SFX Cancels Fest, Admits ‘Disruption’
SFX, in a meeting with “certain of its shareholders,” disclosed that the downgrading by Moody’s Investor Services and Stifel of its corporate credit rating has “contributed to short-term distruption” to its business operations.
“Specifically, the Company has been required to expend more of its cash reserves than planned on unforeseen live event expenses, including making upfront payments to more of its live event vendors, impacting the Company’s liquidity,” SFX said in its 8-K filing with the SEC. “Additionally, the Company confirmed that its special committee of independent directors and management has received indications of interest regarding the potential acquisition of various components of the Company’s business. The committee and management are continuing to review these indications of interest, which are non-binding.”
The filing coincides with word that One Tribe, a music- and yoga-focused event at Lake Perris in California’s Riverside County, has been scratched because of sluggish ticket sales, according to the New York Times.
It would have been Holland promoter ID&T’s first foray into the U.S. festival market since being acquired by SFX in 2013.
The festival was to have featured perfomers including Kygo, Tycho, Gramatik, Damian Lazarus, Rufus Du Sol, Jamie Jones, Carl Craig, Davi, Francesca Lombaro, Lee Burridge and more.
Instead, One Tribe is “indefinitely postponed,” according to the NYT. “We had an ambitious plan to bring an innovative and unique experience built around the spirit of community, art and music to an amazing venue in Southern California,” SFX Live North American managing director Jacob Smid told the paper. “Unfortunately, disappointing ticket sales put us in a position of choosing between compromising our vision and the overall experience at One Tribe, or canceling it.”
No other SFX festivals were immediately canceled, including Electric Zoo in New York City over Labor Day weekend or TomorrowWorld, scheduled Sept. 25-27 in Atlanta. SFXE stock has lost more than 80 percent of its value in 2015, and stock nosedived after a go-private deal with CEO Robert Sillerman failed.
While its stock price appeared to stabilize around the $1 per share mark after dropping to a low of 63 cents, the company’s growing losses and $295 million amassed debt is going to be difficult to overcome with the two downgrades.