UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT:
January 5, 2009
(Date of earliest event reported)
FX REAL ESTATE AND ENTERTAINMENT INC.
(Exact name of registrant as specified in charter)
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Delaware
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001-33902
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36-4612924
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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650 Madison Avenue
New York, New York
(Address of principal executive offices)
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10022
(Zip Code)
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Registrants telephone number, including area code:
(212) 838-3100
(Former Name or Former Address, if
Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.04
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Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
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FX Real Estate and Entertainment Inc.s (the
Company
) subsidiaries that own its
Las Vegas properties (the
Las Vegas Subsidiaries
) have received from their lenders
written demands for repayment of all of the obligations owed to the lenders under the outstanding
$475 million mortgage loan on the Las Vegas properties (the
Loan
), which is governed by
the Amended and Restated Credit Agreements (referenced below). The Loan matured on January 6,
2009.
As previously reported, the Las Vegas Subsidiaries had obtained a temporary waiver of
noncompliance with certain of the Loans debt-to-loan ratio covenants that expired on December 19,
2008 in accordance with it terms. Because the Las Vegas Subsidiaries did not regain compliance with
the debt-to-loan value ratio covenants prior to expiration of the temporary waiver, an event of
default occurred and is continuing under the Loan.
On January 5, 2009, the second lien lenders under the Loan delivered a written demand for
repayment of all of the obligations owed to them under the Loan, including the second lien
principal amount of $195 million. The second lien lenders written demand, which was delivered
prior to the Loan maturity date, cited the continuing covenant default referenced above.
On January 6, 2009, following the Las Vegas Subsidiaries failure to repay the Loan at
maturity, the first lien lenders under the Loan delivered their demand for repayment of all of the
obligations owed to them under the Loan, including the first lien principal amount of $280 million.
The first lien lenders have exercised their right to restrict the Las Vegas Subsidiaries access
to the cash collateral reserve accounts established under the Loan from which the Las Vegas
Subsidiaries had been drawing working capital funds to meet ordinary expenses, including operating
the Las Vegas Properties. Each draw of funds from these accounts will require the consent of the
first lien lenders. Therefore, the Las Vegas Subsidiaries may no longer be able to fund working
capital requirements in accordance with the prior procedures.
Neither the Company nor the Las Vegas Subsidiaries are able to repay the obligations
outstanding under the Loan.
As a result of delivery of the demands for repayment and the Loan being past due, the lenders
may at any time exercise their remedies under the Amended and Restated Credit Agreements, which may
include foreclosing on the Las Vegas properties.
The Loan is not guaranteed by the Company nor has the Company pledged any assets to secure the
Loan. The Loan is secured by first and second lien security interests in substantially all of the
assets of the Las Vegas Subsidiaries, including the Las Vegas properties.
The Loan is governed by the terms and conditions of the Amended and Restated Credit Agreement,
Senior Secured Term Loan Facility (First Lien), dated as of July 6, 2007, and the Amended and
Restated Credit Agreement, Senior Secured Term Loan Facility (Second Lien) dated as of July 6,
2007, both of which are filed as exhibits to Amendment No. 1 to the Companys Registration
Statement on Form S-1 (Registration No. 333-145672), as filed with the Securities and Exchange
Commission on October 9, 2007.
The foregoing description of the Loan does not purport to be complete and is qualified in its
entirety by the complete text of these aforesaid Amended and Restated Credit Agreements, which are
incorporated herein by reference.