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SFX dips into cash reserves after credit rating downgraded
By Chris Cooke | Published on Thursday 3 September 2015
So, if you’re one of the gossipers busy trying to gossip EDM powerhouse SFX out of business, here’s some new fuel to keep your gossiping going.
As previously reported, there has been much speculation of late about the health of Robert Sillerman’s most recent music business venture after the entertainment industry veteran’s failed bid to take the firm back into private ownership.
Investor unrest over that plan, coupled with some odd extra-curricular share transactions, contributed to a slump in the company’s share price. Shares were going for as low as 52 cents at one point yesterday, compared to a share price of $3.70 at the start of the year, and the $5.25 per share rate Sillerman was, at one point, proposing to pay in order to regain control of his company.
Contributing to the latest slip in share price was the recent decision by ratings agencies Moodys and Standard & Poor to downgrade the music firm’s corporate credit rating. And on Tuesday, the company told some of its moneylenders that it was having to dip into its cash reserves to a greater extent than planned, mainly because it was having to make more upfront payments in relation to its current programme of festivals.
The company also reported that its special committee of independent directors had received indications of interest in buying components of the EDM business. As also previously reported, after Sillerman confirmed he wasn’t able to go ahead with the $5.25 per share buy-back plan, SFX said it would accept new offers from third parties to buy some or all of the company.
When similar offers were encouraged earlier in the summer, there was some interest in some SFX assets, but not to buy the company outright. It sounds like that is probably still the case, though directors may be more willing to consider offloading individual festivals or divisions this time round. Sillerman, of course, is also expected to make another bid to win back control of the entire SFX business by the 2 Oct deadline the firm’s board has now set.
