Sinclair’s Sports Networks Start Formal Creditor Debt Talks

Creditors to Sinclair Broadcast Group Inc.’s troubled sports networks are signing non-disclosure agreements to prepare for negotiations on easing the unit’s $8 billion debt load, according to people with knowledge of the matter.

The unit, Diamond Sports Group LLC, has invited creditors holding its secured and unsecured debt to begin formal talks, during which they would get private financial information and be restricted from trading securities, said the people, who asked not to be identified discussing confidential matters.

The negotiations follow proposals submitted by both groups in recent months on how Diamond Sports could address its debt, such as through new financing provided by their existing lenders. Advisers to the creditor groups have been in private talks with the company, Bloomberg reported in March.

A representative for Sinclair didn’t immediately respond to a request for comment, while its financial adviser Moelis & Co. declined to comment. Debtwire previously reported that secured creditors were planning to sign nondisclosure agreements.

Sinclair remains “open for discussions with our stakeholders” and is in “active” talks with parties with respect to Diamond’s debt load “that will help us reach out goals,” Chief Executive Officer Chris Ripley said on the first-quarter earnings call earlier this month.

Sinclair’s Sports Networks Start Formal Creditor Debt Talks

The regional sports networks are trying to tame their debt load as part of a turnaround strategy following its acquisition by Sinclair that could see Diamond Sports expand into new betting deals. The $9.6 billion acquisition in 2019 was financed with costly high-yield debt that fell to distressed levels as the company struggled to sign and maintain deals with carriers and dealt with the pandemic’s disruptions to live sports.

“Diamond has sufficient cash and revolver availability to fund its debt services” going forward, Sinclair Chief Financial Officer Lucy Rutishauser said on this month’s call. Sinclair’s total debt was $12.5 billion as of March 31, which includes $8.1 billion of debt at Diamond Sports.

The company’s 5.375% first-lien notes rose 1.5 cents on the dollar to 74.5 cents, according to Trace data. Its 6.625% unsecured bonds due 2027 last traded on Thursday around 55.9 cents on the dollar to yield around 19%, for trades above $1 million.

Financial and legal advisers for the creditor groups signed non-disclosure agreements in March, Bloomberg reported. The unsecured creditors are getting advice from PJT Partners Inc. and the law firm of Stroock & Stroock & Lavan, while its secured creditors are working with Evercore Inc. and the law firm of Gibson, Dunn & Crutcher.

Representatives for the various advisers didn’t immediately respond to a request for comment or declined to comment.

Unsecured creditors previously proposed putting at least $500 million of new money into the company and exchanging their bonds for new debt with tighter covenants and equal in priority for repayment to existing secured debt, Bloomberg previously reported.

Certain secured lenders had proposed making a new term loan of more than $500 million that Sinclair would use to refinance existing unsecured notes, Bloomberg reported. The loan would have been placed in an outside subsidiary and get first priority on certain assets. Proposals also suggested adding protections to existing loan documents.

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