(Bloomberg) -- Sinclair Inc. and some of its lenders are hashing out a proposal to raise more than $1 billion in new financing to pay down some of its debt, according to people familiar with the situation.
Under the proposal, the money it’s planning to borrow will likely be structured as super senior paper or debt that moves ahead in the repayment line, said the people, who asked not to be identified discussing a private matter. The new money is expected to refinance the $1.2 billion loan due 2026, they added. Lenders would also agree to extend the maturity of the $716 million loan maturing in 2028 and the $733 million one due in 2029 by two years each, the people said.
In return, credit documents would also be tightened, they said.
Negotiations are ongoing and no final decision has been made.
Representatives for Sinclair and JPMorgan Chase & Co., the company’s adviser on this endeavor, declined to comment.
The company has also looked into raising cash by moving assets into a newly created legal entity, and would use the proceeds to refinance the debt due in 2026, Bloomberg previously reported. Moelis & Co. is advising on that initiative, said other people.
The strategy — known as a drop-down transaction — would allow Sinclair to raise money by borrowing against the transferred assets. Such transactions are often met with scorn from existing lenders because it erodes the collateral package backing their loans.
A representative for Moelis declined to comment.
Chatham Asset Management, calling itself one of the largest creditors to Sinclair, urged the broadcaster in June to refrain from maneuvers that divide lender collateral in order to refinance debt. It instead backed a more “traditional” refinancing of Sinclair’s term loans maturing in 2026 and said it would support a public or private exchange of debt into more junior instruments.
--With assistance from Jill R. Shah.
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