SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

20. SUBSEQUENT EVENTS:

On March 1, 2022, DSG consummated the following financing transactions (the “Transaction”):

•DSG First Lien Term Loan: $635 million of a newly funded first-priority lien term loan (the DSG First Lien Term Loan) pursuant to a new first-priority lien credit agreement (the DSG First Lien Credit Agreement), ranking first in lien priority on shared collateral ahead of (i) new second lien credit facilities issued in exchange for existing loans and/or commitments under the existing DSG Bank Credit Agreement, each of which will rank second in lien priority on shared collateral, (ii) 5.375% Second Lien Secured Notes due 2026 (the DSG 5.375% Second Lien Secured Notes) issued in exchange for the DSG 5.375% Secured Notes in an exchange offer, each of which will rank second in lien priority on shared collateral and (iii) loans and/or commitments under the DSG Bank Credit Agreement and DSG 5.375% Secured Notes that do not participate in or consent to the Transaction, each of which will rank third in lien priority on shared collateral.

•DSG First and Second Lien Credit Facilities and DSG 5.375% Second Lien Secured Notes: All lenders under the DSG Bank Credit Agreement that participates in the applicable Transaction and all holders of DSG 5.375% Secured Notes that participate in an exchange offer exchanged their applicable existing debt holdings for:

•In the case of existing term loans under the DSG Bank Credit Agreement, new second-priority lien term loans (the DSG Second Lien Term Loan), with the same or substantially the same maturity, pricing and other economic terms as the existing term loans under the DSG Bank Credit Agreement, but with more restrictive covenants and other terms substantially consistent with the DSG First Lien Term Loan, at an exchange rate of $100 of DSG Second Lien Term Loans for each $100 of existing term loans under the DSG Bank Credit Agreement.

•In the case of the existing DSG Revolving Credit Facility, a new second-priority lien revolving credit facility (the DSG Second Lien Revolving Credit Facility, together with the DSG Second Lien Term Loan, the DSG Second Lien Credit Facilities, and together with the DSG First Lien Term Loan, the DSG First and Second Lien Credit Facilities) with more restrictive covenants and other terms as compared with the existing DSG Revolving Credit Facility, which terms are substantially consistent with the DSG Second Lien Term Loan other than an extended term to May 2026, and were exchanged into the DSG Second Lien Revolving Credit Facility for a principal amount equal to 35.0% of such lender’s total revolving commitments existing under the existing DSG Revolving Credit Facility. The DSG Second Lien Credit Facilities were issued pursuant to a new second-priority lien credit agreement (the “DSG Second Lien Credit Agreement,” and together with the DSG First Lien Credit Agreement, the “DSG First and Second Lien Credit Agreements”). The DSG First and Second Lien Credit Agreements and the existing DSG Bank Credit Agreement are collectively referred to as the DSG Credit Agreements.

•In the case of the DSG 5.375% Secured Notes, the DSG 5.375% Second Lien Secured Notes.

•Non-Participating Lenders under the DSG Bank Credit Agreement and DSG 5.375% Secured Notes: All loans under the DSG Bank Credit Agreement that did not participate in the Transaction (the "DSG Third Lien Term Loan") and all DSG 5.375% Secured Notes that did not participate in an exchange offer rank third in lien priority on shared collateral behind each of the DSG First and Second Lien Credit Facilities and the DSG 5.375% Second Lien Secured Notes, and certain of the covenants, events of default and related definitions in the DSG Bank Credit Agreement and the indenture governing the DSG 5.375% Secured Notes were eliminated in a manner customary for covenant strips as part of exit consents for transactions of this type.

•Redemption of DSG 12.750% Secured Notes. DSG redeemed the 12.750% Secured Notes and satisfied and discharged the indenture governing the DSG 12.750% Secured Notes. The redemption price was equal to the sum of 100% of the principal amount of the DSG 12.750% Notes outstanding plus the Applicable Premium (as defined in the indenture governing the DSG 12.750% Secured Notes), together with accrued and unpaid interest on the principal amount being redeemed up to, but not including, March 2, 2022.

Immediately following the Transactions, DSG had $3,036 million of DSG 5.375% Second Lien Notes outstanding, $14 million of DSG 5.375% Secured Notes outstanding, $635 million outstanding under the DSG First Lien Term Loan, $3,449 million outstanding under the DSG Second Lien Term Loan, and $4 million outstanding under the DSG Third Lien Term Loan. In addition, we had $227.5 million of availability under the DSG Second Lien Revolving Credit Facility.

Borrowings under the DSG First and Second Lien Credit Facilities bear interest, at a rate per annum equal to an applicable margin of 7.00% in the case of base rate DSG First Lien Term Loan borrowings or 8.00%, plus customary credit spread adjustments in the case of Term SOFR rate DSG First Lien Term Loan borrowings; at a rate per annum equal to an applicable margin of 2.25% in the case of base rate DSG Second Lien Term Loan borrowings or 3.25% plus customary credit spread adjustments in the case of Term SOFR rate DSG Second Lien Term Loan borrowings; and 2.00% in the case of base rate DSG Second Lien Revolving Credit Facility borrowings or 3.00% plus customary credit spread adjustments in the case of Term SOFR rate DSG Second Lien Revolving Credit Facility borrowings, and, in the case of the DSG Second Lien Revolving Credit Facility, subject to decrease if the specified second lien net leverage ratio is less than or equal to certain levels, in each such case over either, at our option, (a) a base rate determined by reference to the highest of (1) the “Prime Rate” last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent), (2) the federal funds effective rate plus ½ of 1% and (3) the Term SOFR (or successor) rate for a one month interest period (including the applicable credit spread adjustment) plus 1.00% or (b) the Term SOFR rate determined by reference to the interest period relevant to such borrowing, subject to a 0% interest rate floor.

The DSG First and Second Lien Credit Agreements contain customary mandatory prepayment requirements, including with respect to excess cash flow, asset sale proceeds and proceeds from certain incurrences of indebtedness. DSG may voluntarily repay outstanding loans under the DSG First Lien Term Loan at a prepayment price equal to 100% of the principal amount of the DSG First Lien Term Loan being prepaid plus accrued and unpaid interest, if any, to the prepayment date plus (i) prior to the third anniversary of the closing date of DSG First Lien Term Loan, a make-whole premium (to be defined based on the net present value, calculated on the basis of a treasury rate + 50 basis points, of the interest payments that would have otherwise been paid up to such third anniversary date) plus a prepayment charge equal to 7.0% of the principal amount so prepaid, (ii) 7.0% of the amount so prepaid, if such prepayment occurs on or after the third anniversary of the closing date of the DSG First Lien Term Loan but prior to the date that is one year prior to the maturity date of the DSG First Lien Term Loan, and (iii) 0.0%, if such prepayment occurs on or after the date that is one year prior to the maturity date of the DSG First Lien Term Loan, and in each case subject to customary breakage costs with respect to Term SOFR rate loans. DSG may voluntarily repay outstanding loans under the DSG Second Lien Credit Facilities at any time without premium or penalty, other than customary breakage costs with respect to Term SOFR (or successor) loans.

The DSG First Lien Term Loan and the DSG Second Lien Term Loan both amortize in equal quarterly installments in an aggregate annual amount equal to 1.00% of the original principal amount of such term loans (commencing with the first full fiscal quarter after the closing date thereof), with the balance being payable on the respective maturity date of such term loans.

All obligations under the DSG First Lien Term Loan are secured, subject to permitted liens and other customary exceptions, by: (i) a perfected first priority pledge of (a) all the equity interests of DSG and each wholly owned restricted subsidiary of Holdings that is directly held by Holdings, DSG or a subsidiary guarantor, (b) subject to certain exceptions, the equity held by such entities in non-wholly owned restricted subsidiaries and (c) in certain limited circumstances, the equity held by such entities in non-subsidiary joint ventures and (ii) perfected first priority security interests in substantially all tangible and intangible personal property of Holdings and the subsidiary guarantors.

All obligations under the DSG Second Lien Credit Facilities (including with respect to certain cash management services provided by lenders or agents thereunder or affiliates thereof) are secured, subject to permitted liens and other customary exceptions, by: (i) a perfected second priority pledge of (a) all the equity interests of DSG and each wholly owned restricted subsidiary of Holdings that is directly held by Holdings, DSG or a subsidiary guarantor, (b) subject to certain exceptions, the equity held by such entities in non-wholly owned restricted subsidiaries and (c) in certain limited circumstances, the equity held by such entities in non-subsidiary joint ventures and (ii) perfected second priority security interests in substantially all tangible and intangible personal property of Holdings and the subsidiary guarantors.

The DSG First and Second Lien Credit Facilities are jointly and severally guaranteed by the guarantors party thereto, which currently includes Holdings and each of its wholly owned direct or indirect domestic subsidiaries. The DSG First and Second Lien Credit Facilities contain affirmative covenants including, among others: delivery of annual audited and quarterly unaudited financial statements; delivery of notices of defaults, material litigation and material ERISA events; submission to certain inspections; maintenance of property and customary insurance; payment of taxes; compliance with laws and regulations; a requirement that the DTC application and intellectual property developed as part of or derived from the DTC application shall be developed at and at all times be and remain owned by Holdings, DSG or guarantors and a requirement to maintain an independent board of DSG (including the selection solely by the required lenders under the DSG First Lien Term Loan of two of the independent board members). The DSG First and Second Lien Credit Facilities also contain negative covenants that, subject to certain exceptions, qualifications and “baskets,” generally limit the ability of (i) Holdings, DSG and its restricted subsidiaries to incur debt, create liens, make fundamental changes, enter into asset sales, make certain investments, pay dividends or distribute or redeem certain equity interests, prepay or redeem certain debt, enter into certain transactions with affiliates, amend the Management Agreement with Sinclair Television Group, Inc., transfer certain assets to or engage in certain types of transactions with unrestricted subsidiaries or other non-guarantor subsidiaries, transfer content rights, the DTC application and related intellectual property other than to Holdings, DSG and the guarantors, and forming and transferring assets to joint ventures and (ii) unrestricted subsidiaries to own or hold assets or engage in certain types of transactions as well as customary events of default, including relating to a change of control. The DSG First and Second Lien Credit Facilities also contain customary events of default, including relating to a change of control. If an event of default occurs, the lenders under the DSG First and Second Lien Credit Agreements will be entitled to take various actions, including the acceleration of amounts due under the DSG First and Second Lien Credit Agreements and all actions permitted to be taken by secured creditors under applicable law.