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SFX bondholders want a Live Nation acquisition for Christmas

By | Published on Monday 21 December 2015


SFX’s money-lenders are busy hoping that Live Nation will acquire the flagging EDM powerhouse, according to Reuters.

As much previously reported, this has been a tricky year for the dance festival operator and Beatport owner, after founder Robert FX Sillerman twice aborted plans to buy up all the shares he doesn’t currently control and take the firm back into private ownership.

The insecurity those plans created, coupled with some disappointing financials, has resulted in the firm’s share price tanking. As a result its debt pile of around $300 million is now nearly ten times the market cap valuation of the company, ie the total value of all shares issued, which currently stands at $32.63 million.

SFX recently confirmed it had asked its bankers to investigate a possible restructuring of its debts. Then it was rumoured that Cream founder James Barton – currently a Live Nation executive – was in talks to join the company, possibly replacing Sillerman as CEO. Certainly the consensus is that shareholders and money-lenders no longer trust the SFX founder to run the company.

Another option, it seems, is for Barton’s current employer to take control of SFX, which would be history repeating itself, given that media giant Clear Channel bought Sillerman’s original SFX venue business back in the day, subsequently spinning that venture off as a standalone company, aka Live Nation.

It is thought that the live entertainment giant was among the companies to express an interest in SFX’s assets when the latter’s directors were accepting bids earlier this year. Though, given the EDM firm’s liabilities, Live Nation is seemingly in no major rush to complete any deal, preferring to wait and see what the bankers can do with SFX’s debts.

But, says Reuters, for SFX’s bondholders, a Live Nation acquisition would be the best possible option, because they could get their money back – and a profit – as part of any complete takeover of the EDM firm. Though, if Live Nation were to pick off SFX’s most successful festival brands and buy them individually instead, bondholders might be deprived their pay day.

Live Nation has been boosting its EDM credentials in recent years, not least by acquiring Barton’s Cream business, and an SFX buy would make it a dominant force in the dance music sector. Though, given the US-led EDM bubble arguably burst this year, it remains to be seen just how much Live Nation would be willing to pay. Buying a few slices of SFX, and avoiding the EDM firm’s debt liabilities, would likely be attractive.