The stock-photo company missed its interest payments and has been talking with lenders about a loan that could hand them control.
Getty Images is running out of time.
The 30-day grace period on interest payments the company missed on expires on or about . As of Wednesday, Getty had not made the payments, announced a refinancing or filed for bankruptcy protection.
How the company got here
Getty has been in confidential talks with its lenders over a possible debtor-in-possession loan, the type of financing typically extended to a company operating under bankruptcy protection, or a lender-led change of control. No agreement has been announced.
The rating agencies have already moved. S&P Global Ratings cut Getty to CCC, and Moody's lowered it to Caa3, both deep in speculative territory and signals that the agencies see a real risk of default or restructuring.
Three possible outcomes
The end of a grace period tends to force one of three results. The company can pay the missed interest and buy time. It can reach a deal with creditors, often a swap of debt for equity that dilutes or wipes out existing shareholders. Or it can file for court protection, with the debtor-in-possession loan keeping the lights on during the process.
The talks with lenders over control point toward the second or third path. When creditors negotiate for ownership rather than simply extending maturities, they are usually betting that the business is worth more than the equity market assumes but less than the debt stack.
Why it matters beyond Getty
Getty's deadline arrives while borrowing costs remain high, with the 10-year Treasury yield near 5.24%. A heavily indebted company has little room to refinance when benchmark rates sit near their highest level since 2007.
What to watch
A payment announcement, a signed restructuring agreement or a court filing, any of which could arrive within days. Shareholders should pay particular attention to the terms of any lender deal, since control transactions rarely preserve much value for the existing equity.