MPO year in review – UFC takes out loan, cashes out Fertittas

December 23, 2017

In April, the UFC sought to raise $100 million in incremental loans to complete its buyout of the previous owners.  It appears that the UFC received those loans as the Fertittas cashed out the remaining shares they had left in the company in August.

KKR Capital was leading the effort in obtaining the loans for the company.  According to an investor presentation, with the $100 million loan, the UFC will be at 5.8 times whereas the first lien net leverage would be 4.8 times.

The UFC is marketing the company at $320M EBITDA which is an increase from an estimated $226M EBITDA from 2016 and $192M from 2015.  The numbers come from an investor presentation although there is skepticism about the vast jump from $226M to $320M.  Additionally, it is said that the company’s cuts once it took over in July has achieved cost savings of $10 million and it is projected to save $55 million by the end of 2017.

The UFC is seeking to raise $100 million in incremental loans to repay the previous owners (i.e. Frank and Lorenzo Fertitta and Flash Entertainment) in the case of a potential earnings-based payout according to a report from Reuters.

The payouts of $175M and $75M are due in the event of EBITDA milestones.  According to the Reuters report, the first payout could be due in the latter part of 2017.

KKR Capital, which took over from Goldman Sachs in January as the lead financier, is leading the process for this new loan.  Federal regulators took issue with Goldman Sachs due to its add-backs in projecting the company’s EBITDA.  KKR is not subject to the federal leverage lending guidance.

According to an investor presentation, with the addition of the $100 million loan, the UFC will be at 5.8 times (debt leverage) whereas the first lien net leverage will be 4.8 times.

The UFC is marketing the company at $320M EBITDA which is an increase from an estimated $226M EBITDA from 2016 and $192M from 2015.  The numbers come from an investor presentation although there is skepticism about the vast jump from $226M to $320M.  Additionally, it is said that the company’s cuts once it took over in July has achieved cost savings of $10 million and it is projected to save $55 million by the end of 2017.

In August 2017, Forbes reported that the Fertittas sold their remaining stake in the company. They received roughly a 26% premium over last year’s transaction.  The company acquired for $4.2 Billion dollars in July 2016 was valued at $5 Billion over a year later.

Got something to say?

You must be logged in to post a comment.