[sheet: Cover]

Field	Value
Document Title	Term Sheet Comparison — Existing Term Loan B vs. Proposed Term Loan B
Date	May 9, 2022
Prepared By	Daniel Obi, Associate, Banking & Finance, Calderwood & Harkness LLP
Reviewed By	Sophie Tremblay, Lead Associate, Banking & Finance, Calderwood & Harkness LLP
Matter	Verimark Hospitality Group Inc. — $700,000,000 Term Loan B Refinancing
Engagement No.	1016-00009
Client	Verimark Hospitality Group Inc.
Confidentiality	ATTORNEY-CLIENT PRIVILEGED — FOR INTERNAL USE ONLY
Purpose	Side-by-side comparison of the existing $625,000,000 TLB (Greystone Federal Credit Corp. as agent) against the proposed $700,000,000 TLB (Crescent Harbor Bank, N.A. as agent) to identify key economic and structural differences and inform negotiation strategy
Version	Draft 1.0

[sheet: Side-by-Side Comparison]

Category	Term / Provision	Existing TLB (Greystone)	Proposed TLB (Crescent Harbor)	Commentary / Significance
General	Facility Type	Senior Secured Term Loan B	Senior Secured Term Loan B	Same facility type
General	CUSIP	92347LAA0	92347LAB8	New CUSIP for proposed facility
General	Borrower	Verimark Hospitality Group Inc. (Delaware corporation; NYSE: VMRK)	Verimark Hospitality Group Inc. (Delaware corporation; NYSE: VMRK)	Same borrower
General	Administrative Agent	Greystone Federal Credit Corp.	Crescent Harbor Bank, N.A.	New agent; Crescent Harbor also serves as agent under the existing $400M RCF
General	Collateral Agent	Greystone Federal Credit Corp.	Crescent Harbor Bank, N.A.	Crescent Harbor assumes dual role (TLB agent and RCF agent)
General	Lead Arranger / Bookrunner	Greystone Federal Credit Corp.	Crescent Harbor Bank, N.A.	New arranger
General	Lenders' Counsel	N/A (historical — not reviewed)	Whitfield Gage & Partridge LLP (Harrison Whitfield III)	WGP engaged as agent's / lenders' counsel
General	Closing Date	February 14, 2020	Expected July 2022 (simultaneous sign-and-close)	Approx. 2.5 years between facilities
General	Governing Law	State of New York	State of New York	No change
General	Jurisdiction	Supreme Court of the State of New York, County of New York; U.S. District Court for the Southern District of New York	Supreme Court of the State of New York, County of New York; U.S. District Court for the Southern District of New York	No change
General	Jury Waiver	Mutual waiver	Mutual waiver	No change
Sizing	Facility Size (Original)	$625,000,000	$700,000,000	Proposed facility $75M larger to fund acquisition pipeline and general corporate purposes
Sizing	Outstanding Principal at Payoff	$621,875,000 (after $3,125,000 in scheduled amortization since origination)	N/A — new facility	$625M − $3.125M scheduled amort. = $621.875M outstanding
Sizing	Incremental Proceeds (Net of Existing TLB Refinancing)	N/A	$75,000,000 ($700M − $625M original)	Incremental proceeds available for permitted acquisitions and general corporate purposes
Pricing	Reference Rate	LIBOR	Adjusted Term SOFR (CME Term SOFR + credit spread adjustment)	Transition from LIBOR to SOFR; CSA of +0.10% (1-mo), +0.15% (3-mo), +0.25% (6-mo)
Pricing	Applicable Margin	425 bps (4.25%) over LIBOR	375 bps (3.75%) over Adjusted Term SOFR	50 bps reduction in spread; estimated annual savings of ~$3,500,000 ($700M × 50 bps)
Pricing	Interest Rate Floor	LIBOR floor of 1.00%	SOFR floor of 0.50% (50 bps)	Reduced floor from 100 bps to 50 bps
Pricing	Illustrative All-In Rate	LIBOR + 425 bps (rate at origination not reviewed)	1-mo Term SOFR (2.29% as of July 21, 2022 est.) + 10 bps CSA + 375 bps = ~6.14% per annum	Illustrative rate based on current SOFR levels; actual rate will vary with SOFR
Pricing	Default Rate	Applicable rate + 200 bps	Applicable rate + 200 bps	No change
Pricing	Benchmark Replacement / Fallback	Amendment approach (LIBOR cessation fallback)	Hardwired fallback consistent with ARRC recommendations; Term SOFR as primary, Daily Simple SOFR as fallback	Modernized fallback language
Fees	Original Issue discount (OID)	Not reviewed / not available	1.00% of par ($7,000,000); net funding of $693,000,000	$700M × 1.00% = $7M OID
Fees	Arrangement Fee	Not reviewed	0.50% of facility ($3,500,000) to Crescent Harbor Bank, N.A.	$700M × 0.50% = $3.5M
Fees	Upfront Fee (Syndicate Lenders)	Not reviewed	0.25% of each lender's commitment (embedded in OID)	Standard market upfront
Fees	Administrative Agent Fee	Not reviewed	$150,000 per annum	Annual fee to Crescent Harbor

Fees	Advisory Fee (Meridian Strauss Advisory LLC)	N/A	0.20% of facility ($1,400,000)	Financial advisor fee; $700M × 0.20% = $1.4M
Maturity	Maturity Date	February 14, 2027 (7-year tenor from Feb 2020 close)	July 21, 2029 (7-year tenor from expected July 2022 close)	Extends maturity by approximately 2.4 years
Maturity	Remaining Tenor from Proposed Closing	~4.6 years remaining	7.0 years	Full 7-year tenor on new facility
Amortization	Annual Amortization Rate	1.00% per annum of original principal	1.00% per annum of original principal	Same amortization rate
Amortization	Quarterly Amortization Payment	$625,000,000 × 1.00% ÷ 4 = $1,562,500	$700,000,000 × 1.00% ÷ 4 = $1,750,000	Quarterly payment increases by $187,500 due to larger facility size
Amortization	Total Amortization Over Life	$625M × 1.00% × 7 years = $43,750,000	$700M × 1.00% × 7 years = $49,000,000 (28 quarters × $1,750,000)
Amortization	Balloon Payment at Maturity	$625M − $43.75M = $581,250,000	$700M − $49M = $651,000,000
Prepayment	Voluntary Prepayment	Prepayable at par (soft call period expired)	Prepayable at par after repricing protection sunset; subject to 1.00% repricing premium during soft call period (first 6 months)	See repricing protection below
Prepayment	Prepayment Premium on Existing Facility at Refinancing	0.50% of original principal = $3,125,000 ($625M × 0.50%)	N/A	Payoff will require payment of $3,125,000 prepayment premium to Greystone
Repricing Protection	Soft Call Period	6 months from original closing (expired August 14, 2020)	6 months from closing (July 21, 2022 through January 21, 2023)	Standard 6-month soft call
Repricing Protection	Repricing Premium	1.00% of principal prepaid (expired)	1.00% of principal prepaid ($7,000,000 if full prepayment within 6 months)	Same 1.00% premium; $700M × 1.00% = $7M
Repricing Protection	Repricing Protection Sunset Date	August 14, 2020 (expired)	January 21, 2023
MFN Provision	Most Favored Nation Clause	Not reviewed / believed to have expired or not applicable	Yes — applicable to incremental term loans incurred within 18 months post-closing	Key negotiation point
MFN Provision	MFN Threshold	N/A	50 basis points — if incremental term loan yield exceeds initial TLB yield by more than 50 bps, the initial TLB margin is adjusted upward to within 50 bps of incremental yield	Favorable 50 bps threshold for borrower
MFN Provision	MFN Sunset Period	N/A	18 months (July 21, 2022 through January 21, 2024)	After January 21, 2024, VHG may incur incremental term loans at any yield without MFN adjustment
MFN Provision	MFN Sunset Date	N/A	January 21, 2024
Incremental Facility	Incremental Term Loan Capacity	Not reviewed in detail	Subject to ratio-based and fixed-dollar baskets (to be finalized in Credit Agreement); subject to MFN provision during MFN sunset period	Interaction between incremental facility basket and MFN is key; see separate memo
Financial Covenants	Type	Springing financial covenant	Springing financial covenant	Same structure
Financial Covenants	Maximum Total Net Leverage Ratio	4.75x	4.50x	Tighter covenant in proposed facility (25 bps improvement for lenders)
Financial Covenants	Testing Trigger	Tested when aggregate RCF exposure exceeds 35% of total revolving commitments	Tested when aggregate revolving credit exposure exceeds 35% of total revolving commitments ($400M × 35% = $140M)	Same springing trigger threshold
Financial Covenants	Testing Frequency	Quarterly, trailing four-quarter basis	Quarterly, trailing four-quarter basis	No change
Financial Covenants	Pro Forma Leverage at Closing	Not available for comparison	2.52x ($858M net debt ÷ $341M LTM Adjusted EBITDA); well within 4.50x maximum	Significant covenant headroom of ~1.98x
Financial Covenants	Minimum Interest Coverage Ratio	None	None	Not included in either facility
Guarantors	Guarantor Entities	VHG material domestic subsidiaries (same entities)	Verimark Resort Properties LLC; VHG Management Services Inc.; Verimark Convention Holdings LLC; Palmetto Beachfront Hotels LLC; Cascadia Hospitality Corp.	Same guarantor group expected
Collateral	Collateral Package	First-priority lien on substantially all assets of VHG and Guarantors	First-priority lien on substantially all assets of VHG and Guarantors	Substantially same collateral package

Collateral	Real Property — Mortgaged Hotels	42 hotel properties owned by Verimark Resort Properties LLC (appraised at ~$2.18B)	42 hotel properties owned by Verimark Resort Properties LLC (appraised at ~$2.18B)	New mortgages / amendments required in 12 states: FL (12), NY (6), CA (5), TX (4), GA (3), CO (3), AZ (2), IL (2), WA (2), OR (1), NV (1), VA (1)
Collateral	Equity Pledges — Domestic	100% of equity in each direct domestic subsidiary	100% of equity in each direct domestic subsidiary	No change
Collateral	Equity Pledges — Foreign	65% of equity in first-tier foreign subsidiaries	65% of equity in first-tier foreign subsidiaries	No change
Collateral	Personal Property	All accounts, inventory, equipment, IP, general intangibles	All accounts, inventory, equipment, IP, general intangibles	No change
Collateral	Pari Passu Sharing	Shared on pari passu basis with $400M RCF under intercreditor agreement	Shared on pari passu basis with $400M RCF under Amended and Restated Intercreditor Agreement	Intercreditor agreement to be amended and restated at closing
Collateral	Title Insurance	Continental Fidelity Title Company	Continental Fidelity Title Company	Same title insurer
Security / Perfection	UCC Filing Jurisdiction (Entity-Level)	Delaware Secretary of State	Delaware Secretary of State (VHG and DE subsidiaries); Florida Secured Transaction Registry (FL subsidiaries)	Existing Greystone UCC-1s to be terminated via UCC-3; new filings for Crescent Harbor
Security / Perfection	IP Filings	USPTO and Copyright Office	USPTO and Copyright Office	New filings required
Capital Structure	Total Debt Post-Transaction	~$1.27B (comprising $625M TLB + $400M RCF + $245M unsecured notes)	~$1.345B pro forma (comprising $700M new TLB + $400M RCF (undrawn) + $245M unsecured notes due 2028); net funded debt at closing = $945M ($700M TLB + $245M notes)	Net debt = $945M − $87M unrestricted cash = $858M
Capital Structure	Existing $400M RCF	In place; Crescent Harbor Bank, N.A. as agent	Remains in place; undrawn at closing; same agent	No change to RCF
Capital Structure	Senior Unsecured Notes	$245,000,000 due 2028 (Atlantic Standard Trust Company as indenture trustee)	$245,000,000 due 2028 (no change)	No change
Capital Structure	Hotel Portfolio Appraised Value	~$3,100,000,000 (74 properties across 18 states)	~$3,100,000,000 (74 properties across 18 states)	Current appraised value
Credit Ratings	Corporate Family Rating (Kellaway Ratings Group)	BB-	BB- (expected to be affirmed)	Rating agency: Kellaway Ratings Group
Credit Ratings	Corporate Family Rating (Pinnacle Credit Services)	Ba3	Ba3 (expected to be affirmed)	Rating agency: Pinnacle Credit Services
Credit Ratings	Facility Rating — TLB (KRG)	B+	B+ (expected)
Credit Ratings	Facility Rating — TLB (PCS)	B1	B1 (expected)
VHG Financials	FY2021 Revenue	$1,420,000,000	$1,420,000,000	Per Clearmont & Wharton LLP audited financials
VHG Financials	FY2021 EBITDA	$318,000,000	$318,000,000
VHG Financials	FY2021 Adjusted EBITDA	$341,000,000	$341,000,000	Basis for covenant calculations
LSTA	LSTA Standard Terms	Incorporated	Incorporated — LSTA standard terms for par/near-par term loan trades	No change
Payoff	Total Payoff Amount (Existing Facility)	N/A	~$627,916,667 (comprising $621,875,000 principal + ~$2,916,667 accrued interest + $3,125,000 prepayment premium)	Sum of principal + accrued interest + prepayment premium
Net Proceeds	Net Proceeds to VHG After Payoff and Fees	N/A	~$60,483,333 ($700M − $627,916,667 payoff − $7,000,000 OID − $1,400,000 advisory fee − ~$3,200,000 legal/closing costs)	Available for acquisition pipeline and general corporate purposes

[sheet: Pricing Comparison]

Line Item	Existing TLB — Greystone	Proposed TLB — Crescent Harbor	Difference / Savings	Notes
Facility Size	$625,000,000	$700,000,000	+$75,000,000	Incremental proceeds for acquisitions / general corporate
Reference Rate	LIBOR	Adjusted Term SOFR	N/A	LIBOR to SOFR transition; CSA of +10 bps (1-mo), +15 bps (3-mo), +25 bps (6-mo)
Applicable Margin	425 bps	375 bps	−50 bps	50 bps margin reduction
Interest Rate Floor	LIBOR floor: 100 bps	SOFR floor: 50 bps	−50 bps	Lower floor benefits borrower in low-rate environments
Credit Spread Adjustment (1-mo)	N/A	+10 bps	N/A	ARRC-recommended CSA for 1-month tenor
Credit Spread Adjustment (3-mo)	N/A	+15 bps	N/A	ARRC-recommended CSA for 3-month tenor
Credit Spread Adjustment (6-mo)	N/A	+25 bps	N/A	ARRC-recommended CSA for 6-month tenor
Illustrative All-In Rate (1-mo SOFR)	N/A	~6.14% (2.29% SOFR + 0.10% CSA + 3.75%)	N/A	Based on estimated 1-mo SOFR of 2.29% as of July 21, 2022
OID	N/A (not available)	1.00% ($7,000,000)	N/A	Net funding of $693,000,000
Arrangement Fee	N/A (not available)	0.50% ($3,500,000)	N/A	Paid to Crescent Harbor Bank, N.A.
Advisory Fee	N/A	0.20% ($1,400,000)	N/A	Paid to Meridian Strauss Advisory LLC
Admin Agent Fee (Annual)	Not available	$150,000/year	N/A	Annual administrative agent fee
Estimated Annual Interest Cost (on $700M at illustrative rate)	N/A	$42,980,000	N/A	Illustrative only; $700M × 6.14%
Estimated Annual Interest Savings (margin reduction only)	N/A	N/A	~$3,500,000/year	$700M × 50 bps spread reduction
Prepayment Premium to Greystone	N/A	$3,125,000	N/A	0.50% × $625,000,000 original principal

[sheet: Sources & Uses]

Line Item

SOURCES

New Term Loan B (Gross Proceeds)	$700,000,000	Crescent Harbor Bank, N.A. as admin agent
Less: Original Issue discount (1.00%)	($7,000,000)	$700M × 1.00%
Net Term Loan B Proceeds	$693,000,000

USES

Payoff — Existing TLB Principal (Greystone)	$621,875,000	$625M − $3.125M scheduled amortization
Payoff — Accrued Interest	$2,916,667	Estimate
Payoff — Prepayment Premium (0.50%)	$3,125,000	$625M × 0.50%
Total Greystone Payoff	$627,916,667	Sum of principal + interest + premium
Arrangement Fee (Crescent Harbor)	$3,500,000	$700M × 0.50%
Advisory Fee (Meridian Strauss Advisory LLC)	$1,400,000	$700M × 0.20%
Estimated Legal & Closing Costs	$3,200,000	Includes C&H fees, WGP fees, recording costs, title insurance, etc.
Net Proceeds to VHG (General Corporate / Acquisitions)	$56,983,333	Residual available to borrower
Total Uses	$693,000,000	Equals net proceeds from TLB

RECONCILIATION

Gross Proceeds	$700,000,000
Less: OID	($7,000,000)
Less: Total Greystone Payoff	($627,916,667)
Less: Arrangement Fee	($3,500,000)
Less: Advisory Fee	($1,400,000)
Less: Legal & Closing Costs	($3,200,000)
Net Proceeds to VHG	$56,983,333	Available for permitted acquisitions and general corporate purposes

[sheet: Key Dates]

Milestone	Existing TLB (Greystone)	Proposed TLB (Crescent Harbor)	Notes
Original Closing Date	February 14, 2020	N/A	Existing facility originated Feb 2020
Matter Opened (C&H)	N/A	April 4, 2022
Engagement Letter Executed	N/A	April 8, 2022
Initial Term Sheet Received	N/A	April 22, 2022	From Crescent Harbor
VHG Board Authorization	N/A	May 12, 2022
First Draft Credit Agreement	N/A	May 16, 2022	Circulated by C&H
Commitment Letter Executed	N/A	May 27, 2022
Syndication Launch	N/A	June 6, 2022
Lender Presentations / Bank Meetings	N/A	June 13–17, 2022
Syndication Allocation Confirmed	N/A	June 30, 2022
Final Execution Version Agreed	N/A	July 18, 2022
Signing / Closing / Funding / Payoff Date	N/A	July 21, 2022 (simultaneous sign-and-close)	Existing TLB paid off on same date
Post-Closing Deadline (Mortgages & Title)	N/A	August 5, 2022	42 mortgaged properties across 12 states
Repricing Protection Sunset	August 14, 2020 (expired)	January 21, 2023 (6 months post-closing)	1.00% soft call premium during protection period
MFN Sunset	N/A or expired	January 21, 2024 (18 months post-closing)	50 bps MFN threshold applies until sunset
Maturity Date	February 14, 2027	July 21, 2029	Maturity extended by ~2.4 years

[sheet: Syndicate Comparison]

Lender	Entity Type	Commitment Amount	% of Facility	Principal Contact
Crescent Harbor Bank, N.A. (retained)	National Banking Association	$50,000,000	7.14%	Theodore "Ted" Marchetti, MD, Leveraged Finance
Ridgeline Capital Partners, LP	CLO Fund (LP)	$125,000,000	17.86%	Jerome Alston, Portfolio Manager
Beacon Atlantic Credit Fund III	Credit Fund (LP)	$100,000,000	14.29%	Lina Marchenko, Senior Analyst
Tidewater Institutional Investors, Inc.	Insurance Company Investment Arm	$75,000,000	10.71%	Douglas Nettles, Head of Private Credit
Ironbridge Loan Management LLC	CLO Manager	$100,000,000	14.29%	Catherine Volpe, Managing Director
Northway Savings Bank	Regional Bank (State-chartered)	$75,000,000	10.71%	Brian Kowalski, SVP Commercial Lending
Copperleaf Asset Management, LP	Credit Hedge Fund	$100,000,000	14.29%	Samara Patel, Partner
Harborview Mutual Life Insurance Company	Life Insurance Company	$75,000,000	10.71%	Franklin Yee, CIO
TOTAL	$700,000,000	100.00%

[sheet: Cover]
Field | Value
Document Title | Term Sheet Comparison — Existing Term Loan B vs. Proposed Term Loan B
Date | May 9, 2022
Prepared By | Daniel Obi, Associate, Banking & Finance, Calderwood & Harkness LLP
Reviewed By | Sophie Tremblay, Lead Associate, Banking & Finance, Calderwood & Harkness LLP
Matter | Verimark Hospitality Group Inc. — $700,000,000 Term Loan B Refinancing
Engagement No. | 1016-00009
Client | Verimark Hospitality Group Inc.
Confidentiality | ATTORNEY-CLIENT PRIVILEGED — FOR INTERNAL USE ONLY
Purpose | Side-by-side comparison of the existing $625,000,000 TLB (Greystone Federal Credit Corp. as agent) against the proposed $700,000,000 TLB (Crescent Harbor Bank, N.A. as agent) to identify key economic and structural differences and inform negotiation strategy
Version | Draft 1.0
[sheet: Side-by-Side Comparison]
Category | Term / Provision | Existing TLB (Greystone) | Proposed TLB (Crescent Harbor) | Commentary / Significance
General | Facility Type | Senior Secured Term Loan B | Senior Secured Term Loan B | Same facility type
General | CUSIP | 92347LAA0 | 92347LAB8 | New CUSIP for proposed facility
General | Borrower | Verimark Hospitality Group Inc. (Delaware corporation; NYSE: VMRK) | Verimark Hospitality Group Inc. (Delaware corporation; NYSE: VMRK) | Same borrower
General | Administrative Agent | Greystone Federal Credit Corp. | Crescent Harbor Bank, N.A. | New agent; Crescent Harbor also serves as agent under the existing $400M RCF
General | Collateral Agent | Greystone Federal Credit Corp. | Crescent Harbor Bank, N.A. | Crescent Harbor assumes dual role (TLB agent and RCF agent)
General | Lead Arranger / Bookrunner | Greystone Federal Credit Corp. | Crescent Harbor Bank, N.A. | New arranger
General | Lenders' Counsel | N/A (historical — not reviewed) | Whitfield Gage & Partridge LLP (Harrison Whitfield III) | WGP engaged as agent's / lenders' counsel
General | Closing Date | February 14, 2020 | Expected July 2022 (simultaneous sign-and-close) | Approx. 2.5 years between facilities
General | Governing Law | State of New York | State of New York | No change
General | Jurisdiction | Supreme Court of the State of New York, County of New York; U.S. District Court for the Southern District of New York | Supreme Court of the State of New York, County of New York; U.S. District Court for the Southern District of New York | No change
General | Jury Waiver | Mutual waiver | Mutual waiver | No change
Sizing | Facility Size (Original) | $625,000,000 | $700,000,000 | Proposed facility $75M larger to fund acquisition pipeline and general corporate purposes
Sizing | Outstanding Principal at Payoff | $621,875,000 (after $3,125,000 in scheduled amortization since origination) | N/A — new facility | $625M − $3.125M scheduled amort. = $621.875M outstanding
Sizing | Incremental Proceeds (Net of Existing TLB Refinancing) | N/A | $75,000,000 ($700M − $625M original) | Incremental proceeds available for permitted acquisitions and general corporate purposes
Pricing | Reference Rate | LIBOR | Adjusted Term SOFR (CME Term SOFR + credit spread adjustment) | Transition from LIBOR to SOFR; CSA of +0.10% (1-mo), +0.15% (3-mo), +0.25% (6-mo)
Pricing | Applicable Margin | 425 bps (4.25%) over LIBOR | 375 bps (3.75%) over Adjusted Term SOFR | 50 bps reduction in spread; estimated annual savings of ~$3,500,000 ($700M × 50 bps)
Pricing | Interest Rate Floor | LIBOR floor of 1.00% | SOFR floor of 0.50% (50 bps) | Reduced floor from 100 bps to 50 bps
Pricing | Illustrative All-In Rate | LIBOR + 425 bps (rate at origination not reviewed) | 1-mo Term SOFR (2.29% as of July 21, 2022 est.) + 10 bps CSA + 375 bps = ~6.14% per annum | Illustrative rate based on current SOFR levels; actual rate will vary with SOFR
Pricing | Default Rate | Applicable rate + 200 bps | Applicable rate + 200 bps | No change
Pricing | Benchmark Replacement / Fallback | Amendment approach (LIBOR cessation fallback) | Hardwired fallback consistent with ARRC recommendations; Term SOFR as primary, Daily Simple SOFR as fallback | Modernized fallback language
Fees | Original Issue discount (OID) | Not reviewed / not available | 1.00% of par ($7,000,000); net funding of $693,000,000 | $700M × 1.00% = $7M OID
Fees | Arrangement Fee | Not reviewed | 0.50% of facility ($3,500,000) to Crescent Harbor Bank, N.A. | $700M × 0.50% = $3.5M
Fees | Upfront Fee (Syndicate Lenders) | Not reviewed | 0.25% of each lender's commitment (embedded in OID) | Standard market upfront
Fees | Administrative Agent Fee | Not reviewed | $150,000 per annum | Annual fee to Crescent Harbor
Fees | Advisory Fee (Meridian Strauss Advisory LLC) | N/A | 0.20% of facility ($1,400,000) | Financial advisor fee; $700M × 0.20% = $1.4M
Maturity | Maturity Date | February 14, 2027 (7-year tenor from Feb 2020 close) | July 21, 2029 (7-year tenor from expected July 2022 close) | Extends maturity by approximately 2.4 years
Maturity | Remaining Tenor from Proposed Closing | ~4.6 years remaining | 7.0 years | Full 7-year tenor on new facility
Amortization | Annual Amortization Rate | 1.00% per annum of original principal | 1.00% per annum of original principal | Same amortization rate
Amortization | Quarterly Amortization Payment | $625,000,000 × 1.00% ÷ 4 = $1,562,500 | $700,000,000 × 1.00% ÷ 4 = $1,750,000 | Quarterly payment increases by $187,500 due to larger facility size
Amortization | Total Amortization Over Life | $625M × 1.00% × 7 years = $43,750,000 | $700M × 1.00% × 7 years = $49,000,000 (28 quarters × $1,750,000)
Amortization | Balloon Payment at Maturity | $625M − $43.75M = $581,250,000 | $700M − $49M = $651,000,000
Prepayment | Voluntary Prepayment | Prepayable at par (soft call period expired) | Prepayable at par after repricing protection sunset; subject to 1.00% repricing premium during soft call period (first 6 months) | See repricing protection below
Prepayment | Prepayment Premium on Existing Facility at Refinancing | 0.50% of original principal = $3,125,000 ($625M × 0.50%) | N/A | Payoff will require payment of $3,125,000 prepayment premium to Greystone
Repricing Protection | Soft Call Period | 6 months from original closing (expired August 14, 2020) | 6 months from closing (July 21, 2022 through January 21, 2023) | Standard 6-month soft call
Repricing Protection | Repricing Premium | 1.00% of principal prepaid (expired) | 1.00% of principal prepaid ($7,000,000 if full prepayment within 6 months) | Same 1.00% premium; $700M × 1.00% = $7M
Repricing Protection | Repricing Protection Sunset Date | August 14, 2020 (expired) | January 21, 2023
MFN Provision | Most Favored Nation Clause | Not reviewed / believed to have expired or not applicable | Yes — applicable to incremental term loans incurred within 18 months post-closing | Key negotiation point
MFN Provision | MFN Threshold | N/A | 50 basis points — if incremental term loan yield exceeds initial TLB yield by more than 50 bps, the initial TLB margin is adjusted upward to within 50 bps of incremental yield | Favorable 50 bps threshold for borrower
MFN Provision | MFN Sunset Period | N/A | 18 months (July 21, 2022 through January 21, 2024) | After January 21, 2024, VHG may incur incremental term loans at any yield without MFN adjustment
MFN Provision | MFN Sunset Date | N/A | January 21, 2024
Incremental Facility | Incremental Term Loan Capacity | Not reviewed in detail | Subject to ratio-based and fixed-dollar baskets (to be finalized in Credit Agreement); subject to MFN provision during MFN sunset period | Interaction between incremental facility basket and MFN is key; see separate memo
Financial Covenants | Type | Springing financial covenant | Springing financial covenant | Same structure
Financial Covenants | Maximum Total Net Leverage Ratio | 4.75x | 4.50x | Tighter covenant in proposed facility (25 bps improvement for lenders)
Financial Covenants | Testing Trigger | Tested when aggregate RCF exposure exceeds 35% of total revolving commitments | Tested when aggregate revolving credit exposure exceeds 35% of total revolving commitments ($400M × 35% = $140M) | Same springing trigger threshold
Financial Covenants | Testing Frequency | Quarterly, trailing four-quarter basis | Quarterly, trailing four-quarter basis | No change
Financial Covenants | Pro Forma Leverage at Closing | Not available for comparison | 2.52x ($858M net debt ÷ $341M LTM Adjusted EBITDA); well within 4.50x maximum | Significant covenant headroom of ~1.98x
Financial Covenants | Minimum Interest Coverage Ratio | None | None | Not included in either facility
Guarantors | Guarantor Entities | VHG material domestic subsidiaries (same entities) | Verimark Resort Properties LLC; VHG Management Services Inc.; Verimark Convention Holdings LLC; Palmetto Beachfront Hotels LLC; Cascadia Hospitality Corp. | Same guarantor group expected
Collateral | Collateral Package | First-priority lien on substantially all assets of VHG and Guarantors | First-priority lien on substantially all assets of VHG and Guarantors | Substantially same collateral package
Collateral | Real Property — Mortgaged Hotels | 42 hotel properties owned by Verimark Resort Properties LLC (appraised at ~$2.18B) | 42 hotel properties owned by Verimark Resort Properties LLC (appraised at ~$2.18B) | New mortgages / amendments required in 12 states: FL (12), NY (6), CA (5), TX (4), GA (3), CO (3), AZ (2), IL (2), WA (2), OR (1), NV (1), VA (1)
Collateral | Equity Pledges — Domestic | 100% of equity in each direct domestic subsidiary | 100% of equity in each direct domestic subsidiary | No change
Collateral | Equity Pledges — Foreign | 65% of equity in first-tier foreign subsidiaries | 65% of equity in first-tier foreign subsidiaries | No change
Collateral | Personal Property | All accounts, inventory, equipment, IP, general intangibles | All accounts, inventory, equipment, IP, general intangibles | No change
Collateral | Pari Passu Sharing | Shared on pari passu basis with $400M RCF under intercreditor agreement | Shared on pari passu basis with $400M RCF under Amended and Restated Intercreditor Agreement | Intercreditor agreement to be amended and restated at closing
Collateral | Title Insurance | Continental Fidelity Title Company | Continental Fidelity Title Company | Same title insurer
Security / Perfection | UCC Filing Jurisdiction (Entity-Level) | Delaware Secretary of State | Delaware Secretary of State (VHG and DE subsidiaries); Florida Secured Transaction Registry (FL subsidiaries) | Existing Greystone UCC-1s to be terminated via UCC-3; new filings for Crescent Harbor
Security / Perfection | IP Filings | USPTO and Copyright Office | USPTO and Copyright Office | New filings required
Capital Structure | Total Debt Post-Transaction | ~$1.27B (comprising $625M TLB + $400M RCF + $245M unsecured notes) | ~$1.345B pro forma (comprising $700M new TLB + $400M RCF (undrawn) + $245M unsecured notes due 2028); net funded debt at closing = $945M ($700M TLB + $245M notes) | Net debt = $945M − $87M unrestricted cash = $858M
Capital Structure | Existing $400M RCF | In place; Crescent Harbor Bank, N.A. as agent | Remains in place; undrawn at closing; same agent | No change to RCF
Capital Structure | Senior Unsecured Notes | $245,000,000 due 2028 (Atlantic Standard Trust Company as indenture trustee) | $245,000,000 due 2028 (no change) | No change
Capital Structure | Hotel Portfolio Appraised Value | ~$3,100,000,000 (74 properties across 18 states) | ~$3,100,000,000 (74 properties across 18 states) | Current appraised value
Credit Ratings | Corporate Family Rating (Kellaway Ratings Group) | BB- | BB- (expected to be affirmed) | Rating agency: Kellaway Ratings Group
Credit Ratings | Corporate Family Rating (Pinnacle Credit Services) | Ba3 | Ba3 (expected to be affirmed) | Rating agency: Pinnacle Credit Services
Credit Ratings | Facility Rating — TLB (KRG) | B+ | B+ (expected)
Credit Ratings | Facility Rating — TLB (PCS) | B1 | B1 (expected)
VHG Financials | FY2021 Revenue | $1,420,000,000 | $1,420,000,000 | Per Clearmont & Wharton LLP audited financials
VHG Financials | FY2021 EBITDA | $318,000,000 | $318,000,000
VHG Financials | FY2021 Adjusted EBITDA | $341,000,000 | $341,000,000 | Basis for covenant calculations
LSTA | LSTA Standard Terms | Incorporated | Incorporated — LSTA standard terms for par/near-par term loan trades | No change
Payoff | Total Payoff Amount (Existing Facility) | N/A | ~$627,916,667 (comprising $621,875,000 principal + ~$2,916,667 accrued interest + $3,125,000 prepayment premium) | Sum of principal + accrued interest + prepayment premium
Net Proceeds | Net Proceeds to VHG After Payoff and Fees | N/A | ~$60,483,333 ($700M − $627,916,667 payoff − $7,000,000 OID − $1,400,000 advisory fee − ~$3,200,000 legal/closing costs) | Available for acquisition pipeline and general corporate purposes
[sheet: Pricing Comparison]
Line Item | Existing TLB — Greystone | Proposed TLB — Crescent Harbor | Difference / Savings | Notes
Facility Size | $625,000,000 | $700,000,000 | +$75,000,000 | Incremental proceeds for acquisitions / general corporate
Reference Rate | LIBOR | Adjusted Term SOFR | N/A | LIBOR to SOFR transition; CSA of +10 bps (1-mo), +15 bps (3-mo), +25 bps (6-mo)
Applicable Margin | 425 bps | 375 bps | −50 bps | 50 bps margin reduction
Interest Rate Floor | LIBOR floor: 100 bps | SOFR floor: 50 bps | −50 bps | Lower floor benefits borrower in low-rate environments
Credit Spread Adjustment (1-mo) | N/A | +10 bps | N/A | ARRC-recommended CSA for 1-month tenor
Credit Spread Adjustment (3-mo) | N/A | +15 bps | N/A | ARRC-recommended CSA for 3-month tenor
Credit Spread Adjustment (6-mo) | N/A | +25 bps | N/A | ARRC-recommended CSA for 6-month tenor
Illustrative All-In Rate (1-mo SOFR) | N/A | ~6.14% (2.29% SOFR + 0.10% CSA + 3.75%) | N/A | Based on estimated 1-mo SOFR of 2.29% as of July 21, 2022
OID | N/A (not available) | 1.00% ($7,000,000) | N/A | Net funding of $693,000,000
Arrangement Fee | N/A (not available) | 0.50% ($3,500,000) | N/A | Paid to Crescent Harbor Bank, N.A.
Advisory Fee | N/A | 0.20% ($1,400,000) | N/A | Paid to Meridian Strauss Advisory LLC
Admin Agent Fee (Annual) | Not available | $150,000/year | N/A | Annual administrative agent fee
Estimated Annual Interest Cost (on $700M at illustrative rate) | N/A | $42,980,000 | N/A | Illustrative only; $700M × 6.14%
Estimated Annual Interest Savings (margin reduction only) | N/A | N/A | ~$3,500,000/year | $700M × 50 bps spread reduction
Prepayment Premium to Greystone | N/A | $3,125,000 | N/A | 0.50% × $625,000,000 original principal
[sheet: Sources & Uses]
Line Item | Amount | Notes
SOURCES
New Term Loan B (Gross Proceeds) | $700,000,000 | Crescent Harbor Bank, N.A. as admin agent
Less: Original Issue discount (1.00%) | ($7,000,000) | $700M × 1.00%
Net Term Loan B Proceeds | $693,000,000
USES
Payoff — Existing TLB Principal (Greystone) | $621,875,000 | $625M − $3.125M scheduled amortization
Payoff — Accrued Interest | $2,916,667 | Estimate
Payoff — Prepayment Premium (0.50%) | $3,125,000 | $625M × 0.50%
Total Greystone Payoff | $627,916,667 | Sum of principal + interest + premium
Arrangement Fee (Crescent Harbor) | $3,500,000 | $700M × 0.50%
Advisory Fee (Meridian Strauss Advisory LLC) | $1,400,000 | $700M × 0.20%
Estimated Legal & Closing Costs | $3,200,000 | Includes C&H fees, WGP fees, recording costs, title insurance, etc.
Net Proceeds to VHG (General Corporate / Acquisitions) | $56,983,333 | Residual available to borrower
Total Uses | $693,000,000 | Equals net proceeds from TLB
RECONCILIATION
Gross Proceeds | $700,000,000
Less: OID | ($7,000,000)
Less: Total Greystone Payoff | ($627,916,667)
Less: Arrangement Fee | ($3,500,000)
Less: Advisory Fee | ($1,400,000)
Less: Legal & Closing Costs | ($3,200,000)
Net Proceeds to VHG | $56,983,333 | Available for permitted acquisitions and general corporate purposes
[sheet: Key Dates]
Milestone | Existing TLB (Greystone) | Proposed TLB (Crescent Harbor) | Notes
Original Closing Date | February 14, 2020 | N/A | Existing facility originated Feb 2020
Matter Opened (C&H) | N/A | April 4, 2022
Engagement Letter Executed | N/A | April 8, 2022
Initial Term Sheet Received | N/A | April 22, 2022 | From Crescent Harbor
VHG Board Authorization | N/A | May 12, 2022
First Draft Credit Agreement | N/A | May 16, 2022 | Circulated by C&H
Commitment Letter Executed | N/A | May 27, 2022
Syndication Launch | N/A | June 6, 2022
Lender Presentations / Bank Meetings | N/A | June 13–17, 2022
Syndication Allocation Confirmed | N/A | June 30, 2022
Final Execution Version Agreed | N/A | July 18, 2022
Signing / Closing / Funding / Payoff Date | N/A | July 21, 2022 (simultaneous sign-and-close) | Existing TLB paid off on same date
Post-Closing Deadline (Mortgages & Title) | N/A | August 5, 2022 | 42 mortgaged properties across 12 states
Repricing Protection Sunset | August 14, 2020 (expired) | January 21, 2023 (6 months post-closing) | 1.00% soft call premium during protection period
MFN Sunset | N/A or expired | January 21, 2024 (18 months post-closing) | 50 bps MFN threshold applies until sunset
Maturity Date | February 14, 2027 | July 21, 2029 | Maturity extended by ~2.4 years
[sheet: Syndicate Comparison]
Lender | Entity Type | Commitment Amount | % of Facility | Principal Contact
Crescent Harbor Bank, N.A. (retained) | National Banking Association | $50,000,000 | 7.14% | Theodore "Ted" Marchetti, MD, Leveraged Finance
Ridgeline Capital Partners, LP | CLO Fund (LP) | $125,000,000 | 17.86% | Jerome Alston, Portfolio Manager
Beacon Atlantic Credit Fund III | Credit Fund (LP) | $100,000,000 | 14.29% | Lina Marchenko, Senior Analyst
Tidewater Institutional Investors, Inc. | Insurance Company Investment Arm | $75,000,000 | 10.71% | Douglas Nettles, Head of Private Credit
Ironbridge Loan Management LLC | CLO Manager | $100,000,000 | 14.29% | Catherine Volpe, Managing Director
Northway Savings Bank | Regional Bank (State-chartered) | $75,000,000 | 10.71% | Brian Kowalski, SVP Commercial Lending
Copperleaf Asset Management, LP | Credit Hedge Fund | $100,000,000 | 14.29% | Samara Patel, Partner
Harborview Mutual Life Insurance Company | Life Insurance Company | $75,000,000 | 10.71% | Franklin Yee, CIO
TOTAL | $700,000,000 | 100.00%

[sheet: Cover]

SOURCES

RECONCILIATION

Record

Parties

Dates

Amounts