https://www.sec.gov/Archives/edgar/data/1326380/000132638023000047/creditagreementwellsgamest.htm

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Gamestop filed their updated Credit Agreement today as part of their 10-Q. A Credit Agreement details the terms of a loan. This one happens to be 206

This details the terms of the loan, agreed upon by lenders (Wells Fargo giving the lending the money, and WF, JPM, & BoA are helping administrate) to Gamestop (lead plan administrators/holders of the loan). A few GS subsidiaries are being used as collateral to guarantee the loan.

This is the first page in the Credit Agreement outlining the big players that are cited above.

Now, in these Credit Agreements there are all kinds of stipulations on what you can and can’t do with the money. I don’t usually spend all day reading Credit Agreements, so I’m not speaking from experience here, but this seems like it’s tailored specifically for a very complex merger / acquisition or SERIES of them.

Using this as my baseline, I then wanted to figure out if Gamestop would be acquired - or they were the ones doing the acquiring.

You don’t have to read this following image, I’ll summarize for you, but here it is for reference

A "Permitted Acquisition" in this credit agreement refers to a purchase or acquisition by Gamestop or its subsidiaries. For Gamestop to be allowed to go through with the acquisition certain conditions must be met by Gamestop, including having no defaults, meeting collateral and guarantee requirements, complying with financial conditions, and obtaining board approval for the acquisition.

Seems good, pretty standard.

Negative Covenants - Article 9

Article 9 is about what circumstances are not allowed for the loan to be used, as well as exceptions to the rules depending on the categories. It’s huge, so I’m not going to post it here.

9.1 goes into Limitations based around Liens.

Section 9.2: This section outlines the types of investments that GameStop and its Restricted Subsidiaries are permitted to make with the money from the agreement. These include investments in cash and cash equivalents, loans to officers and employees, intercompany loans, and extensions of credit in the ordinary course of business. The section also allows for investments related to swap contracts, promissory notes, and other specific circumstances. Investment limits based on certain financial metrics and conditions are also defined.

It’s a very big section - but there’s certainly a standout. In case you already forgot, this is the section stating what Gamestop can use the money on.

9.2(l) Joint Ventures & Joint Venture Investments

Since this is a legal document, we have to define both Joint Ventures, and Joint Venture Investments per the terms of the Credit Agreement.

"Joint Venture Investments," are defined as investments in any Joint Venture or Unrestricted Subsidiary. A "Joint Venture" is any entity in which a Loan Party (GME) or a Restricted Subsidiary has significant influence but not full control. This is often characterized by ownership of between 20% and 50% of the voting stock. Additionally, a Joint Venture can also be any entity in which GameStop or its Restricted Subsidiaries have an Equity Interest but which is not categorized as a Restricted Subsidiary (other than an Unrestricted Subsidiary).

The agreement specifies that the aggregate amount for such Joint Venture Investments cannot exceed the greater of (a) $25,000,000 or (b) 15% of the Consolidated EBITDA as of the most recently ended Test Period, calculated on a Pro Forma Basis.

For example, let's say GameStop wants to invest in IEP. If GameStop acquires between 20% and 50% of IEP's voting stock, they would have a Joint Venture with IEP, and this investment would fall under the category of "Joint Venture Investments." The amount GameStop could invest in IEP would then be subject to the financial limitations specified in the agreement, such as not exceeding $25,000,000 or 15% of their most recent Consolidated EBITDA.

Additionally, if GameStop already owns an Equity Interest in IEP but does not have Joint Venture status (i.e., they own less than 20% of the voting stock), they could still make additional investments in IEP to either maintain their Equity Interest or potentially reach Joint Venture status, provided they stay within the financial constraints of the Loan Agreement. Now, we don’t know if they hold IEP or even if this is their strategy.

But, here’s what I think is going on, and how specifically the Joint Ventures are going to work in the long run, and what they’re building structurally here. It fits in with every part of the thesis, and explains a lot of these tangental connections. We have all speculated about companies being under the Teddy umbrella, I’m not trying to claim that as my idea, but rather give it structure with a bit more context. Again, this is extrapolation from the information provided. Enter, the Japanese business structure of the horizontal keiretsu.

Horizontal Keiretsu

A Keiretsu is a set of companies with interlocking business relationships and shareholdings. It is a type of business group. There are two types, Horizontal and Vertical. I believe we are about to see a Horizontal Keiretsu once Teddy is born. But before we get to how we get Teddy, let’s go over what a Horizontal Keiretsu is.

A bank (Teddy) is usually at the center, providing financial support. Companies in a horizontal Keiretsu often own small percentages of shares in each other, strengthening mutual relationships and discouraging hostile takeovers. I theorize that Larry Cheng, Pulte, Icahn, Brett Icahn, Kevin Plank, and many more, are working alongside RC - hoovering up companies to add to the keiretsu, along with their own established companies.

Structure of a Horizontal Keiretsu

• Centered Around a Bank: A major bank often sits at the center of a horizontal Keiretsu, providing financial services and support to all member companies. The bank essentially acts as the backbone of the group, ensuring liquidity and credit availability.

• Cross-Ownership: Companies in the group usually own small stakes in each other. This shareholding structure reinforces mutual trust and discourages hostile takeovers.

Industries and Sectors

• Diverse Portfolio: Companies in a horizontal Keiretsu typically come from a wide range of industries. Think very, very big. The diversification adds resilience to the group as a whole. Not just Amazon categories but manufacturing, electronics, etc. Like if Newell, Canon, L Catterton, Apple, Nike, Sears, Macys, LEGO, Nordstrom, IEP, Flexport, Gamestop, & Overstock / Bed Bath & Beyond all centered around a BANK / financial holding company called Teddy.

Key Features

• Collaboration: Member companies often collaborate on joint ventures, R&D projects, and other initiatives. The tight-knit network makes it easier to coordinate these efforts.

• Information Sharing: Inside the Keiretsu, there is often a free flow of information, helping companies anticipate market trends or economic downturns more accurately.

• Supply Chain: While not as tightly integrated as in a vertical Keiretsu, member companies do prefer to do business with each other, further strengthening the ties.

• Risk Mitigation: The cross-shareholding and mutual business interests allow for risks to be distributed more evenly across the group, making each company more resilient to market fluctuations.

This vibing with you? Through series of complex M&A activity, including the launch of Teddy, we will have our Amazon competitor in the form of a Horizontal Keiretsu.

Lets jump back to the Credit Agreement in GME’s 10-Q - Section 9.8

First off, there’s lots of good stuff in here. Lots to go over, and I’ll likely add to this post as I find more things after I sleep. There’s one section in particular that I feel is applicable, to the situation with towel, that is. Remember, we’re still in the Negative Covenants aka things you can’t do unless there’s an exception, so here’s the thing we can’t do, and then there’s a bunch of exceptions that will allow you to do it.

So, you can’t use the money for any acquisition over $5,000,000 with any Affiliate unless you meet one of the exceptions they list. The reason the Affiliates bit here is important, is because Affiliates also include yourself if you happen to control multiple companies which would stop Gamestop RC from acquiring something from another company he owns - say Teddy. There’s possibly several more exceptions here that would apply, but these are the ones that struck me. The highlighted bits are summarized below.

Take note of all the [reserved] placeholders. That leaves a lot of flexibility to add in whatever you’d like down the line. I’m sure more of these apply, but I’m v tired and just chose a couple.

Section 9.8(i) in the restricted covenants allows transactions with affiliates if they were already in place as of a certain date (the Closing Date) and are listed in a specific schedule. Amendments to those existing agreements are also allowed, as long as they don't materially harm the lenders compared to the original terms. This, IMO, leaves the door open to slide in whatever you want before the Closing Date.

Section 9.8(r) allows transactions with affiliates if those transactions are approved by a majority of the board members who have no personal interest in the transaction. These are known as "disinterested members" of the Board of Directors. As long as the majority of the Board of Directors in Gamestop approves of the transaction, it’s good to go.

If Gamestop wanted to acquire Loopring, Elixer, or some other well-priced complimentary company, they now have everything they need to do so.

We can only speculate on what companies Gamestop is looking to merge with. I have a few thoughts, but this post is already punishing enough. The point is, they’re ready. This feels like the launchpad - you do not go through all this trouble just to sit on your hands and waste time. If we’re going to have our Horizontal Keiretsu, we need a bank.

Teddy

First, let's scroll back up to the top and double check the date the Credit Agreement was amended. May 11th, 2023, right? Look what happened on the 12th?

Teddy is currently registered as a financial holding company / a bank. They are currently a private company. We know that RC had interest in that baby company many moons ago that was tied to that towel stock that went bankrupt and now is a shell of a company. What if I told you, that the best way for Teddy to go public, was through the carcass of towel - which has stripped away all assets and “has nothing left to sell?” In a reverse-merger, you do exactly this. You use the shell of a public company in order to launch a private company public. It allows you to skip a bunch of hoops that you typically need to jump through to go public via IPO. In addition to this, if you play your cards right, you can use any Net Operating Losses as a tax credit over the course of a few years.

Before this part starts up, you have to be on the same page with me on something. First, this is only my opinion, but it’s rooted in pretty solid facts that are somewhat undeniable. There is a ton of noise around this subject. It has been censored somewhat relentlessly. However, considering the contents of this 10-Q, I feel it’s important to discuss the facts here - as I know them. I’m up to constructive discussion on any of these points, and am happy to clarify anything. Please also know that a certain group has been targeting me and my posts recently; take that for what it’s worth.

First, RC is listed as both a creditor & a codebtor in bankruptcy documents of that company. To become a creditor, the company has to owe you money. To be a codebtor, you have to be on the hook to some degree as well. Sometimes it means you cosigned as a guarantor on something. Like, if you have you dad cosign for a car, then you are codebtors with your dad. Word?

Before bankruptcy, this company issued stacks of Series A Convertible Preferred shares, that you could exercise into warrants, which you could then either exercise the warrants for Common Stock or cash. Still with me? These also had a “Bankruptcy Triggering Provision” via the Redemption Rights via the 10-K that was filed months late in June.

We know from filings that the vast majority of these were exercised to Common Stock. ~23,365 There were 180 of the Series A shares that were not exercised. Keep in mind, these were $10,000 each at the time of sale. Per the Redemption Rights above, the holder when going into bankruptcy has the option to exercise the Series A shares for 115% of the original purchase price. In short, they could have made 15% risk free and gone home.

But they didn’t. They exercised all of them for Stock A. Well, all of them but 180 of them. 180 shares of Series A entitles the holder to choose either cash or common stock. However, the company has no say when that happens. Due to these Series A shares in limbo, the company is required to retain both the number of shares & the cash - because they don’t know what the holder will choose, and they can’t make them exercise. Not only this, but from the 13,543 Series A shares that were sold - Towel took a $3.1 billion dollar reduction to retained earnings on their consolidated balance sheet. That loss will be part of the carry-forward equity - which will offset tax burdens via NOLs over the course of years.

Visit my profile for more info - I can’t get too bogged down here. That explains RC as a creditor. Nothing else really does.

Now, why is he the codebtor? In short, he cosigned for the DIP facility, which not only gives him supermajority creditor position through 6th street, but also the rights of a debtor, because his dick is on the line if towel dies and 6th street doesn’t get paid. The big right here is being the only one to submit a plan in ch 11. That exclusivity period doesn’t end until November. Through Common Stock ownership, creditor rights through Series A, supermajority creditor rights via the DIP provided through 6th street, and he’s in exclusive control over the plans that get submitted.

“bUt YoU dOnT hAvE pRoOf FoR tHaT” - THERE IS NO OTHER LOGICAL EXPLANATION.

We know RC puts his money where his mouth is. The idea that he just sold, left a bunch of his loyal followers holding the bag, only to continue to get eviscerated and eventually wiped out, without saying a single word… is also not logical. Not on any level. He has nothing to gain. It’s not in his character. He’s not going to just lay down and take, even if option a didn’t work. He’s principled and this is about more than money - and he wouldn’t hang you out to dry. Not with his, and his father’s, legacy on the line.

UPDATE: FROM THE FILINGS TONIGHT BY TOWEL (9.8 around midnight)

YOU'RE HAVING A BABY! 🎉

A lot of ways this could go

Again, I’m not here to tell you I’m right. The way this is set up though, we just don’t know the scope of it. I personally believe we’re going to lose our minds once those bricks start clickin’.

I’m not here to tell you that Gamestop is going to acquire Dream on Me who bought the baby IP. I really don’t know, there’s provisions in docket 1314 Section 2.7(a) that allow for all the contracts to be transferred back to the seller - in this case towel - which I speculate to be teddy. Maybe Gamestop is going to buy just gaming companies, and then Teddy is going to launch and buy Dream On Me. Again, I can only speculate - but this feels big. There’s been a ton of DD done on the other stock that is worth reading. The DD on GME shouldn’t be done either, and I hope this post helped you understand some of the possibilities.

Moon soon, but actually.

TLDR

• Gamestop filed their updated Credit Agreement today as part of their 10-Q. This details the terms of the loan, agreed upon by lenders (Wells Fargo giving the lending the money, and WF, JPM, & BoA are helping administrate) to Gamestop (lead plan administrators/holders of the loan). I.e., Gamestop decides where the money goes assuming certain conditions are met.

• According to the terms of the agreement, it appears that Gamestop is gearing up to be part of at least one - possibly multiple - joint ventures. You take this against what has been speculated in the past and things start to fit better.

• There are many paths to successful mergers listed in this agreement. It doesn’t have specifics for now, we can only speculate. However, there is plenty of room for them to fill in the blanks whenever they’re ready. Everything else here is good to go, they just need to pull the trigger.

• If Teddy is going to be a financial holding company, I speculate based around facts from filings with some drawing conclusions, how Teddy could go public and how it fits in with GME’s M&A activity.

• It’s 9:30 in the morning. I literally haven’t slept and will update this TLDR to be more robust tomorrow, plus add / fix anything y’all drop in the comments.