Live Nation is raising $1.2 billion in a note sale that closes May 20, giving the promoter and ticketing company roughly $3 billion of liquidity going into a near-empty summer concert season. The 6.5% senior secured notes will be used for general corporate purposes and will be due in 2027.
The addition of these new notes would bring long-term debt to $4.85 billion and add to interest payments that totaled $157.5 million in 2019. By the time the first debt comes due in 2023, Live Nation should be back to health — assuming the concert business has recovered from the COVID-19 pandemic. In the meantime, the company “absolutely will not break our covenants,” even if there is no “material” concert activity, said CFO Kathy Willard during a May 7 earnings call.
But with major tours postponed to 2021, the 2020 summer and fall concert season could have little more than experiments in reduced-capacity concerts and live-streamed concerts. “This gives them insurance on having the liquidity to get through a longer layoff from attended shows,” said Brandon Ross of Lightshed Partners. The year probably won’t be a total loss: regardless of concerts, Ticketmaster expects to contribute in 2020 through ticket fees assuming 2021 tours go on sale in the third and fourth quarter.
Promoters have no choice but to deepen liquidity since the COVID-19 pandemic has halted the concert business in Live Nation’s primary markets in North America and Europe. Because it suspended tours on March 12, concert revenues dropped 24.6% in the first quarter. The concert business is effectively dead halfway through the second quarter as music venues remain closed in nearly all cities and states.