Live Nation has gained financial breathing room by securing favorable changes to its debt covenants ahead of its second-quarter earnings release on Aug. 5.
Although covenants are standard requirements meant to protect the lender from a default, and manageable under normal circumstances, they can be impossible to achieve when a pandemic has crippled many types of businesses, especially live entertainment.
The latest example of music companies shoring up debt and credit to weather COVID-19, Live Nation’s covenant revisions provide “additional financial flexibility,” CEO Michael Rapino said in a July 31 press release. That’s an understatement. The new covenants represent pandemic-era mathematical formulas that are critical for a company greatly affected by government safety measures. Music venues are currently idle and will be among the last businesses to reopen to full capacity. Aside from a small number of reduced capacity shows and one-off live streams, concerts are on hold until 2021 -- and what exactly happens next year is anyone's guess.