Getty Images to File For Chapter 11 Bankruptcy & Go Private
Getty Images is filing for bankruptcy and going private. The stock photo company announced on October 12 that they plan to start a prepackaged Chapter 11 bankruptcy process in the coming weeks to restructure their debt. Members of the Getty family and affiliates of Koch Equity Development (KED) will invest up to $533 million in new equity, and once the process wraps up, those two groups will own the entire company.
Customers, employees, and contributors shouldn’t notice much of a difference. Getty Images says business will continue as usual across their Getty Images, iStock, and Unsplash brands, and the more than 600,000 content creators who supply the library won’t be affected. Vendors will be paid in full, and KED is providing up to $143 million in financing to keep things running during the process. Only certain U.S. entities will be part of the filing.
The plan is designed to shrink Getty Images’ debt load and make the rest easier to manage. Holders of 83.5% of the company’s unsecured bonds agreed to retire $270 million in senior unsecured notes. Holders of about 89% of their secured bonds and term loans, along with all of their revolving credit lenders, agreed to lower interest costs and extend maturity dates. The process will also resolve what the company calls “non-operating legal liabilities,” including a long-running lawsuit over warrants.
Current shareholders are likely to walk away with nothing. The company’s disclosures say holders of Getty Images common stock aren’t expected to receive or keep anything under the plan. The stock has already been delisted from the New York Stock Exchange and now trades on the OTC Pink market under the ticker GETY.
Mark Getty, the company’s co-founder and chairman, called the deal a “transformational transaction” built on the strength of the business. CEO Craig Peters said a healthier balance sheet will let the company invest more in growth, and KED co-head Mike Harris said Koch remains confident in Getty Images’ future.
Getty Images’ money problems deepened after they called off a planned $3.7 billion merger with Shutterstock in July. The U.K.’s Competition and Markets Authority would only approve the deal if Shutterstock sold their editorial business, and Getty Images’ board refused, ending the agreement on July 7.
The company finished the second quarter with just $51.6 million in cash after burning through $123 million, mostly on warrant litigation payments and interest tied to the merger financing. On August 31, Getty Images said they would use a 30-day grace period on interest payments due September 1 on two sets of unsecured notes. Moody’s and S&P Global soon cut the company’s credit ratings to Caa3 and CCC.
Getty Images has been privately owned before. Buyout firm Hellman & Friedman took the company private for $2.4 billion in 2008, and the Carlyle Group bought it in 2012. The Getty family regained control in 2018, the same year Koch Equity Development invested $500 million, and the company returned to the NYSE in July 2022 through a merger with a special purpose acquisition company (SPAC).
Getty Images plans to ask creditors to vote on the reorganization plan in the coming days, and enough of them have already committed to vote yes for it to pass. The company expects to complete the Getty Images Chapter 11 process by the end of the year.
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