Sinclair’s Diamond Sports discloses secured, unsecured debt proposals

Chicago, Oct. 7 – Sinclair Broadcast Group, Inc. indirect subsidiary Diamond Sports Holdings LLC disclosed some of the terms of its proposal to lenders and creditors regarding new debt, according to an 8-K filing with the Securities and Exchange Commission.

The discussions are ongoing.

Currently, Diamond Sports has proposed first-priority superpriority debt to secured holders.

The first priority superpriority debt would be $600 million of new money to be used for general corporate purposes including funding operating needs and other capital expenditures.

The debt would be senior to existing first-lien debt.

Interest would be Libor plus 700 basis points, with a 0.75% Libor floor.

The original issue discount would be 99, with a 3% backstop fee to backstopping lenders.

Amortization would be 1% per year.

There would be a March 2026 maturity date and three years of call protection, then a call option at 107 and then par.

Minimum liquidity would be $25 million.

The company is also proposing up to $6.34 billion of second priority superpriority debt which would be senior to existing first-lien debt and junior to first-priority debt.

Interest would be the status quo: Libor plus 325 bps for term loans and 5 3/8% for notes.

Amortization on the term loan would be 1% per year.

The maturity date would be August 2026, or be coterminous with existing notes and the existing term loan.

The call schedule would be the same as the existing notes and term loan.

To unsecured noteholders, Diamond Sports is proposing $600 million of first-lien notes issued by Diamond Sports Group, LLC.

Funds would be held in escrow until the commercial launch of a direct-to-consumers product. There would be a special mandatory redemption at par.

The first tranche would be a roll-up of unsecured notes in an amount up to $100 million with $600 million of new money notes, to be priced at par. Interest would be 9%.

There would be a limitation to lenders who provide new money financing.

The maturity date would be in October 2027, with a springing maturity to October 2025 if the 5 3/8% secured notes are not refinanced.

Based on the 2027 maturity date, there would be a make-whole premium of Treasuries plus 50 bps for life.

However, if 90% of Diamond Sports’ debt is refinanced, the new money could be redeemed at Treasuries plus 50 bps for three years and then be optionally redeemable at 106, 103 and finally par.

The second tranche would be a roll-up of unsecured notes on essentially the same terms as existing secured notes in return for a 10% discount, also limited to holders who provide new money financing. Interest would be 7 5/8%.

There would also be a third tranche with essentially the same terms as existing secured notes with a 30% discount. Interest would be 6 5/8%.

The second and third tranches would have a maturity date in November 2026.

The transaction discussions are dependent, in part, on the outcome of Sinclair and Diamond Sports’ ongoing discussions with certain interested parties, including commercial partners, on the evolution of the business and those parties’ support for and potential involvement with a proposed direct-to-consumer platform.

The proposals are aimed at lenders on the company’s credit agreement from 2019 and noteholders of the 5 3/8% senior secured notes due 2026, the 6 5/8% senior notes due 2027 and for the 12¾% senior secured notes due 2026.

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

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