S&P Downgrades Getty Images to 'CCC' After Missed Interest Payment

S&P Global Ratings has downgraded Getty Images Inc. (NYSE: GETY) to 'CCC' from 'CCC+' after the company missed an interest payment due on its senior unsecured notes. The ratings agency also placed all of Getty's ratings on CreditWatch with negative implications, signaling the potential for a further downgrade.

Details of the Downgrade

Getty Images' parent company, Getty Images Holdings Inc., did not make the scheduled payment on its 14% and 9.75% senior unsecured notes as it evaluates "balance sheet management initiatives," according to S&P. The ratings agency stated it is uncertain if Getty will make the payment within the 30-day grace period required to prevent an event of default.

As a result of the missed payment, S&P implemented the following ratings actions:

• The issuer credit rating was lowered to 'CCC' from 'CCC+'.
• The rating on senior secured debt was lowered to 'CCC+' from 'B-'.
• The rating on senior unsecured debt was lowered to 'CCC' from 'CCC+'.

If Getty fails to make the interest payment within the grace period, S&P said it would lower the issuer credit rating to 'SD' (Selective Default) and the affected debt ratings to 'D'.

Financial Position and Obligations

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The company's decision comes amid other financial pressures. In July, Getty Images faced a litigation judgment totaling approximately $92.3 million, including interest. The company made a partial payment of about $4.1 million against the judgment in August.

According to S&P, Getty Images ended the second quarter with approximately $51 million in cash and $30 million available on its revolving credit facility. The company subsequently drew the remaining $30 million from the facility after the quarter ended.

Future Debt Maturities

A key risk for investors is a "springing maturity" clause tied to the company's revolving credit facility. This provision would move the facility's maturity date to September 2, 2027 — 180 days prior to the March 1, 2028, maturity of its senior unsecured notes — if more than $100 million of the notes remain outstanding.

S&P noted it expects to resolve the CreditWatch placement as it gains more clarity on Getty's strategic financing alternatives and balance sheet initiatives.