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 has been evaluating strategic options with the support and coordination of its creditors to position the company to achieve long-term success. It has determined that restructuring through a Chapter 11 process is the best path forward for both the company and its stakeholders.”
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.
Preschlack stated that DSG will continue to broadcast games and connect fans with their favorite teams and sports. “With the support from our creditors, I expect to execute a prompt & efficient reorganization to make the company stronger.
“We are grateful for the dedication and hard work of our employees who continue to produce high-quality sports games that fans have come expect. We look forward working constructively alongside our team, league partners, and all DSG stakeholders during this process and beyond.
Payouts not received
Diamond failed to pay $140m in interest on its debt obligations. subsequently entered a 30-day grace period.
The company stated that it would continue talks with creditors and other key stakeholders during the grace period, “regarding possible strategic alternatives and deleveraging transactions in order to best position Diamond Sports Group’s future”.
The bankruptcy of Bally’s Corporation is unlikely to have any impact on the gambling operator Bally’s Corporation. Its name is the Sports Network Operator.
Following publication of the company’s full-year results, Bobby Lavan, CEO Bally’s Corporation stated that “we continue to monitor Diamond situation closely” and that he was looking forward to working with the new management.
“Bally’s will promote its brand using multiple media channels, including our national portfolio Bally’s branded casino, media partnerships such as that with Sinclair, the Tennis Channel, and our global digital portfolio.”