Getty Images Bonds Fall as S&P Cuts Rating Deeper Into JunkLaura J. Keller
Bonds of Getty Images Inc. dropped to a record low as a price war that’s eating up the photo archive’s cash prompted Standard & Poor’s to cut its credit ratings deeper into junk.
Getty’s $550 million of 7 percent notes due in October 2020 fell 3.1 cents to 55.4 cents on the dollar at 1:18 p.m. in New York, according to Trace, the Financial Industry Regulatory Authority’s bond-price reporting system. The yield climbed to 21 percent.
The securities have plunged by more than 14 cents on the dollar since the Carlyle Group-controlled company told investors last month that it burned through a third of its cash in the last three months of 2014. Seattle-based Getty, which owns or represents 170 million images including Alfred Eisenstaedt’s iconic World War II kiss in Times Square, has been under pressure from lower-cost competitors.
“We expect that Getty Images’ leverage will continue to rise because its operating performance will likely remain soft in the first half of 2015,” S&P analysts led by Elton Cerda in New York wrote in a report today. The ratings firm cut Getty’s corporate credit rating one level to B-, six steps below investment-grade.
Getty, which doesn’t publish its financials, told holders of its $2.46 billion of debt on Feb. 23 that its cash was depleted to $27 million in the last three months of 2014, from $41 million in the previous quarter, two people with knowledge of the company’s finances said at the time, asking not to be identified because they weren’t authorized to speak about the private report.
Getty’s $1.9 billion term loan due October 2019 has dropped 6 cents to 84.9 cents on the dollar since the company reported its fourth-quarter performance to investors, according to prices compiled by Bloomberg. The debt was trading at more than 97 cents on the dollar as recently as July.
“We are confident in our current plans for the future,” Colleen McCabe, a spokeswoman for Getty, said in an e-mailed statement, declining to comment on the company’s financial performance or operations. “Getty Images continues to lead the industry, as we have always done.”
Randy Whitestone, a spokesman for Washington-based Carlyle, declined to comment.