Moody’s rates Fanatics, loans Ba3

Moody’s Investors Service said it assigned a Ba3 corporate family rating and a B1 probability of default rating to Fanatics Collectibles Intermediate Holdco, Inc. The agency also gave Ba3 ratings to the company’s planned $100 million senior secured multicurrency revolving credit facility and planned $300 million senior secured term loan.

“The Ba3 CFR assignment reflects governance considerations, particularly an expectation that Fanatics Collectibles will maintain balanced financial strategies and solid credit metrics under its current ownership which includes its founder who has majority voting stock. At less than 1.5x for the year ended Dec.31, 2022, pro forma Moody's adjusted debt/EBITDA is low, and when considering the all first-lien structure and inclusion of a financial maintenance covenant, recovery is above average,” the agency said in a statement.

However, the company’s small scale constrains the rating. Moody’s noted, “Fanatics Collectibles is also exposed to inherent cyclicality in the S&E collectibles industry where demand can be impacted by the popularity of upcoming rookie athletes and sports tournaments, and pricing can be impacted by levels of supply.”

The term loan will be used to repay a $300 million intercompany note to parent company, Fanatics Holdings, Inc., which was used to acquire The Topps Co., Inc.'s sports and entertainment (S&E) segment in December 2021.

The outlook is stable.

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