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Reservoir Leading Music Publishing Funds Onto the US Stock Market

Reservoir Holdings, which owns Reservoir Media, is going public on the Nasdaq stock exchange through a reverse merger with a special purpose acquisition company (SPAC) in an apparent move to gain…

Reservoir Holdings, which owns Reservoir Media, is going public on the Nasdaq stock exchange through a reverse merger with a special purpose acquisition company (SPAC) in an apparent move to gain liquidity and a lower cost of capital. This marks the first standalone publishing company to go public on a U.S. stock market.

Reservoir will form a business combination with Roth CH Acquisition II (currently trading on Nasdaq under the symbol ROCC) and when the deal is completed sometime in the third quarter, the combined company will be named Reservoir Media but with a new ticker, RSVR, according to an announcement issued by the music publishing firm Wednesday (April 14) after the close of trading.

Golnar Khosrowshahi, founder & CEO of Reservoir, will lead the new combined company, with her current executive leadership team of president and COO Rell Lafargue and CFO Jim Heindlmeyer.


Roth CH Acquisition II is bringing $115 million to Reservoir’s public offering as part of the deal. Some institutional investors including Caledonia have been lined up as anchor shareholders, which will bring in $150 million in gross proceeds.

In the end, after investment banking, legal fees and other expenses, Reservoir will be left with $246 million in gross proceeds from the transaction. The company’s current shareholders, including the Khosrowshahi family, will roll over all their Reservoir equity into the new company, giving it an enterprise value of $788 million.

That means that the Reservoir shareholders will likely have a lock-up period — maybe 180 days — before they can cash in any of their shares. In the meantime, the company has an implied pro-forma equity value of $740 million at $10 a share, according to the announcement, which further implies it also has $48 million in net debt.

This deal will provide Reservoir with a lower cost of capital in the fast-paced, high-stakes music asset trading world, allowing it to follow the Hipgnosis business strategy of finding music assets for acquisition and then tapping the public markets to fund the deals. It also provides a way for current Reservoir shareholders to eventually realize some of the value they have created by shares they will own in the new vehicle. But, initially, the Reservoir stock liquidity will be constrained by only having a float of $115 million worth of shares.


“Today we have taken an important step forward in Reservoir’s evolution to fully realize that vision through our partnership with Roth CH II,” Khosrowshahi said in a statement. “Our dedication to our songwriters and artists and their music is at the heart of everything that we do, and this path to growth supports our promise to service our clients, enhance value, and build a quality catalog. I am immensely proud of what we have built alongside President & COO Rell Lafargue, and our incredible team whose excellent skills, high-touch client service, and outstanding track record is unmatched.”

Reservoir’s catalog includes music by 2 Chainz, A Boogie Wit Da Hoodie, A-Ha, Ben Harper, Big & Rich, Bob Crewe, David Guetta, Evanescence, Hoagy Carmichael, Ja Rule, John Denver, Kurt Elling, Leon Ware, Lil Jon, Migos, Molly Hatchet, Rickie Lee Jones, Scott Storch, Scott Stapp, Seether, Sheryl Crow, Stewart Copeland and Willie Mitchell.

The company says it has deployed over $400 million in catalog acquisitions — including recently acquiring the catalog of indie music publishers Shapiro Bernstein — since its inception, and spent another $100 million in frontline creative signings. The company says it also owns 26,000 sound recordings, and its management business handles over 60 clients.


“We are thrilled to be partnering with Reservoir and its exceptional leadership team,” according to a statement issued by Roth Capital and Craig-Hallum, the sponsors of the Roth CH II. “Reservoir has built an outstanding collection of hit songs and soundtracks in both its music publishing and masters businesses, and has a unique and differentiated value enhancement model that drives highly attractive returns. We are excited about Reservoir’s strong cash flow generating capabilities in a growing industry with significant tailwinds. The portfolio is fully diversified in all genres of music with some of the most iconic hits of the past hundred years. We look forward to Reservoir pursuing future organic growth and acquisitions in this exciting sector under consolidation.”

The board of directors of Reservoir and ROCC have unanimously approved the transaction. The transaction will require the approval of the stockholders of ROCC and is subject to other customary closing conditions.

Roth Capital Partners, LLC and Craig-Hallum Capital Group LLC are acting as placement agents for the PIPE transaction with the anchor share holders while Goldman Sachs is acting as financial advisor to Reservoir. Legal respresentation for the music publishing firm was handled by Paul, Weiss, Rifkind, Wharton & Garrison LLP while Loeb & Loeb LLP is serving as legal advisor to Roth CH II.