The company skipped its Sept. 1 coupons while saying it had the money. It is now negotiating new financing that could run through bankruptcy, and the stock lost about 41% on Monday.
Getty Images said a month ago that it had the cash to pay its bondholders. It is now negotiating with lenders over what happens if it doesn't.
The photo and stock-image company is holding confidential talks with lenders about new financing, potentially through a debtor-in-possession loan, people familiar with the discussions said. That type of loan funds a company during bankruptcy and is usually repaid first. Another option under discussion would hand control of the company to lenders in a court process. Members of the Getty family are weighing a capital contribution of their own. Nothing has been decided.
Getty shares fell about 41% on Monday. Since Getty went public, its stock has shed more than 99% of its value.
The clock
On Sept. 1, Getty did not make interest payments due on its 9.750% senior notes due 2027 and its 14.000% senior notes due 2028. A filing the day before stated that the money was available and that Getty was using the 30-day grace period to keep its options open. That window runs out around Oct. 1.
S&P Global Ratings cut Getty to CCC from CCC+ on Sept. 3 and put it on watch for a further downgrade. Missing the end of the grace period would count as a selective default in S&P's view. Moody's moved Getty's corporate family rating down two notches to Caa3 and warned that liquidity would keep worsening unless new cash arrives or the debt is restructured.
The cash
At the end of June, Getty held about $51.6 million in cash against more than $1.3 billion of debt. Only $30 million remained undrawn on its $150 million revolving credit line, and the company took that too in July.
Getty blames three things for the squeeze: high interest rates, a $110.9 million litigation payment and the expense of its failed Shutterstock merger. The combination, abandoned in July, was supposed to bring in about $162 million of cash.
Both sides have hired advisers. Getty is working with Guggenheim Securities and the law firm Simpson Thacher & Bartlett. Across the table, secured lenders are working with Houlihan Lokey and Gibson Dunn & Crutcher. Unsecured creditors have their own counsel in Akin Gump Strauss Hauer & Feld.
Three paths
Getty can pay the interest before the grace period ends, reach a negotiated capital solution with lenders or its largest shareholders, or file for bankruptcy. None of those has happened yet.
The family already controls the company. In August, its entities and Koch-affiliated holders disclosed that they had formed a group owning about 73% of the stock to evaluate options together. Whether the family supplies cash, and on what terms, would shape how much of the company remains with shareholders.
The next few days will settle the first question. A payment, a signed agreement with lenders or a court filing around Oct. 1 will show which path Getty has taken, and the terms of any loan will show which creditors come out on top.