DEBT |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBT | 8. DEBT The following is a summary of the Company’s outstanding debt (in thousands):
First Lien Term Loan (due November 2031) As of June 30, 2026 and December 31, 2025, the Company had $4.6 billion and $3.7 billion, respectively, outstanding under a credit agreement dated August 18, 2016 (as amended and/or restated, the “First Lien Credit Agreement”) by and among TKO Guarantor, LLC or “TKO Guarantor” (f/k/a “UFC Guarantor, LLC” or “Zuffa Guarantor, LLC”), TKO Worldwide Holdings, LLC or “TKO Worldwide Holdings” (f/k/a “UFC Holdings, LLC”), as borrower, the lenders party thereto and Goldman Sachs Bank USA, as administrative agent, which was entered into in connection with the acquisition of Zuffa by EGH in 2016. TKO OpCo and TKO are holding companies with limited business operations, cash flows, assets and liabilities other than the equity interests in the borrower entities TKO Guarantor and TKO Worldwide Holdings. On March 10, 2026, TKO Worldwide Holdings entered into an amendment to the First Lien Credit Agreement (the "First Lien Credit Agreement Amendment") to, among other things, (i) provide for an additional $900.0 million incremental first lien secured term loan (“Incremental Term Loan”) as a fungible increase to the then existing first lien secured term loans of $3.7 billion (collectively, the “Prior Term Loans”), (ii) upsize the revolving credit facility under the existing credit agreement from $205.0 million to $350.0 million (the “Revolving Credit Facility” and together with the Term Loans, the “Credit Facilities”), and (iii) make certain other changes to the First Lien Credit Agreement. On the March 10, 2026 closing date, TKO Worldwide Holdings borrowed the full $900.0 million of the Incremental Term Loan. On May 28, 2026, TKO Worldwide Holdings entered into the Seventh Refinancing Amendment to the First Lien Credit Agreement (the “Credit Agreement Refinancing Amendment”). The Credit Agreement Refinancing Amendment amended the First Lien Credit Agreement to, among other things, (i) refinance and replace the Prior Term Loans with a new class of first lien secured term loans (the “New Term Loans”), the aggregate principal amount of which was unchanged at $4.6 billion, (ii) reduce the applicable interest margin on the New Term Loans by 25 basis points, (iii) reduce the applicable interest rate margin on the Revolving Credit Facility by 25 basis points and (iv) make certain other changes to the First Lien Credit Agreement. In connection with the Credit Agreement Refinancing Amendment, approximately $29.9 million of Prior Term Loans held by lenders that did not participate in the modified syndication was repaid and replaced with an equal amount funded by new lenders. The Credit Facilities are secured by liens on substantially all of the assets of TKO Guarantor and TKO Worldwide Holdings and certain subsidiaries thereof. Following the Credit Agreement Refinancing Amendment, the New Term Loans bear interest at a variable interest rate equal to either, at the option of TKO Worldwide Holdings, Term SOFR or the ABR plus, in each case, an applicable margin. SOFR term loans accrue interest at a rate equal to Term SOFR plus 1.75%, with a SOFR floor of 0.00%. The New Term Loans' interest rate totaled 5.41% as of June 30, 2026. ABR term loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.5%, (b) the prime rate in effect for such day, and (c) Term SOFR for a one-month interest period plus (ii) 0.75%, with an ABR floor of 1.00%. The New Term Loans have the same amortization schedule as the Prior Term Loans they replaced, amortizing at 1% per annum, and maturing on November 21, 2031.
The Company capitalized $14.8 million in transaction costs related to the First Lien Credit Agreement Amendment during the six months ended June 30, 2026. Of these amounts, $11.0 million was capitalized as a component of long-term debt related to the Incremental Term Loan and $3.8 million was capitalized as a component of other assets related to increasing the borrowing capacity of the Revolving Credit Facility. In addition, in connection with the Credit Agreement Refinancing Amendment, the Company incurred transaction costs of approximately $2.5 million during the three and six months ended June 30, 2026. Substantially all of these costs related to debt modification and were expensed as incurred, with an immaterial amount capitalized as a component of long-term debt related to new term loan lenders and the modification of the Revolving Credit Facility.
The loans made pursuant to the upsized Revolving Credit Facility bear interest at a variable interest rate equal to either, at the option of TKO Worldwide Holdings, Term SOFR or the ABR plus, in each case, an applicable margin. Following the Credit Agreement Refinancing Amendment, the leverage-based step-down mechanism previously applicable to the Revolving Credit Facility was eliminated. SOFR revolving loans accrue interest at a rate equal to Term SOFR plus 1.50%, with a SOFR floor of 0.00%. ABR revolving loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.5%, (b) the prime rate in effect for such day, and (c) Term SOFR for a one-month interest period plus (ii) 0.50%, with an ABR floor of 1.00%. The Revolving Credit Facility matures on September 15, 2030. As of June 30, 2026 and December 31, 2025, there was no outstanding balance under the Revolving Credit Facility. The First Lien Credit Agreement contains a financial covenant that requires the Company to maintain, commencing with the fiscal quarter ended June 30, 2025, a First Lien Leverage Ratio of Consolidated First Lien Debt to Consolidated EBITDA of 8.25-to-1. The Company is only required to comply with the foregoing financial covenant if the sum of (i) outstanding borrowings under the Revolving Credit Facility (excluding any letters of credit, whether drawn or undrawn) and (ii) Swingline Loans, as defined in the First Lien Credit Agreement, is greater than the greater of (x) $140.0 million and (y) forty percent of the borrowing capacity of the Revolving Credit Facility. This covenant did not apply as of June 30, 2026 and December 31, 2025, as the Company had no borrowings outstanding under the Revolving Credit Facility. The Credit Facilities restrict the ability of certain subsidiaries of the Company to make distributions and other payments to the Company. These restrictions include exceptions for, among other things, (1) amounts necessary to make tax payments, (2) a limited annual amount for employee equity repurchases, (3) distributions required to fund certain parent entities, (4) other specific allowable situations and (5) a general restricted payment basket, which generally provides for no restrictions as long as the Total Leverage Ratio (as defined in the First Lien Credit Agreement) is less than 5.0x. As of June 30, 2026 and December 31, 2025, TKO Worldwide Holdings had outstanding letters of credit of $11.1 million and $1.1 million, respectively. The estimated fair values of the Company’s outstanding term loans are based on quoted market values for the debt. As of June 30, 2026 and December 31, 2025, the face amount of the Company’s term loans approximated their fair value. Other Secured Loans As of June 30, 2026 and December 31, 2025, the Company had $61.3 million and $63.1 million, respectively, of other secured loans outstanding, which were entered into in order to finance the purchase of certain assets. These loans are secured by the underlying assets of the Company and bear interest at rates ranging from SOFR plus 1.70% to SOFR plus 2.25%. Principal amortization is payable in monthly installments with any remaining balance payable on the final maturity dates of November 1, 2028 and January 1, 2031. One of the Company's other secured loans contains a financial covenant that requires the Company to maintain a Debt Service Coverage Ratio of consolidated debt to Adjusted EBITDA as defined in the applicable loan agreements of no less than 1.15-to-1 as measured on an annual basis. As of June 30, 2026 and December 31, 2025, the Company was in compliance with its financial debt covenant under this secured loan. |
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