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Regional sports network giant Diamond Sports Group has chosen to miss a $140 million debt interest payment due to its bondholders on Feb. 15 as it takes advantage of a 30-day grace period.
“The company intends to use the 30-day grace period to continue progressing its ongoing discussions with creditors and other key stakeholders regarding potential strategic alternatives and deleveraging transactions to best position Diamond Sports Group for the future,” the division of Sinclair Broadcast Group said in a statement on Wednesday.
Representatives for Sinclair and Diamond Sports were not available to comment directly on the ongoing talks with creditors. But Diamond Sports is understood to be eyeing a possible prearranged Chapter 11 bankruptcy filing to reorganize the company and its $8.6 billion debt load.
Diamond Sports in its statement said it intended “to maximize its financial flexibility” by missing its cash interest payment due on its 6.625 percent senior unsecured Notes due 2027, 5.375 percent 2L senior secured notes due 2026, and 5.375 percent 3L senior secured notes due 2026.
“Diamond Sports Group expects that its business will continue as usual, and it will keep broadcasting quality live sports productions for fans while it addresses its balance sheet,” the company added about its 19 Bally Sports-branded regional sports networks.
Those sports networks, including Bally Sports, host a range of MLB, NHL and NBA pro league games. Those rights deals with Diamond Sports would be impacted by any possible Chapter 11 bankruptcy proceeding and its outcome.
Diamond Sports in its most recent third quarter financial results to Sept. 30, 2022 cited “elevated levels of subscriber erosion” as it recorded a $1.04 billion impairment loss and talked about possible “future material impairments.”
It is expected that Diamond Sports will continue talks with its bondholders as a Chapter 11 bankruptcy and an eventual debt-for-equity swap remain as possible options towards a settlement.
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