TRILLIUM CAPITAL ISSUES OPEN LETTER TO GETTY IMAGES BOARD

Rhea-AI Summary

Trillium Capital LLC has urged the Board of Directors of Getty Images Holding (GETY) to improve shareholder value, claiming over $1.1 billion is currently untapped. Following its IPO, Getty's stock price has dropped significantly from nearly $40 to around $7 per share. Trillium proposes various strategies to unlock value, including a potential sale to a strategic buyer or private equity firm, restructuring corporate costs exceeding $376 million, and encouraging management to invest in their own stock. They believe these actions could double the stock price to around $12 per share.

Positive

• Trillium Capital estimates that Getty Images has over $1.1 billion in untapped shareholder value.
• Trillium proposes actionable initiatives that could potentially double Getty's stock price to around $12 per share.
• Recent share buybacks and the reduction of long-term debt by $325 million enhance financial stability.

Negative

• Getty's stock price has significantly declined from nearly $40 to around $7 since its IPO.
• The company has high corporate, selling, and administrative costs exceeding $376 million, indicating inefficiency.
• The current executive leadership lacks sufficient ownership in Getty stock, raising concerns about their commitment.

About $1.1 BILLION LEFT ON THE TABLE AT GETTY
Stock Should Trade Over $12 Per Share

BOSTON, April 11, 2023 /PRNewswire/ --Today, Trillium Capital LLC released the following Open Letter to the Board of Directors of Getty Images Holding, Inc

The principles of Trillium Capital LLC own hundreds of thousand shares of common stock and common stock equivalents of Getty Images Holding, Inc. (NASDAQ: GETY) ("Getty" or the "Company"). We believe that the Board of Directors of Getty (the "Board") has not acted on obvious opportunities to increase shareholder value. The stock price of Getty has declined substantially since its IPO. We have tried to communicate with the Board but have not received a response. We now have no choice but to publicly urge them to take action to enhance shareholder value. We believe that the Board has a fiduciary duty to its shareholders to immediately act to improve shareholder value.

We believe that there are several opportunities that the Board can take to unlock substantial incremental Enterprise Value (calculated by using EBITDA (earnings before the effects of interest, income taxes, depreciation, amortization, and other non-cash related costs) derived from the Company's Form 10-K for the year ended December 31, 2022) by pursuing the actions describe in our letter. We have carefully reviewed the Company's with the United States Securities & Exchange (the "SEC") in connection with the preparation of our letter. 

Following its IPO, Getty traded at almost $40 per share and most recently traded around $7 per share.

We strongly believe that using the Enterprise Value Model, that the value of Getty should be about $1.1 billion higher than it is currently trading and that its stock price should be trading about 100% higher than it currently trades.

Our recommendations to the Board are described below:

Sale of Getty to a Strategic Buyer

Sale of the Company to a strategic buyer would be attractive to a strategic buyer and likely substantially increase Getty shareholder value. Industry players would likely have a high interest in acquiring GETTY at a substantial premium to the current stock price due to the depth of its imaging and video portfolio and recurring revenues. We believe a strategic buyer would likely pay much more than 12X EBITDA for Getty due to the potential to reduce administrative costs, implement more advanced technology, and grow revenues at a faster rate.

Sale of Getty to a Private Equity Player

The sale of Getty to a private equity firm would be attractive to potential buyers and would likely lead to substantial value creation for shareholders. We believe the private equity market has not seen very many great opportunities like Getty in quite a while. Getty's strong cash flow would make it an ideal purchase for private equity. The EBITDA generated by Getty would likely make it an ideal candidate to put a substantial amount of debt leverage on the Company by a private equity player.

Take Private of Getty

The three largest shareholders of Getty (The Getty Family, Koch Icon Investments and CC Neuberger Principal Holdings) own over 80% of the outstanding shares. Most recently some large stockholders of public companies have announced take private transactions. We believe that the three large shareholders of Getty have the resources to take the Company private and should strongly consider it as a viable option.

Corporate and Administrative Costs

Getty has substantial corporate, selling, and administrative costs of over $376 million for the year ended December 31, 2022. A substantial cost restructure and reduction in labor should be announced and implemented by Getty. We believe that this would instill confidence in the Company by its public shareholders and would likely increase its stock price substantially.

Continue to Pay Down Debt

 Getty has already paid down a substantial portion of its long term-debt. Long-term debt is $1.428 billion as of December 31, 2022, representing a reduction of approximately $325 million from December 31, 2021. Perhaps a convertible debt offering could be completed. The proceeds of which could either be used to pay down more debt or conduct a share repurchase plan. 

Executive Team

We believe that executive leadership should have significant "skin in the game" that demonstrates its commitment and confidence in the Company. This is not the case for Getty's senior leadership team. Getty's senior leadership team does not own enough stock that they have purchased in the open market. Recently, certain Getty executives (including the CEO) sold stock at $4.90 per share. The executive team has done a terrible job at investor relations in explaining its filings with the SEC. Our principles are experts in Special Purpose Acquisition Corporations ("SPAC's). In fact, our principles launched a SPAC in 2007 for $250 million and created the current PIPE and Tender structure in 2008. Their PIPE/TENDER structure created in 2008 has been used to raised hundreds of billions of dollars over the past few years. The warrants from the Getty SPAC are no longer outstanding. We believe that this was not communicated well to the public shareholders. The Company has not seemed to participate in any investor conferences to promote Getty and to increase its stock price. The most recent prospectus dated March 17, 2023, to register over 397 million shares of Getty was poorly or not even explained adequately to the public investors. We believe that this SEC filing was only to register the shares issued in the SPAC and that the registrants likely do not intend to sell their shares in the near term. We believe that current executive management, particularly the CEO, should be replaced with more capable executives who are knowledgeable in leading a public company and communicating with public stockholders.

The Path to Unlocking Value Buried Within Getty

Getty currently has about a $5 billion enterprise value based on the closing stock price listed on April 10, 2023, of $6.50 per share. We believe that there is a path to significant shareholder value creation of about $1.1 billion incremental shareholder value locked in Getty (using the Enterprise Value Method described in our letter) that has not yet been unlocked by the executive team. This could result in about a 100% increase in the stock price of Getty.

Enterprise Valuation

Below is the detailed calculation of our strong belief that there is significant unlocked shareholder value buried within Getty. Our calculation indicates that the Enterprise Value of Getty could be as much as $5 billion using the information derived from the Company's December 31, 2022, Form 10-K filing with the SEC as compared to the current public market value of about $3.9 billion, including net debt and using the stock price of $6.50 as of the close on April 10, 2023. We believe that Getty could unlock incremental shareholder value of about $1.1 billion (using the Enterprise Value Method, which is commonly used by strategic and private equity buyers). This is about a 200% increase in the Getty stock price for public shareholders.

Our calculation of the enterprise valuation of Getty is as follows:

					Getty Images Enterprise Valuation in $ except % and share information)
					2021	2022
Net income (loss)					$              117,397,000	$   (77,643,000)
Amortization & Depreciation					100,460,000	93,219,000
Restructuring					386,000	(681,000)
Fair Value Adjustments					(56,300,000)	(45,100,000)
Loss on Extinguishment of Debt						2,693,000
Loss on Fair Falue for Warranties						160,728,000
Stock Based Compensation					6,441,000	9,291,000
Income taxes					18,729,000	44,126,000
Interest					122,160,000	117,229,000
EBITDA					309,273,000	303,862,000
Mutliple					12.00	12.00
Enterprise Value, before Debt					3,711,276,000	3,646,344,000
Debt					1,757,471,000	1,428,847,000
Cash					186,301,000	97,912,000
Net Enterprise Value					5,282,446,000	4,977,279,000
Shares outstanding						395,627,685
Share price March 28, 2023						$                  6.50
Current market cap						2,571,579,953
Current Market Cap plus net debt						3,902,514,953
Potential Market Cap						4,977,279,000
Increase in Market Cap - using EV model						1,074,764,048
Potential Stock price						$               12.58
Increase from Current Stock price						$                  6.08
Percentage increase						194 %	2.82X

 

 

We would highlight a few things used in our analysis. 

• We are using a 12X EBITDA multiple. We believe that a 12X multiple is appropriate given the depth of Getty's digital image and video library and its strong cash flow. Given the size and stickiness of the Getty business, we believe that a strategic or private equity buyer would likely use a higher multiple to calculate enterprise value of Getty and the ultimate value to stockholders could be substantially higher than the current stock price.
• We have not incorporated any potential scale that would be available from using things such as Quantum Computing or Artificial Intelligence.
• We did not incorporate any administrative or corporate cost savings that would likely be achieved by a strategic buyer or any increase in revenue if combined with a larger player with greater reach.
• We did not incorporate any reduction in the cost model that an experienced public company management team would likely be able to execute upon.

We believe that there is significant untapped value in the Getty stock price using the enterprise valuation method than it is currently being valued by the public market.

Getty has achieved some incredible growth in its core business that should attract a strategic or a private equity buyer. Some things that we have identified from its public filings are:

						(in thousand except %)		Percentage Increase
	LTM Purchasing Customers				715	795	835	17 %
	LTM Active Annual Subsribers				59	75	129	119 %
	LTM Revenue Retention Rate				100.1 %	104.5 %	87.9 %
	Image Collection				426,000	458,000	497,000	17 %
	Video Collection				17,000	20,000	24,000	41 %
	LTM video Attachment Rate				10.9 %	12.1 %	13.1 %

 

Why have has this data not been more publicly promoted by the executive team at Getty?

We do not understand why the Board has been so reluctant to unlock the potential value opportunity of about $1.1 billion in incremental shareholder value. This results in about a 100% increase in the stock price of Getty's publicly traded shares.

We implore the Board to seriously review the various options that we have identified in our letter to unlock massive shareholder value and to inform shareholders of the plans for Getty as soon as possible. 

SPECIAL NOTE REGARDING THIS LETTER:

THIS LETTER CONTAINS OUR CURRENT VIEWS ON THE VALUE OF SECURITIES CONDUENT INCORPORATED AND CERTAIN ACTIONS THAT THE BOARD OF DIRECTORS OF GETTY MIGHT TAKE TO ENHANCE THE VALUE OF ITS SECURITIES. OUR VIEWS ARE BASED ON OUR OWN ANALYSES OF PUBLICLY AVAILABLE INFORMATION AND ASSUMPTIONS WE BELIEVE TO BE REASONABLE. THERE CAN BE NO ASSURANCE THAT THE INFORMATION WE CONSIDERED AND ANALYZED IS ACCURATE OR COMPLETE. SIMILARLY, THERE CAN BE NO ASSURANCE THAT OUR ASSUMPTIONS ARE CORRECT. THE ACTUAL PERFORMANCE AND RESULTS OF GETTY MAY DIFFER MATERIALLY FROM OUR ASSUMPTIONS AND ANALYSES.

THIS LETTER ALSO REFERENCES THE SIZE OF OUR RESPECTIVE CURRENT HOLDINGS OF GETTY. OUR VIEWS AND OUR HOLDINGS COULD CHANGE AT ANY TIME. WE MAY SELL ANY OR ALL OF OUR HOLDINGS OR INCREASE OUR HOLDINGS BY PURCHASING ADDITIONAL SECURITIES. WE MAY TAKE ANY OF THESE OR OTHER ACTIONS REGARDING GETTY WITHOUT UPDATING THIS LETTER OR PROVIDING ANY NOTICE WHATSOEVER OF ANY SUCH CHANGES (EXCEPT AS OTHERWISE REQUIRED BY LAW).

FORWARD-LOOKING STATEMENTS:

Certain statements contained in this letter are forward-looking statements including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Due to such risks and uncertainties, actual events or results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Forward-looking statements can be identified by the use of the future tense or other forward-looking words such as "believe," "might, "expect," "anticipate," "intend," "plan," "estimate," "should," "could," "may," "will," "objective," "projection," "forecast," "continue," "strategy," "position" or the negative of those terms or other variations of them or by comparable terminology.

Important factors that could cause actual results to differ materially from the expectations set forth in this letter include, among other things, the factors identified in the public filings Getty. Such forward-looking statements should therefore be construed considering such factors, and we are under no obligation, and expressly disclaim any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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SOURCE Trillium Capital LLC

FAQ

What actions does Trillium Capital suggest for Getty Images (GETY)?

Trillium Capital recommends selling Getty to a strategic or private equity buyer, restructuring costs, and enhancing management investment in stock.

How much shareholder value does Trillium Capital believe Getty Images (GETY) can unlock?

Trillium Capital believes Getty can unlock over $1.1 billion in incremental shareholder value.

What is the current stock price of Getty Images (GETY)?

As of the latest update, Getty's stock price is around $7 per share.

What is the potential stock price Trillium Capital projects for Getty Images (GETY)?

Trillium Capital projects that Getty's stock price could increase to approximately $12 per share.

What are the concerns regarding Getty Images' executive leadership?

Concerns include insufficient stock ownership by executives, which raises questions about their commitment to enhancing shareholder value.