Moody's assigns Fanatics, loan Ba3

Moody's Investors Service said it assigned first-time ratings to Fanatics Commerce Intermediate Holdco, LLC including a Ba3 corporate family rating and a Ba3-PD probability of default rating. The agency also gave a Ba3 rating to the planned $500 million senior secured term loan.

“The Ba3 CFR assignment reflects governance considerations, particularly an expectation that Fanatics will maintain balanced financial strategies and solid credit metrics under its current ownership which includes its founder who has majority voting stock. Pro forma for the transaction, leverage is high with Moody's adjusted debt/EBITDA in the high-6x range for the LTM period June 30, 2021.

“However, leverage is expected to rapidly recover to the high-4x range in the second half of 2021 and below 4x in 2022 as continued rapid sales growth along with margin enhancement will drive solid EBITDA growth,” the agency said in a press release.

The proceeds will be used to fund a dividend to the parent company, Fanatics Holdings, Inc., for continued investment in other related verticals.

The outlook is stable.

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