S&P gives Zuffa, loan BB

Standard & Poor's said it assigned its BB corporate credit rating to Zuffa LLC, d/b/a Ultimate Fighting Championship.

At the same time, S&P said it assigned its BB bank loan and 3 recovery rating to Zuffa's proposed $300 million senior secured credit facilities, indicating the expectation for meaningful recovery of principal in the event of a payment default.

The facilities consist of a $25 million revolving credit facility due 2013 and a $275 million term loan B due 2015, the agency noted, adding that proceeds from the transaction will be used to pay a one-time, special dividend to Zuffa's owners and refinance the company's existing debt.

The outlook is stable.

According to S&P, the ratings reflect the company's relatively short operating history, potential revenue and cash flow volatility given its primarily event-driven business model and vulnerability to changing consumer tastes while these risks are partially offset by the company's good recent operating performance, driven primarily by success in growing the UFC brand, healthy free cash flow conversion and modest debt leverage.

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