Exclusive: Music festival company SFX explores debt restructuring

[December 01, 2015] By Liana B. Baker and Jessica DiNapoli

(Reuters) - Electronic music festival organizer SFX Entertainment Inc, which puts on days-long dance extravaganzas including New York's 'Electric Zoo', is exploring a debt restructuring, a spokesman for its chief executive told Reuters on Monday.

SFX has asked investment bank Moelis & Co to propose ways of slashing the company's debt pile, sources familiar with the matter told Reuters, cautioning that no decision about a particular course of action has been taken.

"It is correct that the company hired Moelis to examine broadly its position. That principally includes sales of non-strategic assets as well as examining the capital structure of the company," a spokesman for SFX CEO Robert F.X. Sillerman said when approached for comment. Moelis declined to comment.

SFX, with about $300 million in debt, has a market capitalization of just $30 million and its debt trades at distressed levels.
 

Sillerman has made offers to take the company private, but withdrew his latest bid mid-November. Moelis had been working on the potential buy-out transaction before it started on the restructuring.

In September Sillerman agreed to invest $30 million in the company, but had not funded the full amount by early November. SFX has demanded payment of the balance of the $30 million from Sillerman and said it is evaluating all legal remedies available to enforce its rights, according to public filings.

SFX went public in 2013 at $13 per share but now trades at around 30 cents. It is struggling to turn a profit, posting a loss of $54.5 million in the quarter ended Sept. 30. Revenue fell by $10.3 million in the third quarter compared to the same period last year.

SFX's dance music events, like Rock in Rio, Mysteryland and Tomorrowland, have attracted millions of visitors around the world. SFX, like its peers, has had to deal with drug use at its dance festivals, which can lead to deaths. SFX has in the past warned that this activity could hurt its financial results.

Sillerman pinned the results from the third quarter on the cancellation of several festival days due to weather, and said that sales and recognition of revenue from sponsorships did not meet the company's expectations.

(Reporting by Liana B. Baker and Jessica DiNapoli in New York; Editing by Andrew Hay)

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