S&P rates Authentic Brands loans B, CCC+

S&P said it assigned Authentic Brands Group LLC’s upcoming $1.675 billion first-lien term loan B issue and 3 recovery ratings and CCC+ and 6 recovery ratings to its planned $500 million second-lien term loan.

It will use proceeds, balance sheet cash and $9 billion of new and rolled over equity to fund a recapitalization, the purchase of Reebok and another entertainment brand, fund a $500 million distribution to shareholders, repay a portion of its outstanding first-lien term loan, and pay fees and expenses. The agency said it will withdraw its ratings on the incremental first-lien term loan once it is repaid.

Concurrently, S&P affirmed the company’s B issuer rating and removed it from CreditWatch with developing implications, where the agency placed the rating on Aug. 13.

“We estimate pro-forma leverage for recent acquisitions including Reebok and an unnamed entertainment brand and the proposed debt issuances to recapitalize the capital structure to be about 6x for fiscal 2021. This is above our previous expectations as the company made several acquisitions in fiscal 2021 ahead of the large Reebok transaction,” the agency said in a press release.

The outlook is stable.

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