SFX Entertainment Nabs $90 Million in Financing

SFX Entertainment
Robert Sillerman of SFX Entertainment

2015 has been a wild ride for the EDM promoter. This financing will provide some stability.

SFX Entertainment has given itself some breathing room. The embattled EDM promoter announced Thursday it raised $90 million in new financing from new and existing investors.

An unnamed institutional investor purchased $30 million of senior preferred stock that can be converted into SFX shares at $1.75 per share and receives a 9 percent cash dividend.

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The Robert Sillerman-controlled Sillerman Investment Partners III LLC purchased $15 million of junior preferred stock that pays dividends "in kind" at 29.5 percent for two years and cash dividends at 9 percent thereafter. It has an obligation to purchase an addition $15 million over the next 30 days. The remaining $30 million of financing comes from the company's $30 million revolving credit facility that was transferred from SFX's existing lenders to 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," Sillerman said in a statement.

The three-year-old company has had an eventful year. A take-private plan by chairman and CEO Robert Sillerman announced in February failed to materialize in August. Along the way, many analysts and investors came to doubt not only the company's financial but Sillerman's ability to secure the necessary financing to buy out the remaining common stock at $5.25 per share. A lawsuit filed last week alleges Sillerman misled investors about his ability to complete the deal. 

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Liquidity problems resulted in the sale of $15 million in stock in June -- $5 million came from Sillerman's investment company. Last month the company's EDM download and streaming service, Beatport, delayed royalty payments to artists and labels but reversed course just days later amidst criticism and ridicule. Then on Sept. 1, SFX announced the cancelation of this year's One Tribe Festival due to disappointing sales.

Investors were encouraged by news of the financing. SFX shares closed up 32.0 percent to $0.62 per share.