Getty Images begins bankruptcy proceedings with expected financing of up to $143 million
Key Facts
Certain U.S. entities of Getty Images have begun voluntary Chapter 11 bankruptcy proceedings to implement an agreed restructuring. The company said in a statement announcing the proceedings that the cases were filed in the U.S. Bankruptcy Court for the District of Delaware. The process aims to address its capital structure and non-operating legal liabilities, with business continuing as usual during the proceedings. Chief Executive Craig Peters said Getty Images "continues to operate as normal." He added that the company continues to serve customers and support content contributors and partners while pursuing the court-supervised restructuring.
Getty Images expects to fund the process with a loan of up to $143 million from an affiliate of Koch Equity Development, alongside cash generated from operations. According to the restructuring agreement announcement, members of the Getty family, through their affiliated entities, and Koch affiliates committed to an equity investment of up to $533 million. That commitment includes about $100 million in prepetition debt, according to the company's filing with the U.S. Securities and Exchange Commission. Major shareholders hold this debt, which will convert into equity upon emergence from the proceedings. Once the restructuring is completed, Getty Images will become a privately held company owned by the investors participating in the capital injection.
For unsecured creditors, the agreement provides for the extinguishment of $270 million in outstanding senior unsecured notes. The company's filing put the aggregate cash consideration payable to holders of these notes at about $170.2 million upon implementation of the plan. That amount will be paid in exchange for extinguishing all senior unsecured notes, under the terms set out in the filing. When announced, the restructuring agreement had secured approval from holders of 83.5% of the unsecured notes. The agreed settlement thus includes a cash payment to creditors alongside the termination of the company's obligations under those notes.
For secured debt, the restructuring includes reduced interest obligations and extended maturities, according to the agreement announcement. Holders of about 89% of the secured notes and term loans agreed to these terms. Approvals also included all revolving credit facility lenders, representing 100%, according to the company. The debt arrangements thus comprise the extinguishment of unsecured notes and amendments to the terms of secured financing and loans. The treatment of interest obligations and repayment dates is based on approvals from the relevant lender groups when the agreement was announced, as the company proceeds with implementation through the court.
For current shareholders, the plan provides for the cancellation of all existing equity interests, including common shares, upon implementation. Holders of these interests will receive no distributions in exchange for their cancellation, according to the filing with the U.S. Securities and Exchange Commission. The company warned that trading in its securities in the over-the-counter market is "highly speculative." It added that trading prices may not reflect the actual recovery investors receive upon confirmation of the plan. The warning places trading in existing securities against the terms of the restructuring, which call for holders' interests to be canceled without any distribution.
The next stages begin with a contractual deadline of no more than 35 calendar days from the commencement of the bankruptcy cases to obtain final court approval of the financing. The agreement sets another deadline of no more than 55 calendar days from the commencement of the cases for court confirmation of the restructuring plan. For the restructuring to become effective, the agreement sets a deadline of no more than 75 calendar days from the commencement of the cases. These milestones may be extended or waived under the terms of the agreement, with the effective-date deadline also subject to extension. The company expects to complete the restructuring by year-end, after obtaining customary regulatory approvals.