SFX becomes a debt free LifeStyle

SFX Entertainment has emerged from bankruptcy ahead of schedule – and with a new name of LifeStyle Inc.  SFX was  originally slated to exit the chapter 11 (administration) process in early 2017 but became officially solvent once more last Friday (2 December). The newly debt-free LifeStyle is run by CEO Randy Phillips, formerly of AEG Live and Global Entertainment.

SFX figures show a $18 million loss for 2015

Whilst SFX had predicted a $500 million turnover and $60-70 million profit for 2016 - new figures which have been made public through the troubled EDM promoter's Chapter 11 bankruptcy. 2015 revenues were $336.9 million - the same as 2014 - with a loss of $18 million. The 2015 figures include estimates for the fourth quarter and are not final numbers. Billboard says the SEC filing makes clear why SFX filed for bankruptcy protection and agreed to undergo a restructuring. Months ago, SFX expected to have a negative cash balance of $29.9 million in January after interest payment and earnouts totalling $28 million. By March, it expected to have a negative cash balance of $33.1 million -- over $58 million under management's preferred $20 million cash buffer. North American live events generated $140 million in revenue in both 2014 and 2015, but losses more than doubled, from $5 million to $13.2 million. Other live events segments, including international live events and ticketing, had positive earnings in 2015. Download and streaming service Beatport lost $5.5 million.

SFX event organisers pay a heavy price for Chapter 11

Many of SFX Entertainment’s largest creditors are SFX-owned promoters who were awaiting deferred payments for selling their events and companies to the failed EDM group. According to a 476-page creditor matrix seen by IQ Magazine.11 of SFX’s 13 largest ‘non-insider’ creditors – (ones not associated with the company’s founder and former CEO, Robert FX Sillerman) are the owners of some of the many companies purchased by SFX since its founding in 2012.

SFX currently lists assets of $661.614m and debts of $490.236m. Sillerman and funds controlled by him own 37.8 per cent of the company’s common stock. IQ says "This means that a large proposition of SFX Entertainment’s creditors are still deeply involved in the company – and have a vested interest in seeing it continue in one form or another."

The largest unsecured creditor is Dutch EDM firm Alda Events which is owed $23.6 million.

SFX also owes $10 million to Made Events, creators of Electric Zoo in New York, Electric Zoo Mexico City and Electric Zoo Beach Tokyo. Chicago promoter React Presents, which organises Summer Set Music & Camping Festival and Spring Awakening, and also owns Clubtix, Inc., is out $5.8m. Principals at Australia’s Totem OneLove Group, which promotes Stereosonic festival, are owed $10.7m (through Artists Alliance Australia Pty Ltd, Beggars Canyon Investments, Deyson Pty Ltd, Sellmark International Pty Ltd & Peter John Raftopoulos). Hoeksema Holdings, run by Theo Hoeksema, the former CEO of Paylogic, is owed $2.5m, while co-founder Jan Willem van der Meer is short $792,000, and co-founder and former CTO Berco Beute $528,000.

Trade creditors are also facing a shortfall, with those listed on the top 40 creditors list including private air-charter firm VistaJet (owed $1m), Epic Tents of Georgia ($442,650), PRS for Music ($327,680), NYC-based app-builder Postlight ($315,000), Front Gate Ticketing ($301,400) and event medical services company CrowdRX ($269,600).

SFX filed for bankruptcy on Monday in a ‘restructuring support agreement’ which wipes over $300m in debt from the company’s books. SFX Entertainment has now been granted initial approval to begin spending part of a $115 million bankruptcy loan. A bankruptcy judge granted the New York-based company access to $80m of the loan, which is being provided by junior bondholders that have worked with the firm on the terms of a restructuring agreement. It will be used to pay off senior lenders and provide $23m to cover operational expenses, reports the Wall Street Journal.

SFX founder and CEO Robert Sillerman (pictured) will resign from the company in the next 60 days and will be replaced on an interim basis by the firm's chief restructuring officer Michael Katzenstein. General counsel Howard Tytel also plans to resign, according to SFX attorney Nancy Mitchel

SFX floated on the New York Stock Exchange in October 2013 for an initial public offering of $13 per share; by the end of January 2016 its share price stood at 13¢.

http://www.iq-mag.net/2016/02/promoters-supplies-high-on-sfx-entertainment-creditors-matrix-list/ and http://www.musicweek.com/news/read/sfx-entertainment-granted-bankruptcy-financing/064034

SFX files for Chapter 11 Bankrupcy

SFX Entertainment has filed for Chapter 11 bankruptcy in the US. The EDM, Tomorrowland. and Beatport owner will see $300m in debt wiped off  it's balance sheet, and see it go private as part of a new Restructuring Support Agreement (RSA) with creditors. Robert Sillerman is stepping down as CEO as part of the bankruptcy process, but will remain as Chairman. SFX says it has reached an agreement with an ad hoc group of bondholders (“ad hoc group”) to significantly restructure the Company’s outstanding debt, including the conversion of ‘the majority of the bondholder group debt into equity in a newly strengthened private company’. These ‘ad hoc bondholders’ have additionally agreed to provide SFX up to $115m in DIP (debtor-in-possession) financing, allowing the firm to operate as normally as possible over the next few months. Beatport moved to reassure its partners that it’s “business as usual” at the service – including royalty payments to labels – despite parent SFX filing for Chapter 11 bankruptcy

More on MBW here

SFX raises $20 million

Following news of a default on a loan repayment and that the company was  "considering bankruptcy,debt restructuring and asset sales", SFX Entertainment's financial saga moved on with the announcement of new financing. The troubled EDM promoter revealed it has raised $20 million "for itself and certain of its operating subsidiaries, obtaining capital for its working and general corporate purposes." Those were the only details released. More information will be given in an SEC filing that had not been released by midday Friday.

More on Billboard here

SFX suffers more setbacks as it defaults on Spotify deal and TMWRK team leaves

SFX , the troubled dance event company, has defaulted on its content agreement with Spotify, and will be refunding the $10 million licensing advance in installments by July 2016. Spotify can recoup its advance because the contract called for SFX boss Robert Sillerman to purchase $15 million in preferred stock by October 17th. Sillerman's failure to make this payment caused SFX to default on a $30 million credit agreement with Barclays Bank and other unnamed lenders, who could at any time declare all funds due immediately. SFX's share price was $0.193 as the year ended - it has fallen 33.4 percent since December 24th 2015 and is 96.3 percent below its 52-week high of $5.25.

SFX has also  parted ways with the company behind artist management firm TMWRK. SFX purchased TMWRK, home of Diplo and many other EDM artists, in 2014. Now TMWRK has agreed to pay $3.6 million to leave SFX, which will abandon the business and write down the value of its investment. 

More on Billboard here

Will Live Nation pick up SFX?

It seems SFX's money-lenders are  hoping that Live Nation will acquire the flagging EDM powerhouse. The debt pile of around $300 million is now nearly ten times the market cap valuation of the company after it's share price collapsed and SFX recently confirmed it had asked its bankers to investigate a possible restructuring of its debts with talk that Cream founder James Barton - currently a Live Nation executive - was in talks to join the company. It is thought that Live Nation was among the companies to express an interest in SFX's assets when the latter's directors were accepting bids earlier this year although Reuters say Live Nation might just cehrry pick off SFX's most successful festival brands and buy them individually instead - although ab SFX buy would make it a dominant force in the dance music sector. 

SFX hires financial advisor to restructure debt

Fast failing EDM promoter SFX  Entertainment has retained an investment bank to restructure a debt load that many commentators believe has the electronic dance-music company teetering toward bankruptcy. Three-year-old SFX confirmed the hiring of debt advisory Moelis & Co. on Monday. Reuters initially reported the appointment.

http://nypost.com/2015/12/01/sfx-hopes-financial-firm-can-save-it-from-bankruptcy/

sillerman withdraws latest SFX offer

Robert FX Sillerman has withdrawn his latest offer to acquire all of the shares in SFX he doesn’t currently control, according to a filing made with the US Securities And Exchange Commission this week. His initial (and incresaed) offer of $5.25 a share was rejected, but after the EDM promoters share price dived, he returned with a new $3.25 per share offer. SFX’s share price hit an all-time low of 41 cents as news of Sillerman’s latest announcement started to circulate last night.

More on CMU here

UPDATE 20.11.15

The SFX share price has now crashed another 41% to 24 cents and Hypebot.com
reporteds"Several industry insiders familiar with the workings of SFX said that a bankruptcy filing was all but inevitable.  The company's board had reported that they had had inquires to purchase portions of the EDM conglomerate, but now even those would likely have to happen at fire sale prices.

Sillerman launches new bid for SFX

Robert FX Sillerman  has submitted a new proposal to buy back all of the shares in the company he doesn't currently control and take the business back into private ownership. This is Sillerman's second attempt to achieve this goal - and at a substantial discount to his initial offer of $5.25 a share which failed when the SFX owner could not secure financial backing for his offer as SFX's share price slumped.

Sillerman's new proposal is to buy out all other shareholders at $3.25 a share, still a substantial premium on the current share price. Some shareholders will also be invited to roll over their current equity into the private company Sillerman hopes to create. The proposal is subject to the approval of SFX's special committee of independent directors, and key shareholders. In a letter filed with the US Securities And Exchange Commission, the SFX boss writes: "I am prepared to move expeditiously towards the negotiation and execution of definitive agreements for my proposed acquisition transaction. No further diligence review or analysis is required".

TomorroWorld US chaos pushes SFX shares even lower

Shares in flagging EDM powerhouse SFX slipped another 12.5%  because of problems at one of the firm's big events  - the third edition of TomorrowWorld - the American spin off of European dance festival Tomorrowland. Described as an "epic disaster of near-riots and looming lawsuits" by Vice site Thump, the problems at TomorrowWorld were caused by inclement weather, athough many festival-goers are blaming the event's promoters for their poor response to the weather after transportation off the boggy site was curtailed, making it hard to exit the festival with fans left stranded at the roadside. On the final day SFX announced that only those already onsite would have access to the final day's festivities, with non-campers offered refunds on their tickets. Announcing that decision, organisers said  "We take the safety of all of our visitors very seriously. The rainfall since Thursday resulted in limited capacity of festival parking fields, drop-off locations, and the shuttle system. Festivalgoers with day tickets, guest list tickets, and anyone not already camping at DreamVille will unfortunately not be able to access today's events".

The firm recently secured an extra $90 million in financing while the board continues to consider options for the company's future but  the New York Business Journal reported that SFX is currently exploring a fire sale of its assets. If SFX's shares remain under $1 for more than 30 days the company risks losing its Nasdaq listing.

UPDATE

MusicWeek reports that SFX has extended the deadline for bids by a further two weeks. The company's special committee of independent directors, with the agreement of chairman and CEO Robert F.X. Sillerman, have now set an initial bid deadline of of October 14, for third-parties to submit proposals to acquire either the entirety of SFX, or assets "not central to the company’s core business". Sillerman has committed to back the decision of the independent directors regarding the future of the business, with the company saying "Pursuant to a voting agreement between Sillerman and his affiliates and the company, Sillerman has agreed to vote all shares beneficially owned by him in favour of a transaction involving the sale of the company that is recommended by the special committee". This agreement lasts until December 2015.

SFX secures new finance

SFX, the embattled EDM promoter, festival organiser and Beatport owner, has refinanced its $30 million revolving credit facilities with a new $90 million cash line that comes from both new and existing investors. SFX said the funding was "for new initiatives and operating and working capital needs". Founder Robert Sillerman added: "This round of financing from these sophisticated investors reflects a level of confidence and provides growth capital to support many of the exciting new initiatives SFX is undertaking". Meanwhile SFX's CFO Richard Rosenstein added: "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. This also eliminates all operating distractions as we explore proposals from interested strategic partners".

SFX's share price rose on the news to 62 cents per share, compared to $3.70 at the start of the year, and $13 when SFX floated in October 2013. 

SFX credit rating downgraded

With Robert Sillerman's having so far failed to take SFX back into private ownership, alongside investor unrest over that plan, some rather odd 'extra-curricular' share transactions and blocked and then unblocked payments ti  content owners from SFX subsidiary Beatport, SFX's latest bad news is recent decision by ratings agencies Moodys and Standard & Poor to downgrade the music firm's corporate credit rating. The company has said that it is 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 spate of bad news has contributed to a slump in the company's share price. Shares went to a low of 52 cents, 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. The company floated at a price of $13 per share in October 2013. 


http://www.factmag.com/2015/08/17/sfx-share-price-plummets/

http://quotes.wsj.com/SFXE

http://nypost.com/2015/02/25/investors-livid-over-sillermans-insulting-sfx-stock-bid/

SFX - Sillerman buyback off - for now

Robert Sillerman has failed to secure enough investment to take SFX Entertainment back into private ownership: Sillerman's plan to take the EDM powerhouse back into private ownership - having only floated it in 2013 - at a prce of $5.25 per share was a substantial premium on the current share price - but less than half what shareholders paid on the float. On Friday, SFX confirmed in a statement that the buy-back  was now off the agenda, and that therefore the special committee of independent directors, previously set up to consider the firm's founder's proposals, would now start exploring other options for the future of the company. That includes the possibility selling some or all of the firm's assets to another party, or, indeed, an alternative buy back plan from Sillerman. Recent shenanginans including a share sale (!) and a delay in payments to labels from subsidiary Beatport made the buy back look an unlikely happening.

UPDATE

In the past three days of trading – Friday (14/08), Monday (17/08) and Tuesday (18/08) – SFX’s share price has fallen by a worrying 41%, from $1.94 to $1.15. That equates to a total company market capitalisation decline of around $80m, down to just $112.3m - from a value  of $640 milllion in August last year - and the market capitalisation in December 2013 on the cusp of a billion dollars, at $927m.

http://www.musicbusinessworldwide.com/sfx-has-lost-half-a-billion-dollars-in-value-over-past-12-months/

http://seekingalpha.com/article/3448436-sfx-entertainment-the-house-of-cards-is-collapsing

SFX revenues grow but losses widen

SFX reported a 48% rise in second quarter revenue to $121 million, driven by ticket sales at live events such as Life In Color Austin, Kingsland Amsterdam, Rock In Rio Vegas, Electric Zoo Tokyo, Tomorrowland Brazil and Mysteryland USA. Other sales, which including digital music streaming and marketing partnerships with brands like Budweiser and T-Mobile, came in at $14.4 million.

However, SFX reported an operating loss of $27.8 million during the second quarter and an overall net loss of $48 million. The company provided no new updates on founder Robert Sillerman’s $5.25 a share controversial offer but has confirmed that its Beatport platform will re-start payments to labels.

More on Forbes here

SFX tells Sillerman to 'show us the money'

The Board SFX Entertainment has told its founder and CEO Robert Sillerman that he has two weeks to confirm his financing for the proposed bid to take the firm back into private ownership. Sillerman wants to buy back all the shares he no longer controls at $5.25 per share in cash. There are no other offers for the EDM group.  Payments to labels from the company's Beatport download platfform are seemingly delayed because the "going private process" has "trapped certain earned label payments".


A lawsuit against Sillerman and the SFX's strategy man Sheldon Finkel, filed by three men who claim to be co-founders of the company, has been allowed to move forward after a judge in California refused Seillerman's request for a summary judgement in his favour. Paolo Moreno, Lawrence Vavra and Gabriel Moreno claim that Sillerman approached them in early 2012 to discuss his plans for a dance music-focussed company and used the three men's expertise to identify and purchase seven of the firm's early acquisitions but that they were defrauded out of shares which would now be worth $100 milllion.

SFX's Silelrman sued over share sale

SFX Entertainment founder and CEO Robert FX Sillerman is being sued by SFX shareholders over his bid to buy all remaining shares and take the company private. Sillerman has filed a proposal worth $774 million with the Securities and Exchange Commission (SEC), offering to buy shares through his affiliate business, Sillerman Investment Company (SIC), for $5.25 per share. Shareholders say the offer undervalues the company - its less than half the value the company floated for in 2013 ($13 a share). The Company said price negotiations were still 'tentative' and would not be closed until July 10th.  Eight other directors are named in the lawsuit: Mitch Slater (VP), Jospeh Rascoff, Geoff Armstrong, John Miller, Michael Meyer, Edward Simon, Pasquale Manocchia and Andrew Bazos. Audience Issue 185 June 2015.

SFX share buy back approved by independent directors

Robert FX Sillerman moved closer to taking his EDM giant SFX back into private ownership, after the special committee of independent directors appointed to consider his proposals backed the plan, although at a higher than originally proposed offer silelrman had made. Sillerman floated SFX in 2013, but announced earlier this year that he now wanted to buy back all the shares he doesn't currently control - nearly 63% of the company - There was a mixed reception to the proposal on Wall Street, hence the appointment of the special committee. Sillerman originally offered $4.75 a share, which was above the going rate at the time; shares in SFX were selling for $4.12 on Friday. But the offer has now been increased to $5.25 a share, and it is that bid that the special committee unanimously agreed to back on Monday, leading to the company's board also recommending the deal to shareholders. SFX raised $260 million ahead of its initial public offering in October 2013, with the company being valued at over $1 billion after 20 million shares were sold at $13 a share, around 70% more than today's asking price.

More on Music Week here

SFX revenues up in Q1 2015

EDM specialist SFX Entertainment’s revenue increased  56.6% to $52.2 million in the first three months of 2015, despite start-up costs for Rock in Rio USA of $4-5m according to Music Week. SFX produced and promoted 251 festivals and events in the period, attracting more than 751,000 fans, including 12 festivals with capacities of over 10,000. Live revenue of $40.2m accounted for 77% of total earnings, while net loss was $41.6m, compared with $56m year-on-year. SFX expects revenues for the year to be around $500m. Its digital dance music service Beatport sold $11.7m of music downloads in the first quarter of 2015, slightly up on $11.6m in the same period last year. Its "sale of products" revenue came to $12.2m. SFX chairman and CEO Robert FX Sillerman said: "The progress SFX continues to make with our operating initiatives, including the successful re-launch of Beatport as the leading mobile and streaming app for EDM fans around the world, reinforces my belief that value is being created in the business".

Wall Street calls foul over Sillerman's half price SFX bid

Wall Street has "cried foul" over Robert Sillerman's plans to take his electronic dance music empire SFX Entertainmt  private again -  at a price one critic called “an insult to investors.” Sillerman  is looking to take SFX private at $4.75 a share. While the price is a 44 percent premium over SFX’s closing price when the offer was made - it's less than half the price the company listed at - $13 per share in October 2013. Rich Tullo, an analyst with Albert Fried & Co., after calling the offer “an insult,” and encouraged SFX to hire an investment bank to solicit bids from suitors such as AEG, Live Nation and MSG. Sillerman has combined 20 global electronic dance music brands — including Awakenings, Disco Donnie Presents, Electric Zoo and Tomorrowland into a new music powerhouse -  andone with an attractive audience: T-­Mobile recently announced it is sponsoring an SFX Beatport music app. Tullo told the New York Post that he expected revenue to rise from $370 million this year to $400 million-plus next year. Sillerman has asked the SFX board to appoint a committee to consider his proposals.