The Beatport owner and live music company, which also runs festivals such as Tomorrowland, has filed for Chapter 11 bankruptcy in the US today (Monday, Feb 1). According to the Wall Street Journal, the move will wipe $300m in debt from SFX’s balance sheet and allow it to be taken private. CEO Robert Sillerman (pictured) will no longer run the company as a result of the Chapter 11 filing.
In what’s been described as a “debt-for-equity swap”, the bankruptcy filing will provide $115 million in financing to allow the company to operate as normal over the next few months. Last Monday (January 25) SFX’s share price fell by 13.71% to an all-time-low on the New York Stock Exchange. As a result, the troubled firm’s market cap stood at a diminutive $9.52 million, the first time it’s fallen under $10m – although it’s since recovered to $12.86m.
Last month, it was revealed that SFX had defaulted on a $10.8 million loan after missing a $3 million interest payment due on January 4. It subsequently secured $20 million in financing, which some saw as an emergency bailout, from a Canadian private equity firm. In addition to digital music service Beatport, dance specialist SFX owns live music brands including Tomorrowland, Mysteryland, Life In Color, Electric Zoo and Sensation.
In what many saw as the final nail in the coffin for SFX, in November Sillerman scrapped his third and final bid to buy the 60% of SFX he doesn’t already own. Sillerman attempted to snap up the equity for $3.25 per share – a considerable drop on the $5.25-per-share bid made by Sillerman earlier in the same year. It was also significantly lower than Sillerman’s first bid for the company, which he launched in February, for $4.75 per share.