Live Nation to Raise Another $500 Million in Debt Sale

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Live Nation Entertainment

To shore up its liquidity, Live Nation plans to sell $500 million of 3.75% senior secured notes by Jan. 4, the company announced Thursday (Dec. 17). The concert giant will use the proceeds from the notes, due in 2028, to repay $75 million of principal of an existing term loan and pay general corporate expenses including "acquisitions and organic investment opportunities," the press release said.

The pandemic has required Live Nation to seek safety from its lenders; in May, it sold $1.2 billion 6.5% senior secured notes due in 2027. The complete absence of concerts required Live Nation to replace a debt covenant it would otherwise violate -- in July, lenders bought LN some time by replacing its net leverage covenant -- the earnings-to-net debt ratio turns negative in 2020 -- with a requirement to maintain at least $500 million of liquidity, according to a company financial statement.

Live Nation's $1.9 billion liquidity on Sept. 30 consisted of $951 million of free cash and $963 million of available debt capacity.

It was supposed to be enough.

"We're confident we have the liquidity we need to get through this," president Joe Berchtold told Billboard in November. By "this" he means the undefined period until Live Nation can host concerts again; Berchtold and CEO Michael Rapino have said Live Nation expects to run at scale by the summer. Rebooting its business won't be as simple as opening the gates; entrance to venues will likely require virtual inoculation cards -- updated by pharmacies -- that would verify a concert goer has been vaccinated.

With an additional $500 million, Live Nation's long-term debt would rise to $5.35 billion, up from $3.2 billion at the end of 2019. Taking on more debt has become a necessary and routine step throughout the live entertainment business: movie theater chains AMC and Cinemark have borrowed $200 million and $400 million, respectively; theme park owner The Walt Disney Company raised $6 billion in March and another $11 billion in May; Six Flags Entertainment raised $725 million in April; and concert promoter Madison Square Garden Entertainment raised $650 million in November.