SFX Entertainment, a company struggling on Wall Street and getting pummeled by investors and analysts, suddenly has some oxygen. According to details now confirmed by the company, SFX has $90 million in cash to burn, thanks to a collection of named and unnamed investors.
“…this solidifies SFX for the short and long term…”
The first taker is an institutional investor that kicked in $30 million for Senior Convertible Preferred Stock, while apparently wishing to remain anonymous. Another $30 million will come from a group of investors corralled by Sillerman Investment Partners III LLC, which the rest provided through a revolving credit facility managed by GoldenTree Asset Management. “While the company continues to explore strategic alternatives, this solidifies SFX for the short and long term, so we can focus on producing great festivals and events and operating globally recognized digital properties,” SFX Entertainment founder Robert F.X. Sillerman offered in a statement.
According to details now being filed with the Securities & Exchange Commission (SEC), the Senior Convertible Preferred Stock is convertible into shares of SFX common stock at $1.75 per share, and pays a 9 percent cash dividend.
“This also eliminates all operating distractions as we explore proposals from interested strategic partners.”
So what’s next? This looks like a classic cash-burn, though company CFO Richard Rosenstein hinted at an acquisition or alliance moving forward. “With the success of many of our festivals in the current quarter and this added financial flexibility, SFX is better positioned to continue growing our powerful brands and support our extraordinary team members who are focused on executing on our strategic plans,” Rosenstein said. “This also eliminates all operating distractions as we explore proposals from interested strategic partners.”