Live Nation Announces Private Notes Offerings

– Live Nation Logo 2017

Live Nation plans to raise $800 million in a private note offering, the company announced March 15. The proceeds will be used “from time to time” to repurchase its 2.5% convertible senior notes due 2019, transaction fees and related expenses; the senior notes, issued in 2014, had a $250 million balance at the end of 2017.

The promotion-ticketing giant will finish with a larger war chest to fund its growth ambitions. In a research note, Moody’s Investor Service estimated Live Nation would have about $425 million left for the other stated purpose, “general corporate purposes.” Moody’s expects Live Nation to make “strategically appropriate acquisitions” and not return the cash to investors through buy-back programs.

Live Nation has a history of using cash to fund its growth. From 2016 to 2018, Live Nation spent roughly $490 million of cash on acquiring or investing in various concert promoters, ticketing companies, artist management companies, and festivals. Among the deals were majority stakes in BottleRock Napa Valley festival in Northern California’s wine country, Bonnaroo founders AC Entertainment, and the Governors Ball festival in New York City.

Moody maintained Live Nation’s Ba3 corporate rating because “excess liquidity to be used for acquisitions” to reduce its debt-to-earnings ratio. In other words, Live Nation will borrow money to buy companies that provide added revenue without much—if any—outstanding debt. Wall Street has shown approval of the growth strategy. Live Nation shares were up 1.2 percent Thursday and have gained 55 percent over the last 12 months. And Wall Street likes a category leader. At $10.3 billion of revenue in 2017, a leap of $2 billion from 2016, Live Nation has both the largest concert promotion and ticketing company in the world.

Not all category leaders are good investments, however. On Thursday Live Nation announced its note offering, iHeartMedia, owner of radio giant iHeartRadio, announced it would file for Chapter 11 bankruptcy to restructure much of its $20 billion of debt. But iHeartMedia and Live Nation are facing different directions. Aside from insurmountable debt, iHeartRadio is facing the headwinds of an Internet-led revolution in entertainment consumption. On the other hand, Live Nation owns the thriving global concert business—and the company that sells the concert tickets—and doesn’t appear to be slowing down anytime soon.