In a move that has been anticipated for a number of weeks, Diamond Sports Group, which owns 19 regional sports networks across the U.S., filed for Chapter 11 bankruptcy protection on Tuesday. The business says that it will continue to broadcast reside games as it finalizes a Restructuring Assistance Agreement (RSA) with holders of a majority of the company’s debt and Sinclair Broadcast Group to get rid of more than $eight billion of the company’s outstanding debt.
Despite the fact that Key League Baseball has stated it will be capable to create its personal broadcasts, leveraging MLB Network and the MLB.Television app to show games, if needed, DSG says it will continue to create its personal broadcasts.
“DSG will continue broadcasting games and connecting fans across the nation with the sports and teams they enjoy,” says David Preschlack, CEO of Diamond. “With the assistance of our creditors, we count on to execute a prompt and effective reorganization and to emerge from the restructuring course of action as a stronger business.”
Diamond intends to use the proceedings to restructure and strengthen its balance sheet, even though continuing to broadcast reside sports productions. DSG says it expects that its Bally Sports regional sports networks will continue to operate in the ordinary course in the course of the Chapter 11 course of action. Diamond is properly capitalized with around $425 million of money on hand to fund its business enterprise and restructuring. The bankruptcy filing comes immediately after the 30-day grace period to make a $140 million debt payment initially due on Feb. 15 expired.
Bally Sports hold the rights to 46 pro sports teams and, according to Sportico, DSG has a total of $1.9 billion in rights charges due to the MLB, NBA, and NHL and more than $600 million in payments on its $eight.six billion in debt to make in 2023 alone.
The RSA Diamond is finalizing with creditors and Sinclair gives that Diamond will separate its business enterprise from Sinclair and turn out to be a standalone business. The RSA will additional present that Diamond’s initially lien lenders will be unimpaired, even though Diamond’s other secured and unsecured creditors will equitize their debt in exchange for equity and warrants issued by reorganized Diamond. Sinclair is anticipated to continue to present management solutions in the course of the proceeding and to present transition solutions for a period immediately after Diamond emerges from Chapter 11.
“The DSG Board of Managers has been evaluating strategic possibilities with the assistance of its advisors and in coordination with creditors to position the Corporation for lengthy term good results and has determined that the finest path forward for the Corporation and its stakeholders is to restructure by way of a Chapter 11 course of action,” continues Preschlack. “We are using this course of action to reset our capital structure and strengthen our balance sheet by way of the elimination of around $eight billion of debt. The economic flexibility attained by way of this restructuring will let DSG to evolve our business enterprise even though continuing to present exceptional reside sports productions for our fans.
“We deeply appreciate the difficult operate and commitment of our staff, who stay focused on making higher excellent sports games that our fans have come to count on,” adds Preschlack. “We appear forward to operating constructively with our group and league partners and all DSG stakeholders all through this course of action and beyond.”
Diamond has filed customary motions with the Court searching for a wide variety of “first-day” relief, like authority to spend employee wages and advantages and honor buyer applications in the ordinary course of business enterprise and without having disruption. To implement its restructuring, the Corporation filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas (the “Court”). More information and facts relating to Diamond’s Chapter 11 proceeding, like court filings and information and facts about the claims course of action are readily available at https://circumstances.ra.kroll.com/DSG.
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Wilmer Cutler Pickering Hale and Dorr LLP are serving as the Company’s proposed legal counsel and AlixPartners, LLP is serving as the Company’s proposed restructuring advisor. LionTree Advisors LLC and Moelis & Corporation LLC are serving as the Company’s investment bankers, and Reevemark is serving as communications advisor to the Corporation.
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Joe Glickman Jr MD