Diamond Sports reaches RSA with creditors, settlement with Sinclair

By Sarah Lizee

Olympia, Wash., Jan. 17 – Diamond Sports Group, LLC entered into a restructuring support agreement with its largest creditor groups, including over 85% of first-lien debtholders, over 50% of second-lien debtholders and over 66% of unsecured bondholders, the company said in a Wednesday morning press release.

Diamond Sports said the RSA provides a framework for a reorganization plan that would enable Diamond to emerge from bankruptcy as a going concern and continue its operations.

The RSA includes a commitment from some of the company’s debtholders to provide $450 million of junior secured super-priority debtor-in-possession financing.

The proceeds will be used to support Diamond’s operations as the company finalizes a comprehensive reorganization plan and to repay $350 million of Diamond’s existing first-lien debt to facilitate the restructuring.

In addition, Diamond’s key creditors have reached agreement on financial terms and a go-forward capital structure that will be the foundation of the reorganization plan to facilitate Diamond’s emergence, the company said.

Some large holders of Diamond’s debt have committed to make a substantial investment in the company and exchange their debt into equity to be issued by reorganized Diamond.

Under the terms of the RSA, Amazon also has committed to make a minority investment in Diamond and to enter into a commercial arrangement to provide access to Diamond’s services via Prime Video.

Under this arrangement, Prime Video will become Diamond’s primary partner through which customers will be able to purchase direct-to-consumer access to stream local Diamond channels.

In addition, Diamond said it looks forward to continuing to partner with its existing multichannel video programming distribution partners to broadcast its MLB, NBA and NHL content.

Diamond also announced that it has an agreement in principle with its parent, Sinclair Inc., to settle the pending litigation between the companies and the other named defendants.

The settlement is supported by Diamond’s creditors that are parties to the RSA.

Under the settlement, Sinclair will pay Diamond $495 million in cash and provide ongoing management and transition services to support Diamond’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 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, chief executive officer of Diamond Sports, said in the release.

“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.”

The RSA, the Amazon investment and commercial agreements, and the Sinclair litigation settlement are subject to conditions and approval by the U.S. Bankruptcy Court for the Southern District of Texas.

Diamond Sports Group is an independently managed and unconsolidated subsidiary of Sinclair Broadcast Group. Diamond owns the Bally Sports Regional Sports networks, a provider of local sports. The Baltimore-based company filed Chapter 11 bankruptcy on March 14, 2023 under case number 23-90116.

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