Ad sales have dropped leading to Vice Media’s bankruptcy filing. Monday marked the beginning of the end for the Vice Media consortium, which is best known for its websites, Vice and Motherboard. The company filed for bankruptcy protection to facilitate its sale to a consortium of lenders, bringing to a close years of financial struggles and the departure of top executives.
The decision to file for bankruptcy resulted from the problematic era many technology and media organizations have been going through. These businesses have been attempting to survive a poor advertising market and decreasing economic growth by slashing costs.
According to Vice, the lender consortium comprising Fortress Investment Group, Soros Fund Management, and Monroe Capital will provide around $225 million in credit bids for practically all of the company’s assets and assume significant liabilities at completion.
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Under the terms of a credit bid, creditors can exchange the secured debt they hold for the company’s assets rather than paying cash. The $500 million to $1 billion range was mentioned for Vice’s assets and liabilities on its balance sheet.
“Creditors are taking it (Vice) over at a steep discount, and we will find out whether they can become viable with a much slimmer capital structure coming out of bankruptcy,” said Thomas Hayes, chairman of investment firm Great Hill Capital. “We will find out whether they can become viable with a much slimmer capital structure coming out of bankruptcy.”
Vice was one of a series of rapidly growing digital media enterprises that formerly had rich valuations as they courted millennial viewers. Those companies are also seeing a decline in worth. Shane Smith, who began his media empire with a single magazine in Canada, was instrumental in the company’s rise to popularity and was one of its co-founders.
Vice has secured promises and authorization from the lenders to utilize more than $20 million in cash, which the company says will be “more than sufficient” to fund its operations through the sale process. Vice is selling its firm to a new owner.
As part of a larger plan to reorganize its news division, the corporation announced on April 27 that it would end production of the widely watched television show “Vice News Tonight.” A week earlier than that, BuzzFeed Inc (BZFD.O) announced that it would be eliminating its news business.
“This climate, coupled with a difficult equity-raising environment due to higher rates, is taking some of the smaller players out to pasture,” Hayes said. “[T]hese players are being put out to pasture.”
