Clair Global gets US’s biggest Main Street loan
Clair Global, a US-based company which provides amplification and tour support to the world’s biggest artists and music festivals, has borrowed US$71 million from the Main Street Lending scheme – the largest loan of its kind in the country, according to The Philadelphia Inquirer.
The $600 billion taxpayer-backed programme was designed by the federal government to help sustain mid-sized businesses until they recover from the economic disruption caused by the pandemic.
Last year, Clair Global provided sound and support services to the Top 10 grossing tours, including Rolling Stones, Elton John, Ariana Grande and Pink.
Troy Clair, president and CEO of Clair Global, said in a statement that “the loan is proportional to the devastation the industry has felt over the last seven months,” but did not disclose how the $71 million will be deployed.
Funds from the Main Street program must be repaid but in the event of a default, it’s taxpayers’ money at risk
The Main Street Lending Program was devised as part of financial rescue legislation in the spring to help businesses that are too big to qualify for the Paycheck Protection Program (PPP), but too small to benefit from the Federal Reserve’s big purchases of corporate debt.
Unlike the PPP program’s forgivable loans, funds from the Main Street program must be repaid. Loan standards are also more selective, requiring participants to have been in good financial shape with manageable debt before the pandemic.
Banks write loans under the programme but are then able to hand 95% of that debt off to the Fed, so they have fewer assets at risk. In the event of a default, it’s mostly the taxpayers’ money, not the bank’s, that runs the risk of not being repaid.
Clair Global also got between $5 million and $10 million in a PPP loan, records show.
Last month, Clair Global acquired US-based company Eighth Day Sound, adding to its umbrella, which includes Britannia Row Productions in the UK, JPJ in Australia, and AudioRent Clair AG in Switzerland.
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Viagogo takes out $330 million loan, says Moody’s
Viagogo has taken out a new US$300 million incremental term loan, according to Moody’s Investor Service, increasing the company’s debt to $2.5 billion.
However, according to Moody’s, there is no immediate impact on the company’s B3 Corporate Family Rating (CFR) or negative outlook.
Net proceeds from the loan, which is due in February 2027, will be used to enhance liquidity adding to balance sheet cash.
Moody’s suspects the excess cash will remain on Viagogo’s balance sheet to ensure liquidity is available to manage operations through the pandemic and will not be used to fund distributions or acquisitions.
“Despite Viagogo’s asset-lite business model, revenues remain dependent on the timing and number of live events globally as well as attendance levels which are expected to remain below historical venue capacity based on social distancing mandates and consumer sentiment,” says a statement from Moody’s.
“Viagogo’s credit profile continues to be pressured by cancellations and postponement of live events globally. We project Viagogo’s secondary ticket sales revenue will remain well below 2019 levels over the next several months followed by a gradual recovery around mid-2021; however, there are further downside risks in the event demand for live events remains depressed beyond mid-2021 in a scenario in which Covid-19 is not contained.”
“Viagogo’s credit profile continues to be pressured by cancellations and postponement of live events globally”
Moody’s says Viagogo’s B3 CFR incorporates good liquidity, supported primarily by significant cash balances exceeding $700 million pro forma for the incremental term loan B.
In November last year, Viagogo announced its acquisition of StubHub for US$4.05 billion in cash, a deal that brings together the world’s two largest secondary ticket sellers.
Subsequently, in January this year, Moody’s downgraded the corporate family rating of Pugnacious Endeavors (Viagogo’s parent company) to B2, before changing the company’s outlook from “stable” to “negative” – citing both a “lack of public financial disclosure” and “the absence of board independence” for its changed credit profile.
Recently, Viagogo was once again downgraded to B3.
The increased cash on hand should, analysis says, allow the company to operate with little to no revenue for another two years – given the impact of Coronavirus on the live events and ticketing industries.
“We expect a measured return to cash flow growth given a portion of live events in 2021 will represent postponed events for which tickets have already been sold, although incremental secondary ticket selling is likely to occur,” Moody’s says.
“Given the time needed to ramp revenues in 2021 to approach historical levels, particularly as permitted attendance will be kept below venue capacity to allow social distancing and consumers remain cautious about large social gatherings, we believe revenues in 2021 will remain well below 2019 levels.”