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SFX terminates Restructuring Support Agreement

By | Published on Tuesday 21 June 2016

SFX Entertainment

Never let it be said anything SFX does is dull. You know how the dance music firm had itself a nice Chapter 11 Restructuring Support Agreement when it applied for bankruptcy protection earlier this year? Well, now it doesn’t.

In something of a surprise move, the company announced last week that it had cancelled that agreement in a bid to provide more “flexibility” in its ongoing negotiations with bondholders and creditors. Which possibly suggests some of those bondholders have decided they don’t like the plan set out in the Chapter 11 Restructuring Support Agreement. And some are speculating that the bit they don’t like might be that founder Robert Sillerman, although out as CEO, stayed on as Chairman.

Confirming the latest development, the company said in a statement: “This provides SFX the flexibility for more comprehensive negotiations with all of its constituents with the goal of developing a consensual plan of reorganisation. The company, its ad hoc group of bondholders and the Official Committee Of Unsecured Creditors continue to work co-operatively”.

Go ad hoc group of bondholders! Quite what all this means for the chances of SFX coming out of all this as a going concern isn’t clear. Though last week’s statement also noted that the company had “no set timeline” for coming up with its new plan of reorganisation.

As previously reported, SFX applied for bankruptcy protection in February, after two failed attempts by Sillerman to take the company back into private ownership, during a period which saw the company’s share price tumble sharply.

A plan to downsize was implemented, aiming to sell off a number of the businesses SFX had bought during its rapid growth period. This proved more difficult than hoped, with the sale of digital music service Beatport cancelled. Digital marketing agency FameHouse was offloaded onto Universal Music, while ticketing firm Flavorus was eventually acquired by Universal parent company Vivendi.

Following the announcement that SFX had terminated its Restructuring Support Agreement, IQ reports that the company’s share price dropped to its lowest ever price – an impressive $0.0125 per share. Less than a year ago, Sillerman was offering $5.25 per share in his first failed buy-back plan.