In a major financial reboot for the 51-year-old company, Learfield has completed a $1.1B recapitalization that will greatly reduce the company’s debt while also infusing $150M in new equity investment into the Texas-based firm. The massive restructuring will reduce Learfield’s debt from $1.1B to $500M after an 11-month debt-restructuring process that President & CEO
Cole Gahagan described as a seminal moment for the company whose future was in doubt.
The new arrangement, which should firmly stabilize the leading rights holder in college athletics, will provide the company with equity investment and a new set of majority owners: Clearlake Capital Group, Charlesbank Capital Partners and funds managed by Fortress Investment Group. Learfield’s new board of directors will be assigned so that each firm will have representation. Other directors from outside of the majority owners could be on the board as well.
In addition to the reduced debt, the $150M in new equity investment will be used to strengthen the company’s financial position for growth through innovation, acquisitions and new business. The previous majority owners were Endeavor, Silver Lake and Atairos; all three now own a minority stake.
Learfield and its equity investors wouldn’t share the company’s new cap table, which is much larger since all its lenders converted their debt into equity shares, Gahagan confirmed. Those three firms -- Clearlake, Charlesbank and Fortress -- constitute Learfield’s new lead capital partners. Gahagan said the injected new equity has been expressly earmarked as growth and innovation capital.
Learfield didn't share the company’s new debt ratio, but a source indicated it was closer to 5x, down from the 30x it hovered near in mid-2022, according to Moody’s.
Gahagan, who led the restructuring effort, called this a seminal moment for the company. He described it as a “reboot of our capital structure” that positions the company for growth in future years.
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Learfield, a company going on 51 years, has transformed under Gahagan’s leadership from a marketing and media business into a tech, data and content firm focused on college athletics. Its five core divisions include multimedia rights, Amplify (ticket sales, fundraising), Paciolan (ticketing software), CLC (licensing) and Sidearm Sports (digital). It also has developed new divisions for NIL, data analytics and content.
Despite those developments, though, Learfield’s debt mounted, which was attributed to three primary factors: The company’s spending on a series of acquisitions that led up to the 2018 merger with IMG College; upside-down contracts with university partners that were structured above market value at that time; and COVID, which caused a proliferation of collegiate sporting events to be cancelled.
With much of its $1.1B in debt maturing this year, Learfield began working with legal and financial debt restructuring experts about 11 months ago. By restructuring the debt, it enabled Learfield to achieve recapitalization without going through court or a bankruptcy process.
Advisors on Learfield's debt restructuring:
- Kirkland & Ellis LLP and Simpson Thacher & Bartlett LLP served as legal advisors
- Moelis & Company LLC served as investment banker
- Alvarez & Marsal served as financial advisor
- C Street Advisory Group served as strategy and communications advisor
- Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisor
- Centerview Partners LLC served as investment banker
- Sidley Austin LLP served as legal advisor to Clearlake
