SFX secures $20m in new financing

Global EDM empire SFX Entertainment – whose brands include Australia’s Stereosonic festival – has staved off possible bankruptcy by securing US$20 million in new financing.

However its CEO Robert Sillerman has not disclosed from where the money was obtained.

The new funding, for “itself and certain of its operating subsidiaries”, comes as SFX desperately fights off falling revenue to keep its corporate head above water.

SFX shares soared 57% to 12.4 cents. It is the first good news the company has had for some months. In the third quarter of 2015, it was close to bankruptcy and planning to hold a fire sale of some of its assets. Last month, SFX hired investment bank Moelis & Co to look at ways of cutting the company’s debt, including potential sales of non-strategic assets.

The first few weeks of 2016 didn’t show any change in the situation.

On January 13 it missed a $3 million interest payment on a $10.8 million note. The next day its share price plunged to 7 cents – a far cry when it was $13 in late 2013. It defaulted on a content agreement with Spotify to purchase $15 million of stock. Management company TMWRK, home to Diplo, paid $3.6m to buy itself out of SFX.

Also this month, Nasdaq reported that SFX owed “$312.6 million in debt, mainly senior bonds due in 2019.” This is against only $59.8 million in cash on hand, as reported in a September 30 earnings report.

Last August, SFX reported a 48% rise in second quarter revenue to $121 million. But that did nothing to generate profits or reduce its debt, with an operating loss of $48 million.

In 2012, Sillerman had a personal fortune of $975 million and launched SFX to become a $1 billion global company. However, poor management and financial planning punctured that dream, and last year SFX only had a market capitalisation of $88 million.