Target: Universal City Development Partners Ltd.
Sponsor: NBC Universal Inc.
Seller: Blackstone Group
Blackstone bought its stake in the company in 2000 for $275 million, according to press reports at the time. The firm has a right of first refusal agreement with NBC, which owns the other half of Universal Orlando, under which if either decides to sell its ownership interest in the company it must first make an offer to the other party.
Universal Orlando disclosed in a recent 10-K filing that on March 9 Blackstone triggered its right of first refusal and offered to sell its interest in the company to NBC, which has until June 12 to decide on the offer. If NBC does not accept the offer, Blackstone has the right to market both its and NBC’s interests in the company to other buyers, according to the filing. It’s not clear how much Blackstone is asking for its stake.
Universal Studios is a movie and television-themed park “designed to allow guests to become part of their favorite movies and television shows,” according to the filing. The park features more than 20 rides, including Hollywood Rip Ride Rockit, which purports to be the most technologically advanced roller coaster in the world; The Simpsons Ride, in which guests can “careen and crash their way through Krustyland,” and Revenge of the Mummy, a psychological thrill ride in which riders plunge into total darkness as they face fireballs, beetles and an army of mummies.
Moody’s Investors Service responded Tuesday by changing its ratings outlook on the company to developing from stable, reflecting the ratings agency’s view that “Blackstone’s action could result in a wide range of potential ownership, leverage and ratings outcomes … over the next 12-18 months.”
Moody’s said that if Blackstone and/or NBC agree to sell any portion of their ownership interest, director Steven Spielberg may have the right under his consulting agreement with Universal Orlando to sell an equivalent percentage of his compensation rights to the prospective purchasers.
Moody’s did not change its rating on the company’s B1 corporate family rating, Ba2 senior secured debt ratings and B3 senior unsecured and senior subordinated note ratings. Moody’s also said the company’s credit facility lenders and bondholders are protected by change-of-control language that would limit their downside.