Diamond Sports enters transaction support agreement with Sinclair

By Mary-Katherine Stinson

Lexington, Ky., Jan. 13 – Diamond Sports Holdings LLC, a wholly owned subsidiary of Sinclair Broadcast Group, Inc., announced that it and Sinclair have entered a transaction support agreement on Thursday, according to a press release.

The agreement pertains to lenders on the company’s credit agreement from 2019 and noteholders of the 5 3/8% senior secured notes due 2027 and the 12¾% senior secured notes due 2026.

The lenders party to the transaction agreement equal 49.7% of the company’s existing term loans. The noteholders party to the agreement represent 53.7% of the 2027 notes and 16.7% of the 2026 notes.

If the agreement is finalized it will raise $600 million in new capital and defer the cash payment of the management fee to Sinclair, thereby providing $1 billion liquidity over five years.

The $600 million in new call capital would be newly funded first-priority lien term loan and new exchange credit facilities and secured notes.

Lenders of the existing term loans, lenders under the company’s existing revolving credit facilities and all holders of existing secured notes, subject to eligibility criteria which will be described in the exchange offer solicitation and documents and pursuant to consent solicitations, will be invited to participate on a pro rata basis.

An exchange offer launch is planned for late January.

The offer will be conditional to participation and consent thresholds. Participation and consent by lenders holding a majority of the principal as well as tenders and consents by holders of at least 2/3 of each of the company’s outstanding secured notes will be required.

In the case of existing term loans, all lenders will exchange their applicable existing debt holdings for second-priority lien term loans with the same or substantially the same maturity, pricing and other economic terms but with more restrictive covenants and other terms consistent with the first-lien term loan.

In the case of the existing revolver, all lenders will exchange their applicable existing debt holdings for second-priority lien term loans with more restrictive covenants and other terms as compared with the existing revolver and substantially consistent with and a part of the same facility as the second-lien term loan.

The existing secured notes will be exchanged for second-priority lien secured notes with more restrictive covenants and other terms consistent with the first-lien term loan.

Those that do not participate or consent in the transaction will rank third in lien priority on shared collateral behind each of the new first-lien term loan, the exchange second-lien term loan, the exchange revolver and the exchange second-lien notes.

It is expected that certain of the covenants, default events and related definitions will also be eliminated.

Wilmer Cutler Pickering Hale and Dorr LLP is legal adviser to Diamond Sports.

Pillsbury Winthrop Shaw Pittman LLP is acting as special finance counsel to Diamond Sports.

Moelis & Co. LLC is special financial adviser to Diamond.

Gibson, Dunn & Crutcher LLP is advisor to an ad hoc group of existing term loan holders and existing secured noteholders.

Evercore is acting as financial adviser on the deal.

The television broadcasting company is based in Hunt Valley, Md.

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