Moody’s lowers Learfield

Moody’s Investors Service said it downgraded Learfield Communications, LLC’s corporate family rating to B3 from B2 and the probability of default rating to B3-PD from B2-PD. Moody’s downgraded the first-lien credit facility (including a $125 million revolver and term loan B) and the second-lien term loan ratings to B2 from B1 and Caa2 from Caa1, respectively. The outlook was changed to negative from stable.

The ratings were downgraded on weaker-than-projected operating performance that drove leverage higher to about 8.3x as of September (excluding Moody’s standard lease adjustments), as well as Moody’s expectation leverage will increase further in 2020.

Lower than anticipated sponsorship revenue and higher multimedia rights costs have hurt Learfield. The extended regulatory review process of the merger with IMG College and sales transition issues have hindered the company’s ability to improve sponsorship revenue. Free cash flow has also been negative during the past three quarters and Moody’s projects it will remain negative over the next year.

Moody’s considers Learfield’s liquidity position weak due to the expectation of negative free cash flow over the next year and Learfield’s continued heavy reliance on its $125 million revolver due December 2021 with $90 million outstanding as of Sept. 30. Unrestricted cash is $39 million.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.