Learfield Buys Time to Restructure With First $12.5M Debt Payment
College multimedia rights giant Learfield, which has $1.1 billion in debt maturing this year, says it has made the first of three payments due between now and the end of July, buying itself time to continue restructuring conversations with its lenders.
Learfield’s debt maturities include three separate payments of $12.5 million on its $58 million special-purpose vehicle receivables facility, the first of which was due May 31. Its next payments are owed by June 30 and July 31, with the remaining $20.5 million due Sept. 1, according to S&P.
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Another $125 million is also owed on Learfield’s revolving credit facility at the start of September, while two of the company’s other outstanding loans, which amount to $970 million, are due Dec. 1. The final maturity, an additional $75 million, is due Dec. 2, 2024.
S&P predicted in January that the company “will not be able to repay all its debts coming due this year.” In anticipation of the upcoming deadlines, Learfield has been working with its lenders and equity partners—represented by law firm Paul Weiss Rifkind Wharton & Garrison LLP—to restructure the bulk of its debt.
Learfield says it expects its plans to be finalized in the coming weeks, and that it is positioned to make the remainder of its upcoming debt payments until then. Earlier this month, Learfield CEO Cole Gahagan told Sportico the company was “nearing the finish line” on restructuring.
“Learfield remains an extraordinarily healthy business and will continue to meet any and all debt obligations, including the already paid amounts which were due today, May 31, 2023,” the company said in a statement to Sportico. “We are in the final stages of our restructuring process, which will allow us to significantly reduce our long-term debt, inject capital into the business and continue serving as the leader in college sports.”
To avoid defaulting on its loans, Learfield enlisted Kirkland & Ellis LLP to advise the company through the debt reshuffle. It is unclear who Learfield’s debt holders are, how many will become equity holders in the restructure and how those swaps will impact the stakes of current investors. Since the MMR giant’s merger with IMG College in late 2018, Endeavor Group Holdings (NYSE: EDR) has owned 42% of Learfield. Private equity firms Silver Lake and Atairos hold the remainder.
As part of the restructuring process, the Texas-based multimedia rights provider has had to renegotiate MMR terms with six of its partners, including UCLA and Florida State. Learfield approached the six schools about renegotiating their existing contracts, which were incurring substantial losses. All six schools have agreed to new terms, though at least three can test the market at the end of the fiscal year in June. The restructured deals better position the company for Learfield’s lenders as they labor to reduce its billion-dollar debt tab. (Learfield anticipates reaching an agreement with its debt holders without having to go through a formal Chapter 11 bankruptcy filing.)
As a major middleman between brands, media companies and athletic departments across the country, Learfield currently handles multimedia rights for more than 180 schools. It typically offers its NCAA partners a guaranteed annual payment in exchange for the ability to sell various sponsorships and multimedia rights. In some cases, such as the six renegotiated deals, the original contracts promised partners more money than they ultimately generated.
While Learfield says no additional renegotiations are planned, it has also used the impact of COVID-19 to modify agreements with several other partners. In many of those amendments—some of which were temporary, while others spanned the remainder of the contract—guarantees were reduced, if not omitted altogether, in favor of a less risky revenue-sharing arrangement.
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