“We believe the level of financial risk could motivate the company to seek a distressed debt restructuring if coronavirus containment does not occur by midyear so that revenue can begin to recover,” they continued. “Endeavor entered 2020 with a highly leveraged capital structure, therefore the anticipated significant drop in revenue in 2020 could potentially result in an unsustainable capital structure,” S&P analysts wrote.
S&P Global has downgraded its credit rating for Endeavor to from B to CCC+ , which takes the company from “highly speculative” to “substantial risk.” Endeavor’s been weighed down by a massive amount of debt incurred mainly from its $2.3 billion acquisition of media, sports and fashion giant IMG, and its stunning $4 billion acquisition of the Ultimate Fighting Championship.. S&P analysts also changed Endeavor’s credit outlook to negative.
Endeavor has been in a precarious state since being forced to pull its planned initial public offering last September. The management and entertainment company’s financial situation has worsened amid the novel coronavirus pandemic, which has forced the cancelations of sports events, concerts, live events and Hollywood productions industry-wide. When Endeavor opened its books in September as part of its IPO, it revealed $4.6 billion in long-term debt and overall liabilities totaling $7.2 billion.
Credit downgrades also for World’s biggest Sports and Entertainment Company WME IMG
S&P also lowered the issue-level ratings on subsidiary WME IMG Holdings LLC’s first-lien credit facilities from B to CCC+, but maintained a B rating on Endeavor’s Ultimate Fighting Championship, which is on credit watch with negative implications
Endeavor, like many other companies struggling through the impact of the pandemic, has already been forced to make company-wide pay reductions of up to 30% to all staffers as a means of avoiding additional layoffs. The company had already temporarily laid off 250 employees who were unable to work from home, and Endeavor’s chiefs Emanuel and Whitesell had already informed staff that they would each be going without a salary for the remainder of the year.