rent obligations.
The company has pledged a 20% membership interest in Sandlot HOFV Canton SC, LLC, as collateral.
Capital raise
The company issued a Series H Common Stock Purchase Warrant to the landlord.
The warrant allows the landlord to purchase 890,313 shares of the company's common stock.
The exercise of the warrant could result in a capital raise for the company, but also dilute existing shareholders.
Summary
- Hall of Fame Resort & Entertainment Company (HOFRECO) has entered into two amendments to its waterpark lease agreement with HFAKOH001 LLC.
- The first amendment, dated February 23, 2024, provides $2.5 million in funding to HOF Village Waterpark, LLC, a subsidiary of HOFRECO.
- This funding includes $1,903,005.11 for real estate taxes, $388,679.36 for February rent, and $208,315.53 for construction and operating expenses.
- The first amendment also increases the base rent and includes a pledge of a 20% membership interest in Sandlot HOFV Canton SC, LLC, and the issuance of a warrant to purchase 890,313 shares of HOFRECO common stock.
- The second amendment, dated February 29, 2024, provides an additional $1 million in funding, with a forbearance of March and April rent, due May 1, 2024.
- This funding can be used for construction, taxes, and operating expenses.
- The second amendment also includes an increase in base rent and a security interest in additional parcels of land.
- Both amendments include a repayment right for the tenant, allowing them to revert to the original rent schedule upon payment of $2,822,580.65 and $1,129,032.26 respectively, after completion of the water park.
Sentiment
Score: 4
Explanation: The document indicates financial strain and reliance on debt and equity dilution to secure funding. While the funding is positive, the increased obligations and potential dilution are concerning.
Positives
- The company has secured a total of $3.5 million in funding through the lease amendments.
- The amendments provide flexibility in the use of funds for construction, taxes, and operating expenses.
- The tenant has the option to revert to the original rent schedule upon repayment, which could reduce future expenses.
Negatives
- The base rent has been increased in both amendments, which will increase operating costs.
- The company has pledged a 20% membership interest in Sandlot HOFV Canton SC, LLC, as collateral.
- The company has issued a warrant to purchase 890,313 shares of common stock, which could dilute existing shareholders.
- Failure to pay the rent due on May 1, 2024, will be an immediate Event of Default.
Risks
- Failure to complete the water park construction could trigger events of default.
- The company's ability to repay the funds and exercise the repayment right is dependent on future financial performance.
- The warrant issuance could dilute existing shareholders if exercised.
- The company is subject to potential foreclosure on the additional parcels of land if an event of default occurs.
Future Outlook
The company is focused on completing the water park construction and managing its financial obligations under the amended lease agreements. The repayment rights provide a potential path to reduce future rent expenses.
Industry Context
The amendments reflect ongoing negotiations between HOFRECO and its landlord, likely due to the financial challenges of developing the Hall of Fame Village. This type of restructuring is not uncommon in large-scale development projects.
Comparison to Industry Standards
- The use of lease amendments and warrant issuances is a common strategy for companies facing financial constraints in the real estate and entertainment industries.
- Comparable companies in the entertainment and resort sector often use similar financing methods to fund large-scale projects.
- The specific terms of the lease amendments and warrant issuance are unique to HOFRECO's situation, but the overall approach is consistent with industry practices for managing capital and debt.
Stakeholder Impact
- Shareholders may experience dilution if the warrants are exercised.
- Employees may be impacted by the company's financial situation.
- Customers may be affected by the progress of the water park construction.
- Creditors may be impacted by the company's increased debt obligations.
Next Steps
- The company needs to complete the water park construction.
- The company needs to manage its financial obligations under the amended lease agreements.
- The company needs to monitor the potential impact of the warrant issuance on its share structure.
Key Dates
- 2022-11-07: Original Lease Agreement date.
- 2022-12-27: Date of the Open-End Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing.
- 2022-12-29: Recording date of the Open-End Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing.
- 2024-01-11: Effective date of the Amended and Restated Limited Liability Company Agreement.
- 2024-02-23: Date of the First Amendment to Lease Agreement, Pledge and Security Agreement, and Series H Common Stock Purchase Warrant.
- 2024-02-28: Effective date of the Second Amendment to Lease Agreement.
- 2024-02-29: Date of the Second Amendment to Lease Agreement and Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing.
- 2024-05-01: Date when March and April 2024 base rent is due.
Keywords
lease agreement, waterpark, funding, warrant, base rent, real estate taxes, construction, operating expenses, security interest, repayment right
HOFV
Hall of Fame Resort & Entertainment CO
NASDAQ
Sector: Communication Services
Filings with Classifications
Delay expected
25 June 2025 4:05 PM
Delisting Notice and Debt Amendment
- The company failed to hold its annual meeting of shareholders on or prior to June 30, 2025, which is a requirement by Nasdaq Listing Rule 5620(a).
Capital raise
25 June 2025 4:05 PM
Delisting Notice and Debt Amendment
- The company increased its 'Facility Amount' under the Note and Security Agreement by $2,000,000, from $12,000,000 to $14,000,000.
- This additional funding is provided by CH Capital Lending, LLC, an affiliate of a company director, Stuart Lichter.
Worse than expected
25 June 2025 4:05 PM
Delisting Notice and Debt Amendment
- The company is facing imminent delisting from Nasdaq, a significant negative event for a publicly traded company.
- The delisting is due to a failure to meet a fundamental corporate governance requirement (holding an annual shareholder meeting).
- While new funding was secured, it is from a related party, which can be viewed less favorably than arms-length financing, especially in the context of delisting.
Capital raise
29 May 2025 8:05 PM
Current Report
- The company increased its existing credit facility by $2,000,000, raising the total available amount to $12,000,000.
- This capital is provided by CH Capital Lending, LLC, an affiliate of a company director, Stuart Lichter.
- The funds are designated for general corporate purposes.
Delay expected
19 May 2025 4:05 PM
8-K Filing
- The maturity date was extended from March 31, 2025, to September 30, 2025, indicating a delay in the company's ability to meet its original repayment schedule.
Capital raise
13 May 2025 4:06 PM
Quarterly Report
- The company states that it will need to raise additional financing to accomplish its development plan and fund its working capital.
- The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
- There are no assurances that the company will be able to raise capital on terms acceptable to the company or at all.
Worse than expected
13 May 2025 4:06 PM
Quarterly Report
- The company's net loss increased slightly compared to the same period last year.
- Total revenue decreased significantly due to lower sponsorship and event revenues.
- Management expresses substantial doubt about the company's ability to continue as a going concern.
Capital raise
12 May 2025 11:32 PM
Merger Announcement
- The Buyer Parties' obligation to consummate the Merger is conditioned on receiving 'Parent Acquisition Financing' in an aggregate amount of not less than $20 million.
- The Buyer Parties' obligation to consummate the Merger is additionally conditioned on receiving 'additional project level financing' in an aggregate amount not less than $125 million.
Worse than expected
8 May 2025 9:23 PM
Merger Announcement
- The acquisition price of $0.90 per share is significantly lower than the company's previous trading price, indicating a less favorable outcome for shareholders compared to previous expectations.
Capital raise
8 May 2025 9:23 PM
Merger Announcement
- The merger is contingent on the Investor obtaining $20 million in financing.
- The merger is also conditioned on securing $125 million in additional project-level financing.
Capital raise
8 May 2025 5:21 PM
Merger Announcement
- The transaction is contingent on the Investor obtaining $20 million in financing.
- The transaction is also conditioned on prior or concurrent consummation of additional project level financing in an aggregate amount not less than $125 million.
Worse than expected
8 May 2025 5:21 PM
Merger Announcement
- The company is being acquired for $0.90 per share, which may be considered worse than expected for investors who anticipated higher returns or continued growth as a public entity.
Worse than expected
16 April 2025 4:05 PM
8-K Filing
- The company received a deficiency letter from Nasdaq due to its stock price falling below the minimum bid price requirement, indicating a negative development.
Delay expected
4 April 2025 8:05 PM
Current Report (8-K)
- The maturity dates of debt instruments and convertible notes have been delayed.
Delay expected
3 April 2025 11:43 AM
SEC Form 4
- The maturity dates of several convertible debt instruments were extended from March 31, 2025, to either September 30, 2025, or December 31, 2025.
Capital raise
26 March 2025 5:00 PM
Annual Report
- The company's cash position is deficient, and it requires additional capital to fund operations and debt service.
- The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
Worse than expected
26 March 2025 5:00 PM
Annual Report
- The company's revenue decreased from 2023 to 2024.
- The company's net loss decreased from 2023 to 2024.
- The company's cash position is deficient and it requires additional capital to fund operations and debt service.
Delay expected
26 March 2025 5:00 PM
Annual Report
- The Company postponed its 2024 Annual Meeting of Stockholders.
Worse than expected
16 January 2025 5:13 PM
8-K Filing
- The company received a delisting notice from Nasdaq for failing to hold its annual meeting within the required timeframe, which is a negative development.
Delay expected
16 January 2025 5:13 PM
8-K Filing
- The company failed to hold its annual meeting within 12 months of its fiscal year end, resulting in a delay and a delisting notice from Nasdaq.
Worse than expected
20 November 2024 4:05 PM
Current Report
- The high interest rate of 12%, potentially rising to 17%, suggests the company is in a weaker financial position and had to accept unfavorable terms.
- The extensive security interest granted to the lender indicates a lack of financial flexibility and a higher risk profile.
Worse than expected
13 November 2024 5:18 PM
Quarterly Report
- The company's net loss of $34.5 million for the nine months ended September 30, 2024, is worse than expected.
- The company's default on the waterpark ground lease and the risk of default on other loan agreements are worse than expected.
- The company's precarious cash position and the substantial doubt about its ability to continue as a going concern are worse than expected.
Delay expected
13 November 2024 5:18 PM
Quarterly Report
- The company's waterpark project has been delayed due to the termination of the ground lease.
Capital raise
13 November 2024 5:18 PM
Quarterly Report
- The company is seeking additional funding through debt, construction lending, and equity financing.
- The company's ability to raise capital on acceptable terms or at all is uncertain.
Worse than expected
31 October 2024 4:05 PM
Current Report
- The termination of the waterpark ground lease due to a payment default is a significantly worse outcome than expected.
- The company's inability to meet its financial obligations and the potential loss of key assets are also worse than expected.
Capital raise
31 October 2024 4:05 PM
Current Report
- The company is in discussions with IRG Canton Village Member, LLC regarding a non-binding proposal to take the company private, which could involve a capital raise or restructuring.
- The company's current financial situation suggests that a capital raise or restructuring is likely necessary to address its liquidity issues.
Delay expected
23 October 2024 4:05 PM
Current Report
- The 2024 Annual Meeting of Stockholders has been postponed from its original date of November 21, 2024.
Better than expected
17 September 2024 4:05 PM
Material Definitive Agreement
- The removal of the annual license fee and the waiver of the $600,000 payment for 2024 are better than the previous agreement.
Delay expected
19 August 2024 5:04 PM
Shareholder Letter
- The funding process for the Gameday Bay Waterpark and Hilton Tapestry Hotel has taken longer than originally anticipated due to a restrictive lending environment and multiple stakeholders.
Worse than expected
19 August 2024 5:04 PM
Shareholder Letter
- Second quarter revenue was below the prior year, indicating worse than expected performance.
Worse than expected
15 August 2024 4:05 PM
Quarterly Report
- The company's revenue decreased by 23% year-over-year, indicating worse than expected performance.
- The net loss attributable to shareholders increased to $15.8 million from $13.6 million in the prior year, indicating worse than expected performance.
Capital raise
13 August 2024 4:05 PM
Quarterly Report
- The company expects that it will need to raise additional financing to accomplish its development plan and fund its working capital.
- The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
- The company may have to raise additional capital through the equity market, which could result in substantial dilution to existing stockholders.
Worse than expected
13 August 2024 4:05 PM
Quarterly Report
- The company's revenue decreased compared to the same period last year.
- The company's net loss increased compared to the same period last year.
- The company's hotel revenues decreased compared to the same period last year.
Delay expected
14 May 2024 4:06 PM
Quarterly Report
- The company has delayed payment of base rent for the waterpark ground lease, which could lead to a default.
Worse than expected
14 May 2024 4:06 PM
Quarterly Report
- The company's net loss of $14.6 million and the substantial doubt about its ability to continue as a going concern indicate worse than expected results.
Capital raise
14 May 2024 4:06 PM
Quarterly Report
- The company expects that it will need to raise additional financing to accomplish its development plan and fund its working capital.
- The company is seeking to obtain additional funding through debt, construction lending, and equity financing.
- There are no assurances that the company will be able to raise capital on terms acceptable to the Company or at all.
Better than expected
14 May 2024 8:39 AM
Quarterly Report
- The company's revenue increased by 34% year-over-year.
- The net loss attributable to shareholders decreased from $19.6 million to $14.9 million.
- The adjusted EBITDA loss improved from $10.9 million to $2.9 million.
Worse than expected
29 April 2024 5:11 PM
Annual Report Amendment
- The company had to amend its annual report due to omitting required information, indicating a deficiency in internal controls or reporting processes.
Capital raise
29 April 2024 5:11 PM
Annual Report Amendment
- The company has multiple loan agreements with CH Capital Lending, LLC, and other related parties, some of which have been amended and restated.
- The company has issued Series A, B, and C Preferred Stock to related parties.
- The company has a history of using convertible notes and warrants to raise capital.
Capital raise
29 April 2024 4:57 PM
SEC Form 4 Filing
- The document details multiple transactions involving convertible notes and term loans, indicating ongoing capital raising activities.
- CH Capital Lending, LLC advanced additional funds under the 2020 Convertible Term Loan in January and February 2024.
- The company has been paying interest by increasing the principal of the Convertible Notes due 2025.
Capital raise
8 April 2024 5:25 PM
8-K Filing
- The company has the ability to sell up to $14,661,873 of common stock through the at-the-market offering.
- The company amended its equity distribution agreement to increase agent compensation, which may incentivize sales.
Capital raise
25 March 2024 4:37 PM
Annual Results
- The company's authorized but unissued Common Stock and Preferred Stock are available for future issuances without stockholder approval.
- The company could utilize these shares for future offerings to raise additional capital.
Capital raise
21 March 2024 8:20 AM
Quarterly Report
- The company completed a $2.8 million public offering of common stock and warrants to increase institutional ownership and improve stock trading volumes.
Worse than expected
21 March 2024 8:20 AM
Quarterly Report
- The company's net loss for the full year increased significantly compared to the previous year, indicating worse than expected financial performance.
Capital raise
29 February 2024 5:24 PM
Lease Amendment
- The company issued a Series H Common Stock Purchase Warrant to the landlord.
- The warrant allows the landlord to purchase 890,313 shares of the company's common stock.
- The exercise of the warrant could result in a capital raise for the company, but also dilute existing shareholders.
Worse than expected
29 February 2024 5:24 PM
Lease Amendment
- The company has increased its debt and diluted its equity through the warrant issuance.
- The company has increased its base rent obligations.
- The company has pledged a 20% membership interest in Sandlot HOFV Canton SC, LLC, as collateral.
Worse than expected
18 January 2024 5:12 PM
Loan Agreement Amendment
- The company's debt has increased significantly to $12,751,934.09, indicating a worsening financial position despite the asset sale.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.