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the draft term sheet and refining the terms and provisions in the
draft term sheet. The memorandum stated that the letter
agreement “would require Generale Bank and CLIS simply to
transfer their respective assets to a Newco in exchange for
preferred interests which will be monetized.”25 Rockport Capital
would form a Delaware limited liability company (“Newco”) and
contribute assets (cash and securities) to Newco in an amount
mutually agreed by Rockport, CLIS, and Generale Bank, in exchange
for all the common interests in Newco; CLIS would contribute all
the stock of MGM Group Holdings to Newco in exchange for
preferred membership interests in Newco; and Generale Bank would
contribute to Newco, in exchange for preferred membership
interests, some $1.050 billion of obligations that MGM Group
Holdings owed to Generale Bank. Regarding documentation, the
first draft letter agreement provided:
3. Documentation. The Transactions will be
documented in the form of an Exchange and Contribution
Agreement * * * among Newco, CLIS and * * * [Generale
Bank] which will contain customary representations,
warranties and indemnification provisions, including,
without limitation, (i) representations and warranties
by CLIS concerning Group’s assets and the absence of
any undisclosed liabilities, (ii) representations and
warranties by CLIS as to its basis in the stock of
Group, (iii) representations and warranties by * * *
[Generale Bank] as to the original amount of the loans
25 Mr. Geary explained that “by this time [the time of the
draft letter agreement] clearly there was going to be a second
letter, a put letter. That’s what I understood to be monetized.
There was a put available. We didn’t have to wait, you know, for
the time of the deal.”
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