UCC Capital Corp. plans to price the first-ever revolving term securitization backed by licensing fee revenues from a variety of intellectual property assets. UCC Capital will act as issuer, underwriter and servicer for the proposed offering, which is expected to price within the next 30 to 45 days.
Totaling roughly $200 million, the offering will initially be backed by two different I.P. revenue streams but the revolving structure allows UCC to add new cashflows to the transaction over time, according to UCC Capital founder and CEO Bob D'Loren. Each added revenue stream will further diversify the pool and increase credit enhancement, D'Loren added. UCC Capital plans to cap the number of revenue streams at "seven-to-eight trademarks," noted D'Loren, due to decreasing marginal returns of servicing a perpetually growing trademark portfolio.
Each cashflow stream added to the trust will coincide with a new term offering. Although D'Loren said the structure would have limited cross collateralization between the revenue streams, each new offering would be closely tied to the performance of the trademark cashflows associated with it.
Although the revolving trust has yet to be officially named, the transaction will have a fixed-rate coupon and straight-line amortization schedule, D'Loren added. The revenue streams will most likely come from apparel and sporting goods trademarks and franchise fees from various retail outlets. "Expect to see those types of assets in the trust," D'Loren added.
Targeted investors will come from the private placement market. It was unclear what the structure would be rated to at this point, although D'Loren confirmed that the deal would not be wrapped.
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