Diamond Sports Group, LLC is finalizing a Restructuring Support Agreement (RSA) with holders of a majority of its debt and Sinclair Broadcast Group, Inc. to eliminate over $8 billion of the company’s outstanding debt.
Diamond Sports Group filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas to implement the restructuring.
Diamond, an independently-managed and unconsolidated subsidiary of Sinclair Broadcast Group, Inc., owns the Bally Sports Regional Sports Networks (RSNs). The Bally Sports RSNs serve as the TV home to more than half of all MLB, NHL and NBA teams based in the U.S.
Diamond Sports Group also has a joint venture in Marquee, the home of the Chicago Cubs and a minority interest in the YES Network, the local destination for the New York Yankees and Brooklyn Nets.
Diamond reported it intends to use the proceedings to restructure and strengthen its balance sheet while continuing to broadcast live sports productions in the U.S.
DSG expects the Bally Sports regional sports networks to continue operating as usual during the Chapter 11 process.
Diamond is well capitalized, with approximately $425 million in cash to fund the business and restructuring.
The RSA that Diamond is finalizing with creditors and Sinclair provides that Diamond will separate its business from Sinclair and become a standalone company. The RSA will further provide that Diamond’s first lien lenders will be unimpaired, while Diamond’s other secured and unsecured creditors will equitize their debt in exchange for equity and warrants issued by the reorganized Diamond. Sinclair will continue to provide management services during the proceeding and transition services for a period after Diamond emerges from Chapter 11.
David Preschlack, CEO of Diamond, said,”The DSG Board of Managers has been evaluating strategic opportunities with the support of its advisors and in coordination with creditors to position the company for long-term success and has determined that the best path forward for the company and its stakeholders is to restructure through a Chapter 11 process. We are utilizing this process to reset our capital structure and strengthen our balance sheet by eliminating approximately $8 billion of debt. The financial flexibility attained through this restructuring will allow DSG to evolve our business while continuing to provide exceptional live sports productions for our fans.”
Preschlack continued, “DSG will continue broadcasting games and connecting fans across the country with the sports and teams they love. With the support of our creditors, we expect to execute a prompt and efficient reorganization and to emerge from the restructuring process as a stronger company.”
Diamond filed customary motions with the Court seeking various “first-day” relief, including the authority to pay employee wages and benefits and honor customer programs in the ordinary course of business and without disruption.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, 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 & Company LLC are serving as the company’s investment bankers, and Reevemark is serving as communications advisor to the company.
