BuzzFeed Is Facing a $124 Million Debt Crisis

Whatever the price, if BuzzFeed sold First We Feast, it would have to use the proceeds to pay down the debt. An update to the contract between BuzzFeed and its creditors in February stipulated that 95% of the funds generated by future asset sales must be used to repay the debt.

If BuzzFeed were able to sell one of its properties, the windfall would likely encourage creditors to continue working with the publisher to pay down the remaining debt, according to Berstein.

In fact, BuzzFeed’s creditors have little incentive to bankrupt the company, as doing so would jeopardize their ability to recoup their investment. That leads to the second option: restructuring the debt or finding alternate financing.

BuzzFeed could refinance its debt obligations to its creditors by extending the timeline, accepting new terms, raising more money, or exploring other options, according to Berstein. 

Stocking stuffer

Finding new capital partners interested in investing in BuzzFeed could prove difficult given its challenged financial position, but the company has reason for some optimism.

BuzzFeed’s stock, which sank from its initial offering in 2021 of $10 per share down to below $1, has rebounded to a year-to-date high of around $4.50. This uptick could be the result of a variety of factors. 

In May, the entrepreneur and politician Vivek Ramaswamy took a 7% equity stake in the company, which could engender confidence in the business.

The uptick could also be related to the fact that BuzzFeed has tied its new identity to its use of artificial intelligence, a buzzy technology that has attracted billions in investment in recent years. BuzzFeed also reported a small quarterly profit in the third quarter, with revenues up 53% year over year. While nascent, the positive financial news is a welcome green shoot for the embattled publisher. 

Whatever the explanation, the uptick in BuzzFeed stock could provide the publisher with a degree of bargaining power in debt restructuring conversations. 

Likewise, the economic outlook—especially as it pertains to mergers and acquisitions—is trending in a positive direction for a variety of reasons, giving BuzzFeed a healthier shot at being able to maneuver its way into solvency. 

“BuzzFeed is definitely drafting off by far the best place the market has been in the last 24 to 30 months,” Berstein said. “They may feel slightly emboldened because of that.”