CAA Reduces Debt To Combat Negative Effects Of Pandemic
As reported by Mike Ozanian of SportsMoney, Creative Artists Agency (CAA) has downgraded its debt. During this pandemic crisis the company had its credit rating lowered by Standard & Poor’s (S&P) Global Ratings to 2.000 or “B” rating from “B+”.
Before the crisis, CAA was in the process of raising around $393 million with a goal of borrowing $1.15 billion over a seven-year loan. This would have allowed them to refinance ther debts of over $750 million.
CAA currently is one of the largest sports and entertainment agencies, with athletes like Chris Paul, Zion Williamson and most recently 2020 NFL Draft first-round pick, Joe Burrow on its expansive client roster.
CAA remains in a “stable” credit outlook after the change because of S&P’s belief that the company “will continue to have sufficient liquidity to service debt obligations”. The expectation is for CAA to generate a cash flow-to-debt ratio of at least 5% over the next 12 months.
With sports and events on hold this move was an expected one to deal with the financial impact of COVID-19.