Item 1.01 Entry into a Material Definitive Agreement.
On January 29, 2026, MSG Las Vegas, LLC (“MSG LV”), an indirect, wholly-owned subsidiary of Sphere Entertainment Co. (the “Company”), entered into a credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent and L/C Issuer, and the lenders party thereto, providing for (i) a $275 million senior secured term loan facility (the “Term Loan Facility”) to refinance the existing term loan and (ii) a senior secured revolving credit facility in the maximum principal amount of $275 million (the “Revolving Credit Facility” and collectively, the “Sphere Facilities”), the proceeds of which are expected to be used for working capital and general corporate purposes, including distributions to Sphere Entertainment Group, LLC (“Sphere Entertainment Group”). All obligations under the Sphere Facilities are guaranteed by Sphere Entertainment Group.
The Sphere Facilities include financial covenants requiring MSG LV to maintain a minimum debt service coverage ratio of 2.50:1.00 and a maximum total leverage ratio of 3.50:1.00. Both covenants are tested quarterly based on the four consecutive fiscal quarters of MSG LV then most recently ended.
The Sphere Facilities will mature on January 29, 2031. Commencing with the first fiscal quarter to occur after the second anniversary of the closing of the Term Loan Facility, the principal obligations under the Term Loan Facility will be subject to amortization payments of 5% per annum, paid in quarterly installments, with the remainder of the Term Loans due at maturity. Borrowings under the Sphere Facilities will bear interest at a floating rate, which at the option of MSG LV may be either (i) Term SOFR (as defined in the Sphere Facilities) plus a margin that ranges from 2.50% to 3.00% based on MSG LV’s total leverage ratio or (ii) the Alternative Base Rate (as defined in the Sphere Facilities) plus a margin that ranges from 1.50% to 2.00% based on MSG LV’s total leverage ratio.
All obligations under the Sphere Facilities, including the guarantees of those obligations, are secured by all of the assets of MSG LV and a pledge of the equity interests in MSG LV held directly by Sphere Entertainment Group (collectively, “Collateral”) including, but not limited to, MSG LV’s leasehold interest in the land on which the Las Vegas Sphere is located. Under certain circumstances, MSG LV is required to make mandatory prepayments on the loan, including prepayments in an amount equal to the net cash proceeds of casualty insurance and/or condemnation recoveries (subject to certain reinvestment, repair or replacement rights), subject to certain exceptions.
In addition to the covenants described above, the Sphere Facilities and the related guaranty and security and pledge agreements contain certain customary representations and warranties, affirmative and negative covenants and events of default. The Sphere Facilities contain certain restrictions on the ability of MSG LV to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the Sphere Facilities, including the following: (i) incurring additional indebtedness; (ii) incurring liens on its assets; (iii) making investments, loans or advances in or to other persons; (iv) paying dividends and distributions to the extent a default or event of default under the Sphere Facilities is in effect at such time or the debt service reserve account is not funded to the extent required; (v) changing its lines of business; (vi) engaging in certain transactions with affiliates; (vii) amending organizational documents; (viii) merging or consolidating; and (ix) making certain dispositions.
The credit agreement governing the Sphere Facilities, the guaranty given by Sphere Entertainment Group and the related security and pledge agreements have been filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K, respectively. The description of the agreements contained herein is qualified in its entirety by reference to the agreements, which are incorporated into this Item 1.01 by reference.
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