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SFX Entertainment files for bankruptcy

Sillerman's EDM conglomerate has entered a 'restructuring support agreement' which will wipe off over $300 million in debt

By Jon Chapple on 01 Feb 2016

Robert FX Sillerman, SFX Entertainment

Robert FX Sillerman

SFX Entertainment has filed for bankruptcy.

As part of the ‘restructuring support agreement’ (RSA), which will wipe over US$300 million in debt from the company’s books, SFX bondholders will have their debt converted into equity in “a newly strengthened private company”. The EDM promoter’s founder, chairman and CEO, Robert FX Sillerman, has long wanted to buy back the 60 per cent of SFX he doesn’t own but has struggled to raise the necessary capital.

Sillerman will step down as CEO but remain as chairman.

The RSA – between SFX and an “ad hoc group of bondholders” – includes a commitment from the latter to provide up to $115m in financing, subject to court approval, to enable SFX to continue trading as normal.

Sillerman says: “All scheduled and planned events and festivals will take place without interruption, providing SFX’s millions of fans an uninterrupted season of spectacular experiences.”

Michael Katzenstein of FTI Consulting will serve as SFX’s ‘chief restructuring officer’, with Greenberg Traurig as legal advisor and Moelis & Company as its investment banker.

“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

SFX Entertainment’s market capitalisation currently stands at $6.3m (on 1 February 2016), down from a $927m in December 2013, shortly after its flotation.

Earlier this month it was forced to terminate its highly publicised content-sharing agreement with Spotify – again owing to a shortage of funds – and sell the TMWRK artist management agency, which it bought in 2014.

“This expression of confidence from our lenders is testimonial to the vibrancy and potential of our business, and the dedication and professionalism of the over 600 people who make up SFX,” says Sillerman. “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. I’m looking forward to continuing to be part of the new SFX as chairman.

“We will immediately commence a search for a new CEO to lead us as we continue to set the trend in the exploding culture that is electronic music.”

SFX Entertainment’s brands include festivals Electric Zoo, Tomorrowland (and spin-offs TomorrowWorld and Tomorrowland Brasil), Mysteryland, Stereosonic and Rock in Rio and digital music store/streaming service Beatport.