Diamond Sports’ disclosure statement approved; plan hearing June 18

By Sarah Lizee

Olympia, Wash., April 17 – Diamond Sports Group, LLC received approval of the disclosure statement for its Chapter 11 plan on Wednesday, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan confirmation hearing is scheduled for June 18.

As previously reported, the plan is based on the company’s restructuring support agreement, which was reached with some holders of its prepetition debt and Amazon on Jan. 16.

The new reorganization path replaces the baseline winddown business plan outlined in the prior agreement between the debtors, some first- and second-lien creditors and the official committee of unsecured creditors.

The company said the new deal has the support of 85% of first-lien lenders, more than 53% of second-lien debtholders and more than 70% of unsecured noteholders.

Amazon has committed to provide the debtors with a new money investment through $115 million principal amount of convertible B exit notes to support the reorganization.

There is a 3.5% breakup fee payable to Amazon if an alternative restructuring takes place.

Amazon has also agreed to enter into a go-forward commercial arrangement with the debtors through which Amazon Prime Video will become the debtors’ primary partner through which customers will be able to purchase direct-to-consumer access to stream the debtors’ local sports programming.

Some participating creditors have committed to provide the debtors with a $450 million subordinated secured super-priority DIP facility. Alter Domus (US) LLC is the administrative agent, and Kroll Restructuring Administration LLC is the syndication agent.

Holders of second-lien claims, third-lien claims and unsecured note claims are eligible to participate.

The DIP facility will be used to provide the debtors with an incremental $100 million of necessary liquidity, with the remaining $350 million used to refinance a portion of the debtors’ first-lien loans.

While the DIP facility is expected to be repaid in full at the end of the cases from the proceeds of the debtors’ settlement with parent Sinclair as well as additional financing to be obtained upon emergence, $210 million of the DIP facility may be rolled into an equal amount of exit debt in the event the settlement proceeds are not received.

The equity of the ultimate parent company of the reorganized debtors at emergence will be issued as follows, subject to dilution:

• 45% to the DIP commitment parties;

• 45% to the DIP lenders; and

• 10% to holders of second-lien claims, third-lien claims and unsecured note claims.

Holders of second-lien claims, third-lien claims and unsecured note claims will receive a pro rata share of litigation proceeds represented by 99% of the class B interests, which proceeds are estimated to be about $184 million based on the proposed settlement with parent company Sinclair and other defendants, if the settlement is approved and the funding received.

Holders of first-lien claims will receive their pro rata share of cash in an amount equal to $415 million, subject to adjustment for amounts paid as adequate protection and a $350 million paydown under the DIP facility; up to $200 million in principal amount of secured takeback debt, or additional cash in lieu of a portion thereof, to be issued at emergence from Chapter 11; and 15% of litigation proceeds, subject to a claims cap and adjustments, which proceeds are estimated to be about $47 million based on the proposed settlement with Sinclair.

Holders of general unsecured claims will receive the lesser of a pro rata share of (a) a dollar amount equal to a 6% cash recovery on an aggregate basis to all holders of allowed general unsecured claims and (b) $13 million.

Go-forward trade claimants will be unimpaired.

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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