CANTON – The Hall of Fame Resort & Entertainment Co. considered declaring Chapter 11 bankruptcy because of its cash flow issues, but “could not afford the costs of filing,” according to a recent report filed with the Securities and Exchange Commission.
The company — which is developing the football-themed Hall of Fame Village — expected to run out of cash by Nov. 18, 2024, and entered an interim funding agreement with CH Capital Lending for a loan that has increased to $8 million.
“Absent the interim funding, HOFV’s plan would have been to wind down operations — lay off 90% of employees, inform creditors of its inability to make timely payments and cancel upcoming events,” according to Wedbush Securities, which the Hall of Fame Resort hired to advise a special committee of board members tasked with analyzing a proposal to take the company private.
Stuart Lichter, the Hall of Fame Resort’s majority shareholder who is also affiliated with lenders that have provided millions of dollars to the company, offered to buy all outstanding shares for 90 cents per share through an investment company.
Wedbush’s presentation — given in May to the committee — was included in the company’s SEC filing on July 11. The Los Angeles-based financial firm called the 90 cents per share offer “fair, from a financial point of view,” at the time of its presentation. Among the merger’s listed merits was “immediate liquidity for shareholders, in comparison to potential bankruptcy.”
The Hall of Fame Resort’s board authorized the transaction earlier this year, and a shareholder vote has yet to be scheduled.
“We continue to actively work toward taking the company private and remain committed to acting in the best interests of our stakeholders as we move forward,” Anne Graffice, the company’s executive vice president of global marketing and public affairs, said in a prepared statement. “We will share additional information once the definitive proxy is filed and when legally appropriate.”
According to Wedbush’s presentation, the merger is expected to close by Oct. 31. HOFV Holdings LLC, a newly formed entity affiliated with Lichter, would acquire all outstanding equity interests, and the Hall of Fame Resort would survive by merging with Omaha Merger Sub Inc. to become a wholly owned subsidiary of HOFV Holdings.
Other highlights of the presentation include:
The Hall of Fame Village is building a football-themed destination surrounding the Pro Football Hall of Fame and Tom Benson Hall of Fame Stadium. The company has built sports fields, constructed the indoor Center for Performance, and added businesses, restaurants and attractions such as a Ferris wheel. But its efforts to finish the construction of the Gameday Bay water park and start construction on a hotel on the campus have stalled because of finances.
Reach Kelly at 330-580-8323 or kelly.byer@cantonrep.com.
This article originally appeared on The Repository: Hall of Fame Resort considered bankruptcy but ‘could not afford costs of filing: Report
Reporting by Kelly Byer, Canton Repository / The Repository
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