In a move that will eventually see $8bn of outstanding debt written off, the Bally Sports regional network broadcaster Diamond Sports Group filed chapter 11 protection before the US Bankruptcy Court in the Southern District of Texas.
Operator of the Bally’s branded TV network has announced that it is negotiating a restructuring support agreement for debt holders from the Diamond company and Sinclair Broadcast Group. According to the company, the proceeds will be used to strengthen its balance sheets and it expects that the restructuring won’t affect its continued broadcasting of regional sports networks.
David Preschlack, Diamond CEO, stated that “the DSG board of directors has been evaluating strategic options with the support and coordination of its creditors to position Company for long-term success and has determined the best path forward is to restructure via a chapter 11 process.”
Sinclair’s subsidiary stated that it was “well capitalized”, with $425m in cash to finance the business and restructuring in the medium to long term.
The agreement will see Diamond spun off Sinclair to become an independent business. Diamond will not impair its first lien lenders, and Diamond’s other creditors can be equitised in return for equity or warrants from the new standalone Diamond.
Sinclair will continue to provide services as a manager during this period, and will continue to provide transition services after the end of the chapter 11.
Preschlack stated that the process was used to rebuild our capital structure and consolidate our balance sheet by eliminating approximately $8.0bn in debt. DSG will be able to grow its business and continue to offer exceptional live sports entertainments to our fans with the financial flexibility gained through restructuring.
Diamond filed “customary motions” to the court asking for a range of “first-day relief”. In these, the business sought the authority to pay employees wages and honor customer programs during bankruptcy proceedings.