NEP/NCP Holdco Inc.

Overview Key strengths Key risks Strong market position as one of the largest global providers of outsourced production services for sporting events and entertainment. Elevated leverage and low free operating cash flow (FOCF) due to the high capital intensity of the business. Good geographic footprint and scale in a fragmented landscape of smaller regional players. Macroeconomic exposure within its live events business and a still-nascent virtual studios production segment. Good revenue visibility from relationships with its clients and high contract renewal rates. Client concentration risks, especially in its broadcast services segment. The company has issued approximately $122.5 million of preferred stock, primarily to its financial sponsor, The Carlyle Group, and its management team while also entering into a sale-leaseback agreement

...NEP's very high capital expenditures (capex) and resulting low free operating cashflow (FOCF) continues to be a key credit risk, although we expect the company will maintain adequate liquidity over the next 12 months. The company has issued approximately $122.5 million of preferred stock, primarily to its financial sponsor, The Carlyle Group, and its management team while also entering into a sale-leaseback agreement to raise an additional $130 million through the first quarter of 2024 ($78 million has been raised as of ept. 30, 2023). NEP is currently building its NEP 360 infrastructure to mitigate its cycles of elevated capex, which typically incur high capex and low cash flow during broadcast contract renewals. This project entails centralizing production globally, significantly reducing its on-site footprint at its broadcast events. The NEP 360 plan could significantly reduce capex in future renewal cycles as centralized production hubs can be singularly updated without costly rebuilds...

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