Bankrupt Clearwater marketing firm secures $122M in financing

Clearwater advertising firm Digital Media Solutions has filed for Chapter 11 bankruptcy and has secured $122 million in financing as part of a process that will include a sale of the company.

In a note to investors Thursday, the company says it has already entered into an “asset purchase agreement” with lenders that “is subject to higher or otherwise better offers.”

The $122 million is debtor-in-possession financing that will be used to continue operating through the sale process. That money comes from existing lenders, with $30 million in new commitments and $92 million pre-petition funded debt, the company says.

According to its initial filing with the U.S. Bankruptcy Court for the Southern District of Texas, DMS' 30 top unsecured creditors are owed $21.46 million.

The total of its debt wasn’t disclosed in the filing. But according to the company’s first quarter earnings report released in May, it ended the quarter in March with $301.9 million in debt and $14.2 million in cash.

Joe Marinucci, DMS’ co-founder and CEO, says in a statement that the sale and bankruptcy are the result of a strategic review that began in April.

“We are now moving forward with the support of highly sophisticated investors, and we believe their commitments for new financing and the (sale agreement) underscore their conviction in our business and the future of DMS.”

The company was founded in 2012 by Marinucci, Fernando Borghese, Luis Ruelas, Matt Goodman and David Shteif. According to its website, the company is a “provider of technology-enabled digital performance advertising solutions connecting consumers and advertisers.”

Its clients include small- and medium-sized companies in the property and casualty insurance and health insurance market as well as businesses in e-commerce, career and education and consumer finance sectors. (The company’s ClickDealer subsidiary is not part of the bankruptcy but is included in the sale.)

DMS has experienced some financial setbacks recently, including being delisted from the New York Stock Exchange last year, shortly after cutting 14% of its workforce and turning down an offer that would have taken it private.

Then, in May’s earnings statement, the company reported its revenue was down 21%, to $70.7 million, when compared with the first quarter of the previous year. And in its fourth quarter earnings statement released in April, it reported its net revenue for 2023 was down 14.4% to $334.9 million.

(DMS became a private company in August. according to a note from a spokesperson. The company did not respond to questions about why it reported its fourth quarter earnings and first quarter earnings just a month apart. The company also did not respond to a question about why it filed for bankruptcy in Texas.)

Kirkland & Ellis LLP and Porter Hedges LLP are representing DMS in the bankruptcy. Portage Point Partners is serving as restructuring advisor and Houlihan Lokey Capital is serving as investment banker.