Live Nation to raise additional $500m in debt

Still in the midst of a global pandemic and after months of uncertainty due to event restrictions worldwide, Live Nation Entertainment has revealed plans to boost its liquidity by an additional $500 million.

The $500m will be raised via a secured note sale according to a release published on December 17, with repayment due in 2028. The debt carries an annual interest rate of 3.75% per annum, reports the Los Angeles Business Journal.

The notes and the related note guarantees will be offered through a private placement.

The $500m raise follows Live Nation’s $1.2 billion raised in May 2020 via a secured note sale, which President and Chief Executive Officer Michael Rapino stated at the time would provide “extra cushion to withstand any scenario well into 2021”.

That debt is due to be repaid by 2027 and carries an annual interest rate of 6.5% per annum.

In Q3 2020 – i.e. the period ended September 30 – Live Nation generated revenues of $184 million, marking a 95% year-over-year decline compared with the $3.77 billion it generated in Q3 2019 from concerts, ticketing and sponsorship.

At the end of the Q3 2020, Live Nation had total cash and cash equivalents of $2.6bn, which included $951m of free cash.

At the time, this free cash, along with $963m of available debt capacity, provided the company with over $1.9bn in available liquidity.

Live Nation told investors that it “believes this level of liquidity provides it with the ability to fund operations until the expected return of concerts at scale in the summer of 2021, preceded by ticket sales earlier in the year.”

According to Live Nation’s statement announcing this latest raise,  the company intends to use the proceeds to repay $75m of an existing “senior secured term loan B facility”.

It will also be used to pay for general corporate purposes, including undisclosed “acquisitions and organic investment opportunities”, and to pay fees and expenses related to the offering.

Speaking to investors in November, Rapino cited a potential vaccine and testing in particular as playing role in the company’s “expected return of concerts at scale in the summer of 2021”.

The company’s shares soared over 22% on November 9 following the news that a COVID-19 vaccine candidate developed by pharma firms Pfizer and BioNTech had been found to be more than 90% effective.Music Business Worldwide