UFC Holdings LLC First-Lien Rating Lowered To 'B' On Proposed $465 Million Add-On To Fund Preferred Stock Repayment

NEW YORK (S&P Global Ratings) Sept. 9, 2019--S&P Global Ratings today lowered the issue-level rating on Las Vegas-based mixed martial arts promoter UFC Holdings LLC's first-lien debt to 'B' from 'B+' and revised the recovery rating to '3' from '2' as a result of the company's proposed add-on of $465 million to the first-lien term loan due 2026. The lower ratings reflect higher first-lien debt and lower recovery prospects for first-lien lenders in a hypothetical default scenario. We expect the first-lien term loan to have $2.344 billion outstanding after the add-on. The recovery rating of '3' indicates our expectation for meaningful recovery (50%-70%; rounded estimate: 55%) of principal in the event of a payment default. UFC plans to use the

...to shareholders, a failure to retain or recruit key performers, increased competition from new entrants or alternative sports categories, and unsuccessful new business ventures. - We assume UFC would reorganize following a default and used an emergence EBITDA multiple of 6.5x to value the company. Simulated default assumptions - Year of default: 2022 - EBITDA at emergence: $243 million - EBITDA multiple: 6.5x - Cash flow revolver: 85% drawn at default Simplified waterfall - Net recovery value (after 5% administrative expense): $1.5 billion - Obligor/nonobligor valuation split: 100%/0% - Estimated secured commercial debtholder claims: $35.5 million - Estimated first-lien debt claims: $2.48 billion - Recovery range: 50%-70% (rounded estimate: 55%) Note: All debt amounts include six months of prepetition interest....

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