The company started a prepackaged Chapter 11 case in Delaware on Wednesday to carry out a deal in which the Getty family and Koch Equity Development invest up to $533 million and take full ownership. A Koch affiliate is also providing up to $143 million of financing for the case.
Getty Images is moving to full private ownership without a tender offer or a merger vote.
The visual-content company said on Wednesday that it had launched solicitation of votes on its prepackaged reorganization plan and commenced voluntary Chapter 11 proceedings for certain U.S. entities in the U.S. Bankruptcy Court for the District of Delaware. The filing meets a deadline in its restructuring support agreement that required both steps by Oct. 21. The shares no longer trade on the New York Stock Exchange, which filed to delist them on Oct. 2; they now trade over the counter at about a penny and a half.
Under the plan, entities affiliated with the Getty family and with Koch Equity Development will invest up to $533 million in equity and own 100% of the reorganized company. A Koch Equity Development affiliate will provide financing of up to $143 million, alongside the company's operating cash, to fund the case. Getty said it expects to complete the restructuring by the end of 2026, subject to court approval.
The $533 million is not all new cash. Under the term sheet filed with regulators, the commitment includes the conversion of about $100 million of prepetition debt held by majority shareholders and the shareholder-provided case financing; the cash equity investment is about $433.2 million, less any of that financing still outstanding when the company emerges.
Who gets what
The plan treats each layer of the capital structure differently. Holders of 83.5% of the principal of Getty's unsecured bonds have agreed to retire $270 million of senior unsecured notes, for which noteholders are to receive about $170.2 million of cash in aggregate under the term sheet filed with regulators. Holders of about 89% of the principal of secured bonds and term loans, and all revolving-credit lenders, have agreed to lower interest rates and longer maturities.
The company's existing Class A common stock would receive or retain no property under the plan.
A take-private by another route
The structure is the story. In a conventional take-private, a buyer offers public shareholders a premium and needs their approval. Here, the founding family and Koch Equity Development end up with the whole company through a court process in which creditors vote and public equity is cancelled.
Koch Equity Development supplies the financing for the case as well as much of the new equity, so the investor funding the bankruptcy is also one of the two future owners.
The creditor terms show the priorities. Unsecured noteholders take cash and exit, while secured lenders amend and extend, keeping the senior debt in place rather than converting it to equity.
Market implications
One reading is that a prepack is an efficient answer for an over-leveraged listed company. Most creditors signed on before filing, financing is committed, and the case is designed to be short.
A second reading is that it sets an uncomfortable template for minority shareholders. Insiders and an allied investor take full ownership through a process in which common stockholders have no recovery, without the premium or vote that a merger would require.
What to watch
The interim order approving the case financing, due within three business days of the filing under the support agreement; the confirmation hearing date; any objections from warrant holders or public shareholders; the final vote tally; and the company's post-emergence capital structure. Objections from common shareholders would be the first test of how far the court is willing to accept the plan's treatment of equity.