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Author Topic: Getty's new $100m debt  (Read 10901 times)

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« on: November 10, 2015, 00:04 »
+4
I don't really understand the nature of the financial deals described, but Getty has apparently borrowed $100m (minus a $5m "discount" and a $2.5m "fee"!!)

http://www.bloomberg.com/news/articles/2015-11-03/carlyle-s-getty-images-said-to-reach-creditor-deal-for-new-debt

http://www.bloomberg.com/news/articles/2015-11-05/distressed-debt-lenders-aid-getty-images-in-shutterstock-battle

There is an article from September with some more background, written while they were looking around for the ways to borrow the money:

http://www.bloomberg.com/news/articles/2015-09-10/goldman-said-among-firms-pushing-carlyle-s-getty-for-debt-swap

"Getty, which is controlled by Carlyle, is seeking to raise between $50 million and $100 million of new debt as it attempts to bulk up its flagging stock-photo business, people with knowledge said earlier this week."

I don't know what they mean by "bulk up" - improve sites and software? advertise? acquire new collections? There is this quote, which also is a bit short on specifics: "Getty will use the cash in part to increase its marketing efforts and develop a consumer-facing business,..."

I guess the 10.5% interest Getty will pay reflects the perception of risk involved in lending a company already $2.46 billion in debt. Moody's downgraded their debt rating to Caa1. This Barrons article refers to the deal as a "limited default"

http://blogs.barrons.com/incomeinvesting/2015/11/05/getty-images-distressed-debt-exchange-called-limited-default/


I can't see any way this can be good for contributors, but thought it was worth noting for those still significantly dependent on iStock income.
« Last Edit: November 10, 2015, 00:09 by Jo Ann Snover »


« Reply #1 on: November 10, 2015, 00:29 »
+3
Well, it is good for contributors, if the money goes into marketing of the business.

But it shows how much they really are struggling. 10% means they are at a really big risk of defaulting. Although  even then, someone will probably come in and buy the business, probably will be cut up between Adobe and SS.
 
What would help them overall is a drive for clarity and transparency, not the usual doubletalk announcements where it is hard to understand what they actually want to do.

I really hope they have a plan. And fresh money means, the place won't be gone in the next 10 months.

So, I think it is good news for us.

op

« Reply #2 on: November 10, 2015, 01:21 »
+8
Getty is just trying to find ways to survive but do not know how.. Which is sad because I work exclusively with them >_>

It looks like macro stock is about to disappear but I cannot see the future in microstock either..

« Reply #3 on: November 10, 2015, 01:29 »
0
I thought their macrostock side was growing well, that it was their istock and micro returns that were struggling.

At least I thought I read that somewhere.

« Reply #4 on: November 10, 2015, 01:29 »
+4
"Bulk up" is exactly like it sounds, get as fat as possible, preferably on someone else's dime.

Hongover

« Reply #5 on: November 10, 2015, 01:36 »
+3
Let's see what they can do with that money. They're burning roughly $15 million per quarter, which means this money will last them roughly 1.5 years from today...assuming they keep the currently burn rate. If they spend more on marketing and it's ineffective, we're looking at about 1 year of run rate before they need more money again.

I feel like Getty is becoming a bit of a zombie company. An old dog trying to keep the status quo in a changing industry. If they don't make some drastic changes, they'll have one foot in the grave in a year.

« Reply #6 on: November 10, 2015, 01:39 »
+5
Let's see what they can do with that money. They're burning roughly $15 million per quarter, which means this money will last them roughly 1.5 years from today...assuming they keep the currently burn rate. If they spend more on marketing and it's ineffective, we're looking at about 1 year of run rate before they need more money again.

I feel like Getty is becoming a bit of a zombie company. An old dog trying to keep the status quo in a changing industry. If they don't make some drastic changes, they'll have one foot in the grave in a year.
They a profitable company saddling an atrocious debt load.

Hongover

« Reply #7 on: November 10, 2015, 01:40 »
+2
I thought their macrostock side was growing well, that it was their istock and micro returns that were struggling.

At least I thought I read that somewhere.

Their macro side is declining every year. The decline was slightly lower this year, but it's still in decline. You patch a few holes and slow the leak, but it's still leaking. The micro side is also on decline because of Fotolia and SS...actually both sides are on decline because of SS.

Hongover

« Reply #8 on: November 10, 2015, 01:41 »
+2
Let's see what they can do with that money. They're burning roughly $15 million per quarter, which means this money will last them roughly 1.5 years from today...assuming they keep the currently burn rate. If they spend more on marketing and it's ineffective, we're looking at about 1 year of run rate before they need more money again.

I feel like Getty is becoming a bit of a zombie company. An old dog trying to keep the status quo in a changing industry. If they don't make some drastic changes, they'll have one foot in the grave in a year.
They a profitable company saddling an atrocious debt load.


http://petapixel.com/2015/02/26/getty-images-is-burning-through-cash-as-its-earnings-shrink/

According to his report, it doesn't seem like they're profitable at all.

« Reply #9 on: November 10, 2015, 03:59 »
+8
http://petapixel.com/2015/02/26/getty-images-is-burning-through-cash-as-its-earnings-shrink/

According to his report, it doesn't seem like they're profitable at all.


They certainly would be if they didn't have to pay hundreds of millions in interest on their debts. And the debts mostly didn't come from running the business or acquisitions but from the two hedge funds financing their purchase of the company by paying out special dividends and letting the company go into debt for it.

« Reply #10 on: November 10, 2015, 04:01 »
+8
It worked so well the last time Getty was saddled with a huge debt.  Not for us but for the hedge fund that sold them to another hedge fund.  I really wouldn't want to be exclusive with all this going on.

« Reply #11 on: November 10, 2015, 09:11 »
+9
It doesn't matter how much they spend on marketing when the site is so badly run.
Confusing user interface, bugs that take months if ever to fix, badly thought out and implemented search, uncontrolled spamming, constantly changing pricing plans.
A potential new customer visiting the site and finding such a mess won't bother coming back.

« Reply #12 on: November 10, 2015, 10:04 »
+1
Let's see what they can do with that money. They're burning roughly $15 million per quarter, which means this money will last them roughly 1.5 years from today...assuming they keep the currently burn rate. If they spend more on marketing and it's ineffective, we're looking at about 1 year of run rate before they need more money again.

I feel like Getty is becoming a bit of a zombie company. An old dog trying to keep the status quo in a changing industry. If they don't make some drastic changes, they'll have one foot in the grave in a year.
They a profitable company saddling an atrocious debt load.


http://petapixel.com/2015/02/26/getty-images-is-burning-through-cash-as-its-earnings-shrink/

According to his report, it doesn't seem like they're profitable at all.
Shrink is a relative term. There is nothing about what their payment to creditors is. People go bankrupt with good jobs and income, not much different.

« Reply #13 on: November 10, 2015, 11:14 »
+2
If they go bankrupt, can they still sell images without paying the contributors?

« Reply #14 on: November 10, 2015, 11:29 »
+3
If they go bankrupt, can they still sell images without paying the contributors?
Of course, see Revostock posts on this site.

« Reply #15 on: November 10, 2015, 11:33 »
+2
Corbis is in big trouble too, executives are running out like mice out of a sinking ship

« Reply #16 on: November 10, 2015, 11:56 »
+2
Corbis is in big trouble too, executives are running out like mice out of a sinking ship
Corbis has a very talented shipwright below decks. If he chooses to plug some of the holes, he will.

« Reply #17 on: November 10, 2015, 13:03 »
+2
Let's see what they can do with that money. They're burning roughly $15 million per quarter, which means this money will last them roughly 1.5 years from today...assuming they keep the currently burn rate. If they spend more on marketing and it's ineffective, we're looking at about 1 year of run rate before they need more money again.

I feel like Getty is becoming a bit of a zombie company. An old dog trying to keep the status quo in a changing industry. If they don't make some drastic changes, they'll have one foot in the grave in a year.

To go with the other foot thats already in there?

« Reply #18 on: November 10, 2015, 13:06 »
0
There is senior debt and un secured lower postion debt. - this just looks like someone moving their debt up to a more senior position in exchnage for some cash for Getty

Not real encouraging the way i read it.
I agree if getty wadnt saddled with so much debt they would be in a better position
The debt  is holding them back in every way

« Reply #19 on: November 10, 2015, 13:08 »
+2
Getty is just trying to find ways to survive but do not know how.. Which is sad because I work exclusively with them >_>

It looks like macro stock is about to disappear but I cannot see the future in microstock either..
So Microstockers claim the current model is unsustainable and Macrostockers appear to believe that macro will disappear.

Most likely neither will happen but it is just the sheer oversupply of imagary in both market segments that dilute individual contributors' earnings.

« Reply #20 on: November 10, 2015, 13:28 »
+7
Not a particularly good sign for people counting on them. Their debt is holding them back almost as much as their repeated boneheaded moves. Or maybe it is the other way around.

IS certainly could have owned micro and midstock with a few more clever and less greedy moves.

« Reply #21 on: November 10, 2015, 13:45 »
+6
At this point I think the only thing they can do with that money that might make any difference would be to drastically increase contributor royalty rates and get photographers back in the game. Photographers word of mouth campaigns and happy contributors that are also buyers were their greatest asset at one time. Of course they didn't realize it then and there's no reason to believe they "get it" now either.
« Last Edit: November 10, 2015, 18:01 by stockmn »

« Reply #22 on: November 10, 2015, 14:53 »
+1
like Michael said - the debt isn't really anything to do with Getty. It's the hedge funds that
created it to pay themselves.  I think they have to go bankrupt if they ever want to really
get aggressive and hopefully grow in new ways.  It's just to much money to make the debt payments leaving them no room to do what they traditionally are good at. Buying other companies. They have great work imo and great clients. yes its a real rough business but their debt is holding them back imo.

« Reply #23 on: November 10, 2015, 14:55 »
+6
Getty probably has 200,000,000 photos so they really dont need more photographers or happy photographers, its the least of their concerns, they need sales, theyre losing ground

« Reply #24 on: November 10, 2015, 15:04 »
+4
yup more sales and less debt.
I don't know but this looks to me like planning for a bankruptcy
550 million in unsecured debt gets bumped up to top tier secured debt in exchange for cash.  Thats how I read it anyway

they should have bought Fotolia and maybe dreamstime/corbis. they use to buy everyone
before the debt.



 

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