Diamond Sports Group, an independently-managed and unconsolidated subsidiary of Sinclair that owns the Bally Sports regional sports networks entered into a restructuring support agreement with its largest creditor groups, including more than 85% of its first lien debt holders, more than 50% of its second lien debt holders and more than 66% of its unsecured bond holders, which provides a framework for a reorganization plan that would enable Diamond Sports Group to emerge from bankruptcy as a going concern and continue its operations.
The RSA includes a commitment from certain of the company’s debt holders to provide $450 million of junior secured superpriority debtor-in-possession financing. Diamond Sports Group will use the proceeds of this financing to support its operations as the company finalizes a comprehensive reorganization plan and to repay $350 million of its existing first lien indebtedness to facilitate the restructuring. In addition, Diamond Sports Group’s creditors reached agreement on financial terms and a go-forward capital structure that will be the foundation of the reorganization plan to facilitate Diamond Sports Group’s emergence from bankruptcy as a going concern. Certain large holders of Diamond Sports Group’s debt committed to make a substantial investment in the company and exchange their debt into equity to be issued by the reorganized Diamond Sports Group.
Under the terms of the RSA, Amazon also has committed to make a minority investment in Diamond Sports Group and enter into a commercial arrangement to provide access to Diamond Sports Group’s services via Prime Video. Under this arrangement, Prime Video will become Diamond Sports Group’s primary partner through which customers will be able to purchase direct-to-consumer access to stream local Diamond Sports Group channels. Customers will be able to access all local content, including live MLB, NBA and NHL games, and pre- and post-game programming, for the teams for which Diamond Sports Group retains direct-to-consumer rights, through Prime Video channels. Additional details regarding pricing and availability will be announced at a later date. In addition, Diamond Sports Group will continue to partner with its existing MVPD distribution partners to broadcast its MLB, NBA and NHL content.
Diamond Sports Group also announced that it has an agreement in principle with its parent, Sinclair, to settle the pending litigation between the companies and other named defendants, with the settlement supported by Diamond Sports Group’s creditors that are parties to the RSA. Under the settlement, among other things, Sinclair will pay Diamond Sports Group $495 million in cash and provide ongoing management and transition services to support Diamond Sports Group’s reorganization and separation from Sinclair’s operations. Under the RSA, the proceeds from the Sinclair settlement will be used to support the reorganization plan and fund distributions to certain creditors.
“We are thrilled to have reached a comprehensive restructuring agreement that provides a detailed framework for a reorganization plan and substantial new financing that will enable Diamond to operate and thrive beyond 2024,” David Preschlack, CEO of Diamond Sports Group, said. “We are grateful for the support from Amazon and a group of our largest creditors who clearly believe in the value-creating potential of this business. Diamond’s near-term focus will be on implementing the RSA and emerging from bankruptcy as a going concern for the benefit of our investors, our employees, our team, league and distribution partners, and the millions of fans who will continue to enjoy our broadcasts.”
The RSA, the Amazon investment and commercial agreements and the Sinclair litigation settlement are subject to conditions, and the transactions described therein are subject to approval by the U.S. Bankruptcy Court for the Southern District of Texas.