Yesterday Concert promoter SFX Entertainment, the company created four years ago to capitalize on the popularity of dance music festivals, declared bankruptcy after a troubled year in which the company’s founder abandoned a takeover bid and its stock plunged by more than 95 %.
The bankruptcy reorganization will take the company private, eliminate more than $300 million in debt from its balance sheet and install a new chief executive to replace Robert F.X. Sillerman, who founded SFX in 2012 with a dream of creating a media empire around dance music.
As part of the deal, a group of the company’s bondholders will convert their debt into equity and provide $115 million in financing. According to an announcement, the company’s many festivals around the world, including Electric Zoo, Tomorrowland, Mysteryland and Stereosonic, will go on as planned, and other businesses, like its digital music store Beatport, will remain operational. Beatport declare in a statement publish on their website :
THE BEAT GOES ON
Earlier today, news broke that our parent company SFX Entertainment introduced a financial reorganization plan that includes both new financing and filing for Chapter 11 bankruptcy protection.
All Beatport users, customers, and partners should rest assured knowing that this action will have no impact on our ability to continue offering the most complete electronic music experience available. Around here, it’s business as usual.
That means the entire Beatport platform is fully operational without restriction. The store remains open. The streaming service continues uninterrupted. New releases are being added every day. New videos are being scheduled and filmed. Payments to labels and suppliers are ongoing in their usual manner.
In fact, Beatport is expanding. Just last week we launched a version of Beatport customized for the Dutch market, our first foray into operating a fully localized service, and we will be introducing several new features to our News and Video sections over the course of the coming weeks.
For 12 years, Beatport has served all facets of the electronic music community–DJs, artists, labels, and fans alike–and that’s not going to change anytime soon. From the beginning, we’ve committed ourselves to the long haul, ignoring the mainstream trends, fads, or bubbles that only serve to distract and divide. We remain focused on the music and will continue to reinvest in the creative community every step of the way. We have a lot of exciting plans for the year ahead, and can’t wait to show everyone what’s next.
Until then… the beat goes on. – Beatport
Despite the multiplication of its acquisitions at any cost but also serious management problems encountered during TomorrowWorld, Mr. Sillerman, who owns about 40% of the company’s shares according to his most recent filings, said that he would remain the chairman of SFX and that the company would begin searching for a new chief executive immediately.
“ This expression of confidence from our lenders is testimonial to the vibrancy and potential of our business. Of course this was not where we thought we’d be, but with this restructuring we have the opportunity to achieve all that SFX can and will be. ” – Robert F.X. Sillerman
The bankruptcy, which in recent weeks had been the subject of speculation in the music world, brings to an end a painful stretch for SFX and Mr. Sillerman, who hoped to repeat the success he had two decades ago with an earlier incarnation of SFX Entertainment. But the new version of SFX has been much more troubled, by raising $260 million in an initial public offering in late 2013, but investors grew impatient with its efforts to build a profitable business by attracting corporate sponsors. like Maglan Capital hedge fund that sold its holdings in SFX last year :
“ Nothing ever materialized in the fundamentals with this company, It became a ‘show me’ story at some point. ” – Steven Azarbad, Maglan Capital
Despite SFX’s problems, the dance-music world has largely remained strong. Festivals like Coachella, which involve many dance acts as headliners, are still popular, and by one estimate the global market for dance music, including recordings, live performances, endorsements and other deals, will worth in 2016 more than the $6.9 billion of last year.