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React Presents, Made Event and More Owed Millions by SFX

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React Presents' Spring Awakening Music Festival

React Presents’ Spring Awakening Music Festival

Only last week we reported that SFX Entertainment filed for Chapter 11 bankruptcy in a final attempt of restructuring and salvaging whatever possible from their dire financial situation by erasing their $300 million of outstanding debt.

We have now learned through an IQ Mag report that 11 of SFX’s largest “non-insider” creditors – i.e. those that aren’t directly associated with SFX founder and owner Rober FX Sillerman – are the direct owners of the many companies that SFX added to their portfolio since 2012. According to the report, SFX’s assets are listed at $661.614m with debts of $490.236m. Sillerman and entities controlled by him own 37.8 per cent of the company’s common stock at the time of writing.

From the report, it can be learned that SFX’s largest American creditors are Made Event, founders of Electric Zoo in New York, Electric Zoo Mexico City and Electric Zoo Beach Tokyo, who are still waiting payment of around $10 million. React Presents in Chicago, responsible for a vast percentage of EDM-related events in the entire Midwest including Spring Awakening Music Festival, Summer Set Music & Camping, the Mid and Concord Hall, is owed $5.8 million.

Elsewhere, reports highlight that the Netherland’s Alda Events (at the top of the creditor’s list) is out $23.6 million while Australia’s Totem OneLove Group, promoters for Stereosonic festival, are owed $10.7m.

Three co-founders of Hoeksema Holdings (Paylogic) are also owed three separate amounts each ranging from half a million to $2.5m. Several trade creditors that are still owed money include private air-charter firm VistaJet ($1m), Epic Tents ($442,650), PRS for Music ($327,680), NYC-based app-builder Postlight ($315,000), Front Gate Ticketing ($301,400) and an event medical services firm CrowdRX ($269,600).

What this list essentially is, are the various entities and individuals still awaiting deferred payments by SFX. Due to the nature of the Restructuring Support Agreement, it is safe to assume that creditors will continue to have a strong vested interest and involvement in ensuring SFX’s restructuring is successful.

Source: IQ Mag

TomorrowWorld’s Future Uncertain According to Festival Spokesman

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Yesterday the dance music world learned that SFX Entertainment officially filed for chapter 11 bankruptcy, the latest step in the company’s attempts to take the company back private and out of its seemingly never-ending financial woes.

SFX Entertainment holds a large portfolio of dance music entities and festivals across the United States including Beatport and the American version of Belgium’s famed Tomorrowland. While the former released a statement that things were business as usual, news coming out of TomorrowWorld’s camp were not as positive.

Local outlet Georgia Unfiltered reached out to Tomorrowland spokesperson Debby Wilmsen about the future of the festivals in Belgium, Brazil, and the USA. Key parts of her statement distance the Brazilian and Belgian editions of the festival series from the event that takes place each fall in Atlanta, Georgia:

“Since 2013 we have collaborated with SFX for the foreign editions of Tomorrowland held in the USA and Brazil. However, we have noticed that our vision and goals, including a long-term strategy, are different from those of the publicly listed company.”

Wilmsen went on to assure that while the future of TomorrowWorld is uncertain, Tomorrowland and Tomorrowland Brasil will remain unaffected: “The Chapter 11 procedure will have no consequences for Tomorrowland in Boom,” she says. “The festival in Belgium is created, organized and managed for 100 % by the Belgian team. Tomorrowland Brazil will also take place as planned two months from now in Itu (Sao Paulo). Tomorrowland Brazil is being organized in close consultation with the Belgian team by a motivated Brazilian team that is able to work independently of SFX in North America for all aspects of the event.”

Read the full statement on Georgia Unfiltered.

SFX Loses $140M in 2015, Facing Bankruptcy

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SFX Entertainment may very well be hanging by its last thread. With $140 million in 2015 losses, $300 million in debt, and stock trading at $0.23 (down 95% since June), SFX is now looking into restructuring its debt. In a final act of desparation, Chairman and CEO Robert Sillerman has enlisted the help of Moelis & Co to help tackle the company’s financial woes. According to a spokesman, “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.” Read more

TomorrowWorld Fiasco Leaves Non-Campers Stranded and Neglected

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What draws music lovers to iconic festivals like Tomorrowland, EDC, HARD, and Mysteryland is the infectious positivity in the electronic dance community. Complete strangers positively interact with one another without preconceived notions, offering water to their fellow dehydrated shufflers, or overhearing the most sincere apology you swear you’ve ever heard for stepping on someone’s foot. You would think that the people who promote and organize these events would foster this kind of culture at their events.

This past weekend, TomorrowWorld organizers, SFX Entertainment and ID&T, showed no signs of respect for their festival goers when a massive storm unexpectedly hit TomorrowWorld. Promoters announced Sunday morning, “The experience of the TomorrowWorld visitors is always number one priority, so TomorrowWorld was forced to close all daily parking lots and drop off locations. TomorrowWorld regrets that festivalgoers with day tickets, guest list tickets, and anyone not already camping at DreamVille will unfortunately not be able to access the festival.”

Essentially, non-campers were denied access for the remainder of the festival in order to keep the integrity of the festival experience in tact, so they at least had to make sure someone was able to enjoy the full TomorrowWorld experience. Which is mildly understandable at best. What makes matters worse is the fact that they cut off all access to transportation and failed to put in place a secure shuttle service because they were the ones who blocked off all vehicle entry points, thus leaving festivalgoers stranded, freezing, and hungry with no transportation or cell service.

Needless to say it was a PR nightmare for TomorrowWorld and all festival organizers involved.

 

The $90 Million SFX Lifeline

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SFX Entertainment, Inc. (NASDAQ: SFXE) has experienced one financially turbulent summer, starting with the flash sale of $15 million in SFX stocks in June, Beatport royalty payment delays in August, and closing out the season with a festival cancellation due to disappointing ticket sales. The flash sale was already a red flag for investors because it cried out desperation for cash, especially when SFX was valued at $1 billion not even two years prior. At that point, investors were feeling pretty uneasy about the lack of liquidity. Enter stage, the $90 million lifeline.

SFX has secured $60 million in private placement financing and refinanced $30 million in the Company’s revolving credit facility. The $60 million in private investments consists of the sale of $30 million to an unnamed institutional investor at $1.75 per share and pays a cash dividend of 9% and $30 million to the Company’s Chairman and CEO, Robert F.X. Sillerman’s private investment company. Sillerman Investment Partners will receive cash dividends in kind at 29.5% for two years and 9% thereafter.

Sillerman comments on the impact of the new financing, “While the Company continues to explore strategic alternatives, this solidifies SFX for the short and long term, so we can focus on producing great festivals and events and operating globally recognized digital properties.”

This surge of investments is undoubtedly the best news SFX has heard all summer.

One Tribe Festival Cancelled

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Lake Perris

The first annual One Tribe Festival in Southern California has been abruptly cancelled. The festival was scheduled to take place at Lake Perris State Park in Southern California on September 25th and 26th, and  boasted an immense lineup with stage showcases from Beatport, Awakenings, Crosstown Rebels, Paradise, Desert Hearts, and B3.

SFX Entertainment released the following statement with the dance blog LessThan3 earlier today:

“The One Tribe festival in SoCal is being indefinitely postponed due to various unforeseen events and circumstances.”

SFX will be issuing a more elaborate statement in the near future regarding the One Tribe cancellation, as well as information regarding ticket refunds.

One Tribe was shaping up to be a highly anticipated festival, with fans undoubtedly disappointed with this recent news.

UPDATE: One Tribe has issued the following statement on their social media channels:

ONE T

SFX share price plummets as private bid falls short of deadline

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Robert Sillerman, CEO of SFX, failed to reach the Aug 13th deadline bid to take the company private.

The EDM promoter, which owns Beatport, React Presents, Made Event, and i-Motion has been trying to restructure the company by taking things private. According to Billboard report, Sillerman’s offer of $5.25 per share became unattainable as SFX’s stock dropped 20% to $1.55 per share. The company has since released a statement saying it is exploring “strategic alternatives” in regards to its future. The statement added that the company would consider offers on the company until October 2nd.

Source: RA

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Robert Sillerman Looks To Sell SFX Entertainment

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Robert Sillerman, often criticized for bringing wall street into dance music, recently made an unsuccessful attempt to re-privatize SFX Entertainment. SFX has consolidated much of the electronic dance music industry across all sectors, acquiring a number of large companies such as Beatport and ID&T.

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On Friday, SFX said that it is considering “strategic alternatives,” such as selling off the company, either in parts or as a whole, and is open to all offers through October 2nd. This announcement comes following record-high quarterly losses and a great deal of recent controversies such as a $100 million lawsuit filed by  his former partner Paolo Moreno and a battle with SFX subsidiary, Beatport, over unpaid royalties. SFX recently announced a second-quarter loss of $48 million, and just this week, its stock has fallen more than 50%, down do an all-time low of $1.39 per share; just two years ago, the company went public at $13 per share, and the price has been steadily declining ever since.

 

SFX Entertainment Stock Steady Amidst Bankruptcy Rumors

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SFX Entertainment’s (NASDAQ: SFXE) stock price bounced back to normal on Thursday morning after seeing a sharp decline attributed to an article published by Seeking Alpha. The article entitled “SFX Entertainment: Playing House Music In A House Of Cards“ heavily critiqued the EDM-focused event promotion company. The price currently  sits at $4.35 per share, a 23.6% increase from Wednesday’s low of $3.52 per share.

Seeking Alpha’s critique warned investors of imminent collapse due to Chairman and CEO Bob Sillerman’s failure to keep his promise to purchase stocks and the company’s purchase of $10 million of debt, and alleged misrepresentation.

Rich Tullo of Albert Fried & Co. promptly authored a note to investors reiterating his confidence in the company. SFX thereafter responded by announcing Sillerman’s acquisition of 575,000 shares of SFX stock in two transactions at an average weighted price of $4.91.

Source: Billboard