S&P ups Vivid Seats

S&P said it raised its ratings on Hoya Midco LLC (Vivid Seats) and its senior secured term loan to B from B-. The agency also revised the loan’s recovery rating to 3 from 4. The 3 recovery rating indicates an expectation for meaningful (50%-70%, rounded estimate: 65%) recovery in default.

Concurrently, S&P removed all the ratings from CreditWatch with positive implications, where they were placed on April 23, and assigned a positive outlook.

“The upgrade reflects substantially reduced debt levels following the completion of Vivid Seats' merger with Horizon Acquisition Corp. Vivid Seats used substantially all of the proceeds from its SPAC merger, approximately $770 million, to pay down term loans, redeem the company's senior preferred equity and pay related fees and expenses, substantially reducing its debt,” the agency said in a press release.

Pro forma, S&P said it expects Vivid Seats will have $458 million outstanding on its senior secured term loan and about $450 million of cash on the balance sheet.

“The positive outlook reflects the potential for an upgrade if Vivid Seats is able to maintain solid operating performance, increase revenue above 2019 levels in 2022, and reduce adjusted gross leverage below 5x in 2022 (including any potential tax receivable agreement-related liabilities) while maintaining free operating cash flow (FOCF) to debt in the high-single-digit area,” the agency said.

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