Moody's rates Zuffa loans Ba3

Moody's Investors Service said it assigned a Ba3 corporate family rating to Zuffa, LLC (doing business as Ultimate Fighting Championship) and Ba3 (LGD4, 50%) ratings to its proposed $275 million eight-year senior secured term loan B and $25 million six-year senior secured revolving credit facility.

The outlook is stable.

The loans will be used to refinance existing debt, to fund the pending acquisition of Pride Fighting Championships, for other general corporate purposes and to fund a dividend to Zuffa's owners.

The agency said Zuffa's Ba3 corporate family rating reflects its strong first mover position and growth prospects in the expanding sport of mixed martial arts, its scale within the sport, its brand name recognition, the effective barrier to entry provided by the trademark and copyright protection of its main brand, the Ultimate Fighting Championship, its significant revenue and free cash flow growth and its strong credit metrics relative to most other sports entities. Its moderate debt-to-EBITDA leverage is comfortably situated in the Ba rating category based on 2006 results and is expected by Moody's to improve.

The ratings are constrained by the firm's short history overall, its short history of strong performance, its small size and its revenue concentration in a relatively limited number of U.S. pay-per-view events, Moody's said.

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