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1021-00002 · Verimark Hospitality Group · Offering Documents

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PRICING TERM SHEET

Offering Memorandum Supplement

Rule 144A / Regulation S

Dated: June 17, 2024

$500,000,000

Verimark Hospitality Group Inc.

8.250% Senior Notes due 2031

This Pricing Term Sheet, dated June 17, 2024, supplements and should be read together with the Preliminary Offering Memorandum dated June 3, 2024 (the "Preliminary Offering Memorandum"), relating to the offering by Verimark Hospitality Group Inc. (the "Issuer" or the "Company") of its 8.250% Senior Notes due 2031 (the "Notes"). Capitalized terms used but not defined herein have the meanings ascribed to them in the Preliminary Offering Memorandum. The information in this Pricing Term Sheet supersedes the information in the Preliminary Offering Memorandum to the extent that such information is inconsistent with the information contained herein. All references to dollar amounts are to United States dollars unless otherwise indicated.

I. ISSUER INFORMATION

The Issuer is a leading owner and operator of full-service and select-service hospitality properties across the United States and select international markets. Additional information regarding the Issuer, including its business, financial condition, and results of operations, is set forth in the Preliminary Offering Memorandum, which should be read carefully and in its entirety by prospective investors before making any investment decision with respect to the Notes.

II. SECURITY DESCRIPTION

III. PRICING TERMS

The following pricing terms have been determined with respect to the Notes:

The Original Issue discount for U.S. federal income tax purposes will accrue over the term of the Notes on a constant yield to maturity basis. Prospective investors should consult the section entitled "Certain U.S. Federal Income Tax Considerations" in the Preliminary Offering Memorandum and their own tax advisors regarding the tax consequences of the Original Issue discount and the acquisition, ownership, and disposition of the Notes.

IV. SETTLEMENT INFORMATION

It is expected that delivery of the Notes will be made against payment therefor on the Settlement Date, which is the fifth business day following the Trade Date. Pursuant to Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, trades in the secondary market are required to settle in one business day, unless the parties to a trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes on the Trade Date or the next three succeeding business days will be required, by virtue of the fact that the Notes initially will settle in T+5, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of the Notes who wish to trade the Notes prior to the Settlement Date should consult their own advisors.

V. CUSIP / ISIN NUMBERS

144A Notes:

Regulation S Notes:

The CUSIP and ISIN numbers set forth above are included solely for the convenience of the holders of the Notes. The Issuer makes no representation as to the correctness or accuracy of such numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed thereon.

VI. OPTIONAL REDEMPTION

Make-Whole Redemption. Prior to July 1, 2027, the Issuer may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus a make-whole premium as described in the Preliminary Offering Memorandum, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. The make-whole premium is calculated by reference to the yield on a comparable U.S. Treasury security plus 50 basis points, as more fully described in the Preliminary Offering Memorandum.

Equity Clawback. Prior to July 1, 2027, the Issuer may, on one or more occasions, redeem up to 40% of the original aggregate principal amount of the Notes (i.e., up to $200,000,000) at a redemption price equal to 108.250% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date, with the net cash proceeds received by the Issuer from one or more qualifying equity offerings; provided, however, that:

(a) at least 60% of the originally issued aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional Notes) remains outstanding immediately after the occurrence of each such redemption; and

(b) each such redemption occurs within 180 days of the date of the closing of the applicable qualifying equity offering.

Fixed-Price Optional Redemption Schedule

On or after July 1, 2027, the Issuer may redeem the Notes, in whole or in part, at the following redemption prices (expressed as a percentage of the principal amount of the Notes to be redeemed), plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date, if redeemed during the twelve-month period beginning on July 1 of each of the years indicated below:

In each case set forth above, the applicable redemption price is expressed as a percentage of the principal amount of the Notes to be redeemed and is payable together with accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Notices of redemption will be provided in accordance with the terms and conditions described in the Preliminary Offering Memorandum and the Indenture.

VII. CHANGE OF CONTROL

Upon the occurrence of a Change of Control Triggering Event (as defined in the Preliminary Offering Memorandum), the Issuer will be required to make an offer to repurchase all of the outstanding Notes at a purchase price equal to 101.000% of the aggregate principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The terms and conditions of the Change of Control offer, including the definition of "Change of Control Triggering Event" and the procedures for tendering Notes, are described in greater detail in the Preliminary Offering Memorandum under the heading "Description of the Notes—Change of Control."

VIII. USE OF PROCEEDS

The Issuer estimates that the net proceeds from this offering, after deducting the Initial Purchasers' discount but before deducting other estimated offering expenses, will be approximately $483,750,000. The Issuer intends to use the net proceeds from this offering as follows:

The "Existing Credit Facility" refers to the Amended and Restated Credit Agreement, dated as of March 15, 2021, among Verimark Hospitality Group Inc., as borrower, the lenders party thereto from time to time, and Greystone National Bank, N.A., as administrative agent and collateral agent (Loan No. GNB-SYN-2021-04417), as amended, restated, supplemented, or otherwise modified from time to time. As of the date hereof, the Existing Credit Facility bears interest at a weighted average rate of approximately Term SOFR plus 3.50% per annum. The Existing Credit Facility has a maturity date of March 15, 2026. The proceeds from borrowings under the Existing Credit Facility were used to finance the acquisition of certain hospitality properties and for general corporate purposes, as more fully described in the Preliminary Offering Memorandum. Upon consummation of this offering, the Existing Credit Facility will be repaid in full and terminated.

IX. RATINGS

The Notes have received the following credit ratings:

A credit rating is not a recommendation to buy, sell, or hold securities and may be revised, suspended, or withdrawn at any time by the assigning rating agency in its sole discretion. Each rating should be evaluated independently of any other rating. The ratings reflect only the views of the applicable rating agencies, and any desired explanation of the significance of such ratings should be obtained from the respective rating agency. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be lowered, suspended, or withdrawn entirely by its respective rating agency if, in such rating agency's judgment, circumstances so warrant. A downgrade, suspension, or withdrawal of any rating assigned to the Notes may adversely affect the market price and marketability of the Notes.

X. INITIAL PURCHASERS

The Notes are being offered by the Initial Purchasers named below. The following table sets forth the names of the Initial Purchasers and their respective roles in this offering:

The Initial Purchasers have agreed, severally and not jointly, to purchase the Notes from the Issuer pursuant to the terms and conditions of the Purchase Agreement dated June 17, 2024, among the Issuer, the Guarantors, and the Initial Purchasers, as described in the Preliminary Offering Memorandum under the heading "Plan of Distribution."

XI. TRUSTEE, REGISTRAR, PAYING AGENT, AND TRANSFER AGENT

XII. GOVERNING LAW

The Indenture under which the Notes will be issued and the Notes themselves will be governed by, and construed in accordance with, the laws of the State of New York.

XIII. LEGAL ADVISORS

XIV. KEY INDENTURE PROVISIONS (SUMMARY REFERENCE)

The following is a summary of certain covenants and provisions to be contained in the Indenture governing the Notes. This summary is not complete and is qualified in its entirety by reference to the full text of the Indenture and the description of the Notes contained in the Preliminary Offering Memorandum under the heading "Description of the Notes." Prospective investors should read the Preliminary Offering Memorandum carefully and in its entirety for a more complete description of the covenants, events of default, and other terms of the Notes.

The foregoing summary of key indenture provisions is provided for convenience of reference only and is subject in all respects to the actual terms and conditions set forth in the Indenture. Prospective investors are urged to review the full covenant descriptions, definitions of capitalized terms, events of default, and other provisions contained in the Preliminary Offering Memorandum.

XV. REGISTRATION RIGHTS (SUMMARY REFERENCE)

In connection with the issuance and sale of the Notes, the Issuer and the Guarantors will enter into a Registration Rights Agreement with the Initial Purchasers. The following is a summary of certain key terms of the Registration Rights Agreement:

The foregoing summary of the Registration Rights Agreement is provided for convenience of reference only and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, a form of which is included as an exhibit to the Preliminary Offering Memorandum.

XVI. DISCLAIMERS AND ADDITIONAL INFORMATION

The Issuer has provided a Preliminary Offering Memorandum dated June 3, 2024 with respect to this offering. Before you invest, you should read the Preliminary Offering Memorandum and the other documents the Issuer has provided to you for more complete information about the Issuer and this offering. This Pricing Term Sheet is qualified in its entirety by reference to the Preliminary Offering Memorandum, including the risk factors, financial statements, and other information contained therein. In the event of any inconsistency between the information contained in this Pricing Term Sheet and the information contained in the Preliminary Offering Memorandum, the information in this Pricing Term Sheet shall control.

This offering is being made only to (i) qualified institutional buyers ("QIBs") as defined in Rule 144A under the Securities Act, in reliance on the exemption from registration provided by Rule 144A, and (ii) to non-U.S. persons (as defined in Regulation S under the Securities Act) in offshore transactions in reliance on Regulation S under the Securities Act. Prospective investors that are QIBs are hereby notified that the seller of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A thereunder.

The Notes have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction. The Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) except to QIBs in reliance on Rule 144A or pursuant to another exemption from the registration requirements of the Securities Act. Each purchaser of the Notes will be deemed to have made the representations and agreements described in the Preliminary Offering Memorandum under the heading "Transfer Restrictions."

Nothing in this Pricing Term Sheet constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so. This Pricing Term Sheet is not being made available to any person or in any jurisdiction where the making of this Pricing Term Sheet would not be in compliance with the laws of such jurisdiction.

Any disclaimers or legends required by the laws of any jurisdiction or required by the rules of any self-regulatory organization are deemed to be included herein to the extent required.

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Issuer:	Verimark Hospitality Group Inc. ("VMRK" or the "Company")
Ticker Symbol:	VMRK (Nasdaq Global Select Market)
Principal Executive Offices:	2400 Brickell Bay Drive, Suite 3100, Miami, FL 33129
State of Incorporation:	Delaware
Security:	8.250% Senior Notes due 2031 (the "Notes")
Type:	Senior Unsecured Notes
Aggregate Principal Amount:	$500,000,000
Guarantors:	Verimark Resort Holdings LLC, VHG Properties Inc., Bayshore Hotel Management LLC, Verimark Capital Holdings LLC, and Pinnacle Lodging Enterprises Inc. (collectively, the "Guarantors")
Ranking:	The Notes will be senior unsecured obligations of the Issuer, ranking equally in right of payment with all existing and future senior indebtedness of the Issuer, and senior in right of payment to all existing and future subordinated indebtedness of the Issuer. The Notes will be effectively subordinated to all existing and future secured indebtedness of the Issuer, to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of each non-guarantor subsidiary. The guarantees of the Notes will be senior unsecured obligations of the Guarantors, ranking equally in right of payment with all existing and future senior indebtedness of each Guarantor, and senior in right of payment to all existing and future subordinated indebtedness of each Guarantor.
Form:	The Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
Coupon / Interest Rate:	8.250% per annum
Interest Payment Dates:	January 1 and July 1 of each year, commencing January 1, 2025
Interest Payment Amount:	Semi-annual payments of $20,625,000 (calculated as $500,000,000 × 8.250% ÷ 2)
Day Count Convention:	360-day year consisting of twelve 30-day months
Maturity Date:	July 1, 2031
Issue Price:	98.500% of the aggregate principal amount
Gross Proceeds:	$492,500,000 (calculated as $500,000,000 × 98.500%)
Original Issue discount (OID):	1.500% of the aggregate principal amount ($7,500,000)
Yield to Maturity:	Approximately 8.524%, calculated on a semi-annual bond equivalent basis, consistent with the 98.500% issue price and 8.250% coupon rate
Spread to Benchmark Treasury:	T + 400 basis points (indicative)
Benchmark Treasury:	4.250% due May 15, 2031
Initial Purchasers' discount:	1.750% of the aggregate principal amount ($8,750,000) (calculated as $500,000,000 × 1.750%)
Net Proceeds to Issuer (before expenses):	$483,750,000 (calculated as $492,500,000 − $8,750,000)
Trade Date:	June 17, 2024
Settlement Date:	June 25, 2024 (T+5 business days)

First Interest Accrual Date:	July 1, 2024
Record Date:	December 15 and June 15 immediately preceding each interest payment date
Delivery:	Book-entry form only, through the facilities of The Depository Trust Company ("DTC") and its direct and indirect participants, including Westmark & Co. ("Ashgrove Enterprises") and Stonefield Industries ("Thackeray Partners LLC"), as applicable
CUSIP:	923847 AA 5
ISIN:	US923847AA52
CUSIP:	U92384 AA 8
ISIN:	USU92384AA83
Redemption Period	Redemption Price (% of Principal Amount)
On or after July 1, 2027 and prior to July 1, 2028	104.125%
On or after July 1, 2028 and prior to July 1, 2029	102.063%
On or after July 1, 2029 and thereafter	100.000%
Use of Proceeds	Amount
Repayment of Existing Credit Facility (principal)	$467,342,819.16
Accrued interest on Existing Credit Facility	$4,207,180.84
Prepayment premium (0.50% of outstanding principal)	$2,336,714.10
Transaction fees and expenses (including legal, accounting, printing, trustee, and rating agency fees)	$6,863,285.90
General corporate purposes	$3,000,000.00
Total	$483,750,000.00
Rating Agency	Rating	Outlook
Crestline Ratings Group	B1	Stable
Broadmark Rating Services Inc.	B+	Stable
Role	Firm
Lead Left Bookrunner and Representative of the Initial Purchasers	Kensington Barrow & Co.
Joint Bookrunner	Ridgeline Capital Markets LLC
Co-Manager	Stonebridge Marvelo Securities Inc.

Trustee:	Fidelitas Trust Company, N.A.
Registrar:	Fidelitas Trust Company, N.A.
Paying Agent:	Fidelitas Trust Company, N.A.
Transfer Agent:	Fidelitas Trust Company, N.A.
Address:	100 Wall Street, Suite 1500, New York, NY 10005
Issuer's Counsel:	Calderwood & Harkness LLP
Initial Purchasers' Counsel:	Whitfield, Crane & Aldrich LLP
Provision	Summary
Fixed Charge Coverage Ratio Incurrence Test	≥ 2.00 to 1.00
Restricted Payments Basket	$50,000,000 plus 50% of Consolidated Net Income (cumulative from July 1, 2024, with certain adjustments as described in the Preliminary Offering Memorandum)
Permitted Indebtedness General Basket	$75,000,000
Permitted Liens Basket	$50,000,000
Asset Sale Proceeds Application Period	365 days from receipt of Net Proceeds
Provision	Summary
Filing Deadline	The Issuer will be required to file a registration statement with the Securities and Exchange Commission relating to an offer to exchange the Notes for a new issue of substantially identical notes registered under the Securities Act within 180 days after the closing of this offering (i.e., on or before January 4, 2025).
Effectiveness Deadline	The Issuer will use its commercially reasonable efforts to cause such registration statement to be declared effective within 365 days after the closing of this offering (i.e., on or before July 8, 2025).
Additional Interest for Non-Compliance	If the Issuer fails to comply with its obligations under the Registration Rights Agreement, additional interest will accrue on the Notes at a rate of 0.25% per annum for the first 90 days following such failure, increasing to 0.50% per annum thereafter, subject to a maximum additional interest rate of 1.00% per annum.

This pricing term sheet supplements the Preliminary Offering Memorandum dated June 3, 2024 (the "Preliminary Offering Memorandum") and supersedes the information in the Preliminary Offering Memorandum to the extent inconsistent herewith. This communication is being provided to you on a confidential basis. This term sheet does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein. The securities have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
PRICING TERM SHEET
Offering Memorandum Supplement
Rule 144A / Regulation S
Dated: June 17, 2024
$500,000,000
Verimark Hospitality Group Inc.
8.250% Senior Notes due 2031
This Pricing Term Sheet, dated June 17, 2024, supplements and should be read together with the Preliminary Offering Memorandum dated June 3, 2024 (the "Preliminary Offering Memorandum"), relating to the offering by Verimark Hospitality Group Inc. (the "Issuer" or the "Company") of its 8.250% Senior Notes due 2031 (the "Notes"). Capitalized terms used but not defined herein have the meanings ascribed to them in the Preliminary Offering Memorandum. The information in this Pricing Term Sheet supersedes the information in the Preliminary Offering Memorandum to the extent that such information is inconsistent with the information contained herein. All references to dollar amounts are to United States dollars unless otherwise indicated.
I. ISSUER INFORMATION
The Issuer is a leading owner and operator of full-service and select-service hospitality properties across the United States and select international markets. Additional information regarding the Issuer, including its business, financial condition, and results of operations, is set forth in the Preliminary Offering Memorandum, which should be read carefully and in its entirety by prospective investors before making any investment decision with respect to the Notes.
II. SECURITY DESCRIPTION
III. PRICING TERMS
The following pricing terms have been determined with respect to the Notes:
The Original Issue discount for U.S. federal income tax purposes will accrue over the term of the Notes on a constant yield to maturity basis. Prospective investors should consult the section entitled "Certain U.S. Federal Income Tax Considerations" in the Preliminary Offering Memorandum and their own tax advisors regarding the tax consequences of the Original Issue discount and the acquisition, ownership, and disposition of the Notes.
IV. SETTLEMENT INFORMATION
It is expected that delivery of the Notes will be made against payment therefor on the Settlement Date, which is the fifth business day following the Trade Date. Pursuant to Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, trades in the secondary market are required to settle in one business day, unless the parties to a trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes on the Trade Date or the next three succeeding business days will be required, by virtue of the fact that the Notes initially will settle in T+5, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of the Notes who wish to trade the Notes prior to the Settlement Date should consult their own advisors.
V. CUSIP / ISIN NUMBERS
144A Notes:
Regulation S Notes:
The CUSIP and ISIN numbers set forth above are included solely for the convenience of the holders of the Notes. The Issuer makes no representation as to the correctness or accuracy of such numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed thereon.
VI. OPTIONAL REDEMPTION
Make-Whole Redemption. Prior to July 1, 2027, the Issuer may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus a make-whole premium as described in the Preliminary Offering Memorandum, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. The make-whole premium is calculated by reference to the yield on a comparable U.S. Treasury security plus 50 basis points, as more fully described in the Preliminary Offering Memorandum.
Equity Clawback. Prior to July 1, 2027, the Issuer may, on one or more occasions, redeem up to 40% of the original aggregate principal amount of the Notes (i.e., up to $200,000,000) at a redemption price equal to 108.250% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date, with the net cash proceeds received by the Issuer from one or more qualifying equity offerings; provided, however, that:
(a) at least 60% of the originally issued aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional Notes) remains outstanding immediately after the occurrence of each such redemption; and
(b) each such redemption occurs within 180 days of the date of the closing of the applicable qualifying equity offering.
Fixed-Price Optional Redemption Schedule
On or after July 1, 2027, the Issuer may redeem the Notes, in whole or in part, at the following redemption prices (expressed as a percentage of the principal amount of the Notes to be redeemed), plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date, if redeemed during the twelve-month period beginning on July 1 of each of the years indicated below:
In each case set forth above, the applicable redemption price is expressed as a percentage of the principal amount of the Notes to be redeemed and is payable together with accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Notices of redemption will be provided in accordance with the terms and conditions described in the Preliminary Offering Memorandum and the Indenture.
VII. CHANGE OF CONTROL
Upon the occurrence of a Change of Control Triggering Event (as defined in the Preliminary Offering Memorandum), the Issuer will be required to make an offer to repurchase all of the outstanding Notes at a purchase price equal to 101.000% of the aggregate principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The terms and conditions of the Change of Control offer, including the definition of "Change of Control Triggering Event" and the procedures for tendering Notes, are described in greater detail in the Preliminary Offering Memorandum under the heading "Description of the Notes—Change of Control."
VIII. USE OF PROCEEDS
The Issuer estimates that the net proceeds from this offering, after deducting the Initial Purchasers' discount but before deducting other estimated offering expenses, will be approximately $483,750,000. The Issuer intends to use the net proceeds from this offering as follows:
The "Existing Credit Facility" refers to the Amended and Restated Credit Agreement, dated as of March 15, 2021, among Verimark Hospitality Group Inc., as borrower, the lenders party thereto from time to time, and Greystone National Bank, N.A., as administrative agent and collateral agent (Loan No. GNB-SYN-2021-04417), as amended, restated, supplemented, or otherwise modified from time to time. As of the date hereof, the Existing Credit Facility bears interest at a weighted average rate of approximately Term SOFR plus 3.50% per annum. The Existing Credit Facility has a maturity date of March 15, 2026. The proceeds from borrowings under the Existing Credit Facility were used to finance the acquisition of certain hospitality properties and for general corporate purposes, as more fully described in the Preliminary Offering Memorandum. Upon consummation of this offering, the Existing Credit Facility will be repaid in full and terminated.
IX. RATINGS
The Notes have received the following credit ratings:
A credit rating is not a recommendation to buy, sell, or hold securities and may be revised, suspended, or withdrawn at any time by the assigning rating agency in its sole discretion. Each rating should be evaluated independently of any other rating. The ratings reflect only the views of the applicable rating agencies, and any desired explanation of the significance of such ratings should be obtained from the respective rating agency. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be lowered, suspended, or withdrawn entirely by its respective rating agency if, in such rating agency's judgment, circumstances so warrant. A downgrade, suspension, or withdrawal of any rating assigned to the Notes may adversely affect the market price and marketability of the Notes.
X. INITIAL PURCHASERS
The Notes are being offered by the Initial Purchasers named below. The following table sets forth the names of the Initial Purchasers and their respective roles in this offering:
The Initial Purchasers have agreed, severally and not jointly, to purchase the Notes from the Issuer pursuant to the terms and conditions of the Purchase Agreement dated June 17, 2024, among the Issuer, the Guarantors, and the Initial Purchasers, as described in the Preliminary Offering Memorandum under the heading "Plan of Distribution."
XI. TRUSTEE, REGISTRAR, PAYING AGENT, AND TRANSFER AGENT
XII. GOVERNING LAW
The Indenture under which the Notes will be issued and the Notes themselves will be governed by, and construed in accordance with, the laws of the State of New York.
XIII. LEGAL ADVISORS
XIV. KEY INDENTURE PROVISIONS (SUMMARY REFERENCE)
The following is a summary of certain covenants and provisions to be contained in the Indenture governing the Notes. This summary is not complete and is qualified in its entirety by reference to the full text of the Indenture and the description of the Notes contained in the Preliminary Offering Memorandum under the heading "Description of the Notes." Prospective investors should read the Preliminary Offering Memorandum carefully and in its entirety for a more complete description of the covenants, events of default, and other terms of the Notes.
The foregoing summary of key indenture provisions is provided for convenience of reference only and is subject in all respects to the actual terms and conditions set forth in the Indenture. Prospective investors are urged to review the full covenant descriptions, definitions of capitalized terms, events of default, and other provisions contained in the Preliminary Offering Memorandum.
XV. REGISTRATION RIGHTS (SUMMARY REFERENCE)
In connection with the issuance and sale of the Notes, the Issuer and the Guarantors will enter into a Registration Rights Agreement with the Initial Purchasers. The following is a summary of certain key terms of the Registration Rights Agreement:
The foregoing summary of the Registration Rights Agreement is provided for convenience of reference only and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, a form of which is included as an exhibit to the Preliminary Offering Memorandum.
XVI. DISCLAIMERS AND ADDITIONAL INFORMATION
The Issuer has provided a Preliminary Offering Memorandum dated June 3, 2024 with respect to this offering. Before you invest, you should read the Preliminary Offering Memorandum and the other documents the Issuer has provided to you for more complete information about the Issuer and this offering. This Pricing Term Sheet is qualified in its entirety by reference to the Preliminary Offering Memorandum, including the risk factors, financial statements, and other information contained therein. In the event of any inconsistency between the information contained in this Pricing Term Sheet and the information contained in the Preliminary Offering Memorandum, the information in this Pricing Term Sheet shall control.
This offering is being made only to (i) qualified institutional buyers ("QIBs") as defined in Rule 144A under the Securities Act, in reliance on the exemption from registration provided by Rule 144A, and (ii) to non-U.S. persons (as defined in Regulation S under the Securities Act) in offshore transactions in reliance on Regulation S under the Securities Act. Prospective investors that are QIBs are hereby notified that the seller of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A thereunder.
The Notes have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction. The Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) except to QIBs in reliance on Rule 144A or pursuant to another exemption from the registration requirements of the Securities Act. Each purchaser of the Notes will be deemed to have made the representations and agreements described in the Preliminary Offering Memorandum under the heading "Transfer Restrictions."
Nothing in this Pricing Term Sheet constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so. This Pricing Term Sheet is not being made available to any person or in any jurisdiction where the making of this Pricing Term Sheet would not be in compliance with the laws of such jurisdiction.
Any disclaimers or legends required by the laws of any jurisdiction or required by the rules of any self-regulatory organization are deemed to be included herein to the extent required.
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© 2024 Verimark Hospitality Group Inc. All rights reserved.
Issuer: | Verimark Hospitality Group Inc. ("VMRK" or the "Company")
Ticker Symbol: | VMRK (Nasdaq Global Select Market)
Principal Executive Offices: | 2400 Brickell Bay Drive, Suite 3100, Miami, FL 33129
State of Incorporation: | Delaware
Security: | 8.250% Senior Notes due 2031 (the "Notes")
Type: | Senior Unsecured Notes
Aggregate Principal Amount: | $500,000,000
Guarantors: | Verimark Resort Holdings LLC, VHG Properties Inc., Bayshore Hotel Management LLC, Verimark Capital Holdings LLC, and Pinnacle Lodging Enterprises Inc. (collectively, the "Guarantors")
Ranking: | The Notes will be senior unsecured obligations of the Issuer, ranking equally in right of payment with all existing and future senior indebtedness of the Issuer, and senior in right of payment to all existing and future subordinated indebtedness of the Issuer. The Notes will be effectively subordinated to all existing and future secured indebtedness of the Issuer, to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of each non-guarantor subsidiary. The guarantees of the Notes will be senior unsecured obligations of the Guarantors, ranking equally in right of payment with all existing and future senior indebtedness of each Guarantor, and senior in right of payment to all existing and future subordinated indebtedness of each Guarantor.
Form: | The Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
Coupon / Interest Rate: | 8.250% per annum
Interest Payment Dates: | January 1 and July 1 of each year, commencing January 1, 2025
Interest Payment Amount: | Semi-annual payments of $20,625,000 (calculated as $500,000,000 × 8.250% ÷ 2)
Day Count Convention: | 360-day year consisting of twelve 30-day months
Maturity Date: | July 1, 2031
Issue Price: | 98.500% of the aggregate principal amount
Gross Proceeds: | $492,500,000 (calculated as $500,000,000 × 98.500%)
Original Issue discount (OID): | 1.500% of the aggregate principal amount ($7,500,000)
Yield to Maturity: | Approximately 8.524%, calculated on a semi-annual bond equivalent basis, consistent with the 98.500% issue price and 8.250% coupon rate
Spread to Benchmark Treasury: | T + 400 basis points (indicative)
Benchmark Treasury: | 4.250% due May 15, 2031
Initial Purchasers' discount: | 1.750% of the aggregate principal amount ($8,750,000) (calculated as $500,000,000 × 1.750%)
Net Proceeds to Issuer (before expenses): | $483,750,000 (calculated as $492,500,000 − $8,750,000)
Trade Date: | June 17, 2024
Settlement Date: | June 25, 2024 (T+5 business days)
First Interest Accrual Date: | July 1, 2024
Record Date: | December 15 and June 15 immediately preceding each interest payment date
Delivery: | Book-entry form only, through the facilities of The Depository Trust Company ("DTC") and its direct and indirect participants, including Westmark & Co. ("Ashgrove Enterprises") and Stonefield Industries ("Thackeray Partners LLC"), as applicable
CUSIP: | 923847 AA 5
ISIN: | US923847AA52
CUSIP: | U92384 AA 8
ISIN: | USU92384AA83
Redemption Period | Redemption Price (% of Principal Amount)
On or after July 1, 2027 and prior to July 1, 2028 | 104.125%
On or after July 1, 2028 and prior to July 1, 2029 | 102.063%
On or after July 1, 2029 and thereafter | 100.000%
Use of Proceeds | Amount
Repayment of Existing Credit Facility (principal) | $467,342,819.16
Accrued interest on Existing Credit Facility | $4,207,180.84
Prepayment premium (0.50% of outstanding principal) | $2,336,714.10
Transaction fees and expenses (including legal, accounting, printing, trustee, and rating agency fees) | $6,863,285.90
General corporate purposes | $3,000,000.00
Total | $483,750,000.00
Rating Agency | Rating | Outlook
Crestline Ratings Group | B1 | Stable
Broadmark Rating Services Inc. | B+ | Stable
Role | Firm
Lead Left Bookrunner and Representative of the Initial Purchasers | Kensington Barrow & Co.
Joint Bookrunner | Ridgeline Capital Markets LLC
Co-Manager | Stonebridge Marvelo Securities Inc.
Trustee: | Fidelitas Trust Company, N.A.
Registrar: | Fidelitas Trust Company, N.A.
Paying Agent: | Fidelitas Trust Company, N.A.
Transfer Agent: | Fidelitas Trust Company, N.A.
Address: | 100 Wall Street, Suite 1500, New York, NY 10005
Issuer's Counsel: | Calderwood & Harkness LLP
Initial Purchasers' Counsel: | Whitfield, Crane & Aldrich LLP
Provision | Summary
Fixed Charge Coverage Ratio Incurrence Test | ≥ 2.00 to 1.00
Restricted Payments Basket | $50,000,000 plus 50% of Consolidated Net Income (cumulative from July 1, 2024, with certain adjustments as described in the Preliminary Offering Memorandum)
Permitted Indebtedness General Basket | $75,000,000
Permitted Liens Basket | $50,000,000
Asset Sale Proceeds Application Period | 365 days from receipt of Net Proceeds
Provision | Summary
Filing Deadline | The Issuer will be required to file a registration statement with the Securities and Exchange Commission relating to an offer to exchange the Notes for a new issue of substantially identical notes registered under the Securities Act within 180 days after the closing of this offering (i.e., on or before January 4, 2025).
Effectiveness Deadline | The Issuer will use its commercially reasonable efforts to cause such registration statement to be declared effective within 365 days after the closing of this offering (i.e., on or before July 8, 2025).
Additional Interest for Non-Compliance | If the Issuer fails to comply with its obligations under the Registration Rights Agreement, additional interest will accrue on the Notes at a rate of 0.25% per annum for the first 90 days following such failure, increasing to 0.50% per annum thereafter, subject to a maximum additional interest rate of 1.00% per annum.