OREANDA-NEWS. S&P: UFC Holdings LLC 'B+' First-Lien Debt Ratings Unchanged Following $75 Million Upsize New York S&P Global Ratings said today that its issue-level and recovery ratings on UFC Holdings LLC's first-lien term loan and second-lien term loan remain unchanged after the company increased the first-lien term loan by $75 million to $1.375 billion, and decreased the second-lien term loan by $75 million to $425 million. The total amount of debt in the capital structure is unchanged, and there is no meaningful impact to our base-case forecast for UFC.

Our issue-level rating on the first-lien term loan remains 'B+'. The '2' recovery rating reflects our expectation for substantial recovery (70-90%; lower half of the range) for lenders in the event of a payment default. The shift to the lower half from the upper half of the '2' recovery range reflects the additional first-lien debt in the capital structure. Our '6' recovery rating and 'CCC+' issue level rating on the company's second-lien term loan are unchanged, despite the decrease in the size of the facility, indicating our expectation for negligible recovery (0-10%) for lenders in the event of default.

Our 'B' corporate credit rating remains unchanged. The outlook is negative. For the complete corporate credit rating rationale, see our research update on UFC Holdings, published July 22, 2016, on RatingsDirect.

RECOVERY ANALYSISKey analytical factorsOur simulated default scenario contemplates a payment default in 2018, reflecting a substantial decline in cash flow as a result of a combination of factors. They may include increased competition from new entrants or alternative sports categories, prolonged economic weakness, injury to high profile fighters, failure to retain or recruit key performers, failure to maintain or renew key sponsorship agreements, higher production costs, and unsuccessful new business ventures. We assume a reorganization following the default, using an emergence EBITDA multiple of 6.5x to value the company, which is comparable to that applied to its peers. Simulated default assumptionsYear of default: 2018EBITDA at emergence: $197 mil. EBITDA multiple: 6.5xSimplified waterfallNet enterprise value (after 5% administrative costs): $1.219 bil. First-lien secured debt claims: $1.530 bil.