Sinclair Completes Liquidity Enhancing Transactions

Rhea-AI Summary

Sinclair (SBGI) has completed a series of transactions to strengthen its balance sheet and enhance financial flexibility. The company executed multiple refinancing moves, including: a $1.43 billion private placement of First-Out First Lien Secured Notes due 2033, establishment of a $575 million first-out first lien revolving credit facility, and refinancing of approximately $1.44 billion in term loans.

The transactions extend the company's closest meaningful maturity to December 2029 and increase the weighted average maturity to 6.6 years. Additional components include an exchange offer for secured notes, private debt repurchases at discounted rates, and a private exchange offer for second lien notes. These moves are designed to reduce first lien net leverage and improve financial optionality, allowing Sinclair to pursue deleveraging opportunities while enhancing stakeholder returns.

Positive

• Extended debt maturities to December 2029, with weighted average of 6.6 years
• Reduced first lien net leverage
• Secured $575 million revolving credit facility
• Achieved debt repurchases at discounted rates (84% and 97% of principal)

Negative

• High interest rate of 8.125% on new $1.43B First-Out First Lien Notes
• Substantial total debt load remains
• Some lenders ($75M) did not participate in revolving credit facility exchange

Insights

Financial Restructuring Analyst

This comprehensive debt restructuring represents a strategic transformation of Sinclair's balance sheet, addressing several critical financial challenges while creating new opportunities. The transaction's sophistication is evident in its multi-layered approach:

Key Financial Improvements:

• The extension of the nearest major maturity to 2029 and weighted average maturity to 6.6 years provides important breathing room for operational transformation in a challenging media landscape
• The new debt structure, featuring first-out, second-out, and third lien obligations, creates a more organized hierarchy that better protects senior creditors while maintaining flexibility for the company
• The repurchase of existing notes at discounted values (84% for secured notes, 97% for unsecured) represents opportunistic deleveraging

However, this enhanced flexibility comes at a cost. The new 8.125% first-out notes and 9.75% second lien notes carry higher interest rates than some of the retired debt, reflecting current market conditions and the company's risk profile. This will impact annual interest expenses, though the strategic benefits of extended maturities and improved structure likely outweigh these costs.

The strong creditor support evidenced by high participation rates in the exchanges and refinancing suggests market confidence in Sinclair's long-term viability, despite industry headwinds from declining traditional TV viewership and streaming competition. The enhanced financial flexibility positions Sinclair to potentially pursue strategic initiatives, including possible deleveraging through asset sales or operational improvements, without immediate maturity pressures.

This transaction demonstrates sophisticated liability management, creating a more resilient capital structure that should help Sinclair navigate the ongoing transformation in media consumption patterns while maintaining strategic optionality for future value creation.

BALTIMORE--(BUSINESS WIRE)-- Sinclair, Inc. (Nasdaq: SBGI), the "Company" or "Sinclair," today announced that Sinclair Television Group, Inc. (“STG”) and certain affiliated entities have completed a series of previously announced transactions (the “Transactions”), which strengthen the Company’s balance sheet and better position it for long-term growth.

“The Transactions demonstrate the strong support from our creditors in positioning the Company for long-term success by enhancing our financial liquidity and flexibility” said Chris Ripley, Sinclair’s President and Chief Executive Officer. “The refinancings push our closest meaningful maturity to December 2029 and extend all of our maturities to a weighted average of 6.6 years, while materially reducing our first lien net leverage and improving our financial optionality, allowing us to continue to be opportunistic in the marketplace to deleverage over time while driving enhanced returns for all of the Company’s stakeholders.”

The Transactions included the following:

• First-Out First Lien Notes. STG completed a private placement of $1,430.0 million of STG’s 8.125% First-Out First Lien Secured Notes due 2033. The net proceeds from the offering were, or will be, used to repay all of the outstanding $1,175 million of aggregate principal amount term loans B-2 under the Company’s previously existing credit agreement (the “Existing Credit Agreement”), to consummate the AHG Notes Repurchase (as defined below), and to pay related fees and expenses related to the Transactions.
• First-Out First Lien Revolving Credit Facility. STG entered into an up to $575.0 million aggregate principal amount first-out first lien revolving credit facility, including a letter of credit sub-facility and a swing-line sub-facility (the “First-Out Revolving Credit Facility”) pursuant to the terms of a new credit agreement (the “New Credit Agreement”). Lenders of $75.0 million aggregate principal amount of revolving loans and commitments outstanding under the Existing Credit Agreement (the “Existing Revolving Credit Facility”) did not participate in or consent to the exchange into obligations under the First-Out Revolving Credit Facility. As a result, such obligations are ranked as third lien obligations under the Existing Credit Agreement, as amended to eliminate substantially all covenants, certain of the events of default and related definitions contained therein (the “Amended Credit Agreement”).
• Second-Out Term Loan Facility. Lenders of approximately $711.4 million and $731.3 million aggregate principal amount of outstanding term loans B-3 and B-4, respectively, under the Existing Credit Agreement elected to refinance and/or exchange such term loans into second-out first lien term loans under the New Credit Agreement (the “Second-Out Term Loan Facility”), consisting of (x) approximately $711.4 million aggregate principal amount term loans B-6 maturing December 31, 2029 offered to lenders of the outstanding term loans B-3 and (y) approximately $731.3 million aggregate principal amount term loans B-7 maturing December 31, 2030 offered to lenders of the outstanding term loans B-4. The remaining approximately $2.7 million of term loans B-3 held by lenders that did not participate in or consent to the exchange into Second-Out Term Loan Facility are ranked as third lien obligations under the Amended Credit Agreement.
• Exchange Offer and Consent Solicitation. Holders of approximately $267.2 million aggregate principal amount of STG’s 4.125% Senior Secured Notes due 2030 (the “Existing Secured Notes”) exchanged such Existing Secured Notes for approximately $267.2 million aggregate principal amount of STG’s 4.375% Second-Out First Lien Secured Notes due 2032 (the “Exchange Second-Out Notes”) as of the early tender time under an exchange offer and related consent solicitation (the “Exchange Offer”). Holders of Existing Secured Notes who do not tender prior to the expiration time of the Exchange Offer will continue to hold Existing Secured Notes under the indenture related thereto, subject to amendments to release all collateral securing such Existing Secured Notes and eliminate substantially all covenants, certain of the events of default and related definitions. As amended, such Existing Secured Notes will become unsecured obligations of STG.
• Private Debt Repurchase. STG agreed to repurchase or redeem for cash approximately $63.6 million aggregate principal amount of Existing Secured Notes at 84% of the principal amount thereof and approximately $104.0 million aggregate principal amount of STG’s 5.125% Senior Unsecured Notes due 2027 at 97% of the principal amount thereof (the “AHG Notes Repurchase”), each together with any accrued and unpaid interest, held by certain parties to the Company’s previously announced transaction support agreement (the “Transaction Support Agreement”). Certain of these repurchases occurred on the closing date of the Transactions. The repurchases that remain are expected to occur as soon as practicable following the closing date of the Transactions.
• Private Exchange Offer. STG agreed to issue to certain holders of the Existing Secured Notes party to the Transaction Support Agreement $432 million aggregate principal amount of STG’s 9.75% Senior Secured Second Lien Notes due 2033 in exchange for $432 million aggregate principal amount of Existing Secured Notes, with accrued and unpaid interest on the exchanged amount of Existing Secured Notes paid in cash. The exchanges are expected to occur over the next three weeks, as previously agreed with such holders.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer or sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. This press release does not constitute a notice of redemption with respect to any securities.

Pillsbury Winthrop Shaw Pittman LLP and Fried Frank Harris Shriver & Jacobson LLP served as legal advisors to the Company and STG, J.P. Morgan acted as exclusive capital markets advisor to Sinclair in connection with structuring and negotiating the Transactions, with Simpson Thacher & Bartlett LLP acting as its counsel, and Moelis acted as co-financial advisor to Sinclair in connection with the Transactions. Milbank LLP served as legal advisor to an ad hoc group of certain of STG’s creditors, and Perella Weinberg Partners LP served as financial advisor to an ad hoc group of certain of STG’s creditors.

Forward-Looking Statements:

The matters discussed in this news release include forward-looking statements regarding, among other things, the Transactions. When used in this news release, the words “outlook,” “intends to,” “believes,” “anticipates,” “expects,” “achieves,” “estimates,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including and in addition to the assumptions set forth therein, but not limited to, the Company’s ability to achieve the anticipated benefits from the Transactions; the rate of decline in the number of subscribers to services provided by traditional and virtual multi-channel video programming distributors (“Distributors”); the Company’s ability to generate cash to service its substantial indebtedness; the successful execution of outsourcing agreements; the successful execution of retransmission consent agreements; the successful execution of network and Distributor affiliation agreements; the Company’s ability to identify and consummate acquisitions and investments, to manage increased financial leverage resulting from acquisitions and investments, and to achieve anticipated returns on those investments once consummated; the Company’s ability to compete for viewers and advertisers; pricing and demand fluctuations in local and national advertising; the appeal of the Company’s programming and volatility in programming costs; material legal, financial and reputational risks and operational disruptions resulting from a breach of the Company’s information systems; the impact of FCC and other regulatory proceedings against the Company; compliance with laws and uncertainties associated with potential changes in the regulatory environment affecting the Company’s business and growth strategy; the impact of pending and future litigation claims against the Company; the Company’s limited experience in operating or investing in non-broadcast related businesses; and any risk factors set forth in the Company’s recent reports on Form 10-Q and/or Form 10-K, as filed with the Securities and Exchange Commission. There can be no assurances that the assumptions and other factors referred to in this release will occur. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements except as required by law.

Category: Financial

View source version on businesswire.com: https://www.businesswire.com/news/home/20250212013791/en/

Investor Contacts:

Christopher C. King, VP, Investor Relations

Billie-Jo McIntire, VP, Corporate Finance

(410) 568-1500

Source: Sinclair, Inc.

FAQ

What is the interest rate on Sinclair's (SBGI) new First-Out First Lien Notes?

The new First-Out First Lien Notes due 2033 carry an interest rate of 8.125%.

How much is Sinclair's (SBGI) new revolving credit facility worth?

Sinclair secured a $575 million first-out first lien revolving credit facility.

When is Sinclair's (SBGI) closest meaningful debt maturity after the refinancing?

Following the refinancing transactions, Sinclair's closest meaningful debt maturity is in December 2029.

What discount did Sinclair (SBGI) achieve on its private debt repurchase?

Sinclair repurchased Existing Secured Notes at 84% of principal amount and Senior Unsecured Notes at 97% of principal amount.

What is the new weighted average maturity of Sinclair's (SBGI) debt?

The transactions extended Sinclair's weighted average debt maturity to 6.6 years.