NOTES PAYABLE AND COMMERCIAL BANK FINANCING

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

NOTES PAYABLE AND COMMERCIAL BANK FINANCING

NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

Notes payable and finance leases to affiliates

The current portion of notes payable, finance leases, and commercial bank financing on our consolidated balance sheets includes finance leases to affiliates of $2.1 million and $1.9 million as of June 30, 2019 and December 31, 2018, respectively. Notes payable, finance leases, and commercial bank financing, less current portion, on our consolidated balance sheets includes long-term finance leases to affiliates of $9.6 million and $10.6 million as of June 30, 2019 and December 31, 2018, respectively.

Debt of variable interest entities and guarantees of third-party debt

We jointly, severally, unconditionally, and irrevocably guarantee $72.7 million and $76.5 million of debt of certain third parties as of June 30, 2019 and December 31, 2018, respectively, of which $22.3 million and $24.4 million, net of deferred financing costs, related to consolidated VIEs is included on our consolidated balance sheets as of June 30, 2019 and December 31, 2018, respectively. These guarantees primarily relate to the debt of Cunningham Broadcasting Corporation (Cunningham) as discussed under Cunningham Broadcasting Corporation within Note 9. Related Person Transactions. We have determined that, as of June 30, 2019, it is not probable that we would have to perform under any of these guarantees.

STG Term Loan A

On April 30, 2019, we paid in full the remaining principal balance of $91.5 million of Term Loan A-2 debt under the Bank Credit Agreement, due July 31, 2021.

STG 5.375% Senior Unsecured Notes

In July 2019, the Company announced that it will redeem, in full, $600.0 million of STG's 5.375% Senior Unsecured Notes due 2021 (the 5.375% Notes) on August 13, 2019. The 5.375% Notes were called at 100.000% of their par value. The redemption will be funded through a combination of seven-year incremental term B loans (Incremental Term B Loans) and cash on hand and is contingent upon the funding of $600.0 million of Incremental Term B Loans to finance such redemption.

RSN Debt Financing

On August 2, 2019, Diamond and Diamond Co-Issuer issued the Diamond Notes as described under Subsequent Events within Note 1. Nature of Operations and Summary of Significant Accounting Policies. The proceeds of the Diamond Notes are held in escrow and will be used to finance the acquisition of the RSNs as discussed under Pending Acquisitions within Note 2. Acquisitions and Dispositions of Assets. If (1) we do not consummate the acquisition of the RSNs on or prior to February 3, 2020; (2) prior to February 3, 2020, we notify the escrow agent that they will not pursue the consummation of the acquisition of the RSNs; or (3) the applicable conditions to the release of the escrow funds (including the completion of the acquisition of the RSNs) are not satisfied on or prior to February 3, 2020, then, in any such case, we must redeem all of the Diamond Notes at a redemption price equal to 100.0% of the principal amount of the Diamond Notes being redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Prior to August 15, 2022, we may redeem the Diamond Notes, in whole or in part, at any time or from time to time, at a price equal to 100% of the principal amount of the applicable Diamond Notes plus accrued and unpaid interest, if any, to the date of redemption, plus a ‘‘make-whole’’ premium. Beginning on August 15, 2022, we may redeem the Diamond Notes, in whole or in part, at any time or from time to time at certain redemption prices, plus accrued and unpaid interest, if any, to the date of redemption. In addition, on or prior to August 15, 2022, we may redeem up to 40% of each series of the Diamond Notes using the proceeds of certain equity offerings. If the notes are redeemed during the twelve-month period beginning August 15, 2022, 2023, and 2024 and thereafter, then the redemption prices for the Diamond 5.375% Secured Notes are 102.688%, 101.344%, and 100%, respectively, and the redemption prices for the Diamond 6.625% Notes are 103.313%, 101.656%, and 100%, respectively.

Diamond’s and Diamond Co-Issuer's obligations under the Diamond Notes are jointly and severally guaranteed by Diamond Sports Intermediate Holdings LLC (Holdings), Diamond’s and Diamond Co-Issuer’s direct parent, and certain wholly-owned subsidiaries of Holdings. Upon completion of the acquisition of the RSNs, the RSNs wholly-owned by Holdings and its subsidiaries will also jointly and severally guarantee the Issuers' obligations under the Diamond Notes. However, the Diamond Notes are not guaranteed by the Company, STG, or any of STG’s subsidiaries.

In conjunction with the acquisition of the RSNs, we expect to (1) borrow $0.7 billion of seven-year term loans, priced at LIBOR plus 2.50%, under STG's bank credit agreement which will be amended and restated, (2) issue $1.0 billion fully committed privately-placed preferred equity of a newly-formed indirect wholly-owned subsidiary of the Company, and (3) borrow $3.3 billion of seven-year term loans, priced at LIBOR plus 3.25%, under a new bank credit agreement to be established by Diamond and Diamond Co-Issuer, as discussed under Pending Acquisitions within Note 2. Acquisitions and Dispositions of Assets at or near the time of closing on the acquisition of the RSNs. Also, concurrent with the financing of the acquisition of the RSNs, we expect to replace STG's existing revolving credit facility with a new $0.65 billion five-year revolving credit facility, priced at LIBOR plus 2.00%, and establish a new $0.65 billion five-year revolving credit facility, priced at LIBOR plus 3.00%, for Diamond. The newly committed debt at STG will be guaranteed by the Company, certain other subsidiaries of the Company, and certain subsidiaries of STG, and secured by certain assets of STG and the guarantors, consistent with existing terms loans under the existing bank credit facility. In connection with the preferred equity, the Company will provide a guarantee of collection of distributions from Diamond and Diamond Co-Issuer.