Strategy

Electronic Music Promoter SFX Files Chapter 11

The filing apparently marks the end of founder Robert Sillerman's dream of creating a media empire based on electronic dance music festivals.
Matthew HellerFebruary 1, 2016

Once high-flying electronic dance music promoter SFX Entertainment filed bankruptcy Monday after failing to deliver the profits it had promised investors.

CEO Robert F.X. Sillerman founded SFX in 2012 with a dream of creating a media empire by building a portfolio of electronic dance music (EDM) festivals including TomorrowWorld and Electric Zoo. The company went public in October 2013 at a valuation of more than $1 billion.

Under its bankruptcy reorganization plan, SFX will go private, eliminate more than $300 million through a debt-for-equity swap with bondholders, and install a new chief executive to replace Sillerman.

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Bondholders also agreed to loan SFX up to $115 million to refinance $50 million of loans and provide funds to pay performers, production crews, and royalties for its streaming service Beatport.

“This expression of confidence from our lenders is testimonial to the vibrancy and potential of our business,” Sillerman said in a news release. “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.”

Sillerman, who owns about 40% of the company’s shares according to his most recent filings, said he would remain the chairman of SFX.

“The bankruptcy … brings to an end a painful stretch for SFX and Mr. Sillerman,” the New York Times said, noting that he offered last year to take the company private at $5.25 a share, valuing the company at $774 million, but abandoned his bid amid investor doubts about the financing of the deal.

SFX raised $260 million in its initial public offering and, according to court records, sold 3 million tickets last year at more than 100 festivals and 1,100 other events worldwide. But the company has never turned a profit and its stock has plunged by more than 95% over the past year.

The Chapter 11 bankruptcy petition listed assets of $661.6 million and debts of $490.2 million.

“For Sillerman, a filing will be a painful end to what’s been a disastrous venture into EDM,” Forbes predicted last month.

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