S&P Global and Moody’s Investors Services downgraded CAA Holdings Monday after the company raised $75 billion in a debt sale as the agencies said saying canceled and postponed live events and shrinking agent commissions could impact revenue.
The outlook is stable, however, meaning, in the case of S&P, that “CAA will maintain sufficient liquidity to service all of its debt obligations and that productions and live events, including sports and music, will gradually return to pre-pandemic levels toward the end of fiscal year 2020 into 2021.”
Moody’s specifically referenced the $75 million in fresh cash CAA just raised from investors, which adds to a previous $1.15 billion term loan and a $125 million revolving credit facility. It said the downgrade was due to a combination of the fresh debt and the fact that the pandemic has limited the ability to hold live events and complete media production as anticipated.
“While some events will be rescheduled to future quarters, others will be cancelled due to the pandemic. As a result, CAA’s leverage levels will increase for as long as media production and live events continue to be impacted by the coronavirus. However, contractual revenue streams and strong demand for media content are projected to provide some stability to performance.”
The net proceeds of the new term loan will be used for general corporate purposes and will support CAA’s existing liquidity position.
Many companies in media and entertainment have raise cash in various ways over the past six weeks, most commonly through debt sales,
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