Key points
- Getty plans a prepackaged Chapter 11
- Who will own the company afterward
- What the fine print says about shareholders
Getty Images (GETY) announced a restructuring Monday that would take it private and leave existing common shareholders with nothing. The proposed plan still requires creditor approval and bankruptcy court confirmation.
The shareholder treatment appears near the bottom of the release, where Getty says holders would not receive or retain any property for their common shares. GETY traded at $0.0148 as of 12:40 p.m. ET, down about 69 percent from Friday's close of about $0.048.
What did Getty agree to?
Getty, which runs Getty Images, iStock, and Unsplash, reached an agreement with major creditors to support the restructuring. It plans to solicit their votes before filing for Chapter 11. Members of the Getty family, through their affiliated entities, and affiliates of Koch Equity Development will invest up to $533 million in new equity. Those investors will own 100 percent of the company when it emerges from bankruptcy.
The lenders are giving ground too. Holders of 83.5 percent of Getty's unsecured bonds agreed to retire $270 million of those notes. Holders of about 89 percent of its secured bonds and term loans, plus all of its revolving credit lenders, agreed to lower interest and push back maturities. Koch will also provide up to $143 million to pay for the process.
"This transformational transaction is underpinned by the strength of the business and the significant growth potential we see ahead," said Mark Getty, the company's co-founder and chairman.
Getty hasn't filed for bankruptcy yet
The company says it'll seek those votes "in the coming days" and then start "a prepackaged Chapter 11 filing process in the coming weeks." A prepackaged Chapter 11 is a bankruptcy case where the votes are lined up first, so the court process can move quickly. Getty expects to finish by year end, and the filing will cover only some of its US entities.
Getty says vendors will be paid in full, and it doesn't expect any effect on customers, content contributors, partners, or employees.
How did the stock get here?
On September 29, the New York Stock Exchange started proceedings to delist Getty's stock over its "abnormally low selling price," Getty said in an October 1 filing. The shares moved to the OTC Pink market, where stocks trade outside a major exchange, the next day. Monday's release also refers to Getty's earlier expression of substantial doubt about its ability to continue as a going concern, which is a company's way of warning it may not have enough money to keep operating.
The release says the bankruptcy process will address Getty's "non-operating legal liabilities," without listing them. Its risk list does mention "the warrant litigation," a fight that goes back to 2022. In October 2023, a federal court in New York awarded Alta Partners $36.9 million and CRCM Institutional Master Fund $51.0 million over Getty's warrants, plus 9 percent annual interest. An appeals court upheld that judgment on January 15, Getty said in a January filing, and the company has recorded a liability for the full judgment and interest.
Getty said further details would appear in a Form 8-K. As of 12:41 p.m. ET on October 12, no filing containing those details had appeared on EDGAR.
