Concert Producer SFX Entertainment to Go Private after Bankruptcy

by San Antonio Attorney

American live events company SFX Entertainment Inc. sought for Chapter 11 bankruptcy protection on Feb. 1 as part of an arrangement that eliminates $300 million in debt from its accounts and turns it to a new private company.

The deal enables the bondholders to get equity in exchange for the debt.  Also, it provides funding worth $115 million that would allow the company to operate throughout the bankruptcy process.  The current CEO, Robert F.X. Sillerman, is also slated to step down.

SFX filed for bankruptcy after not paying a $3 million interest payment to bondholders.  The company was hastily declared in default on the nearly $6 million payable of the bond.

The company attempted to hoist liquidity with a go-private deal that eventually got botched.  Under Sillerman’s headship, the arrangement primarily offered $4.75 per share and afterward $5.25 per share.  However, it was discarded in August after it was challenged in court.

According to court papers filed with the U.S. Bankruptcy Court in Wilmington, Del., SFX intends to complete its reorganization and leave Chapter 11 bankruptcy within 6 months.

The New York-based producer of concerts holds electronic music events worldwide.  It is known for its festivals like TomorrowWorld and Electric Zoo.  In 2013, the Electric Zoo made the news when the festivity was abruptly put to an end by police officials after two concertgoers died of drug use.

SFX was founded by Sillerman in the 1970’s.  He owned 71 radio stations which he sold in 1998.  He continued the event-promotion part of the business and named it SFX Entertainment.  Eventually, that business was sold to Clear Channel Communications Inc.  for more than $4 billion.

He revived the live-events production in 2011 focusing on electronic-music concerts and the company went public in 2013.

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