Live entertainment giant Live Nation, owner of Ticketmaster, is planning to issue $1 billion in convertible bonds, using the proceeds to pay down existing debt.
The company said in a statement on Tuesday (December 3) that it may also give purchasers of the new bond issuance the option to buy another $100 million in convertible bonds, within 13 days of the initial notes being issued.
Convertible bonds are debt bonds issued by companies that holders can swap for a predetermined amount of the company’s stock. In this case, bondholders who choose to convert will be given either stocks or cash, or a combination of both, at Live Nation’s discretion.
The company says it plans to use the money to repurchase part of a previous tranche of convertible bonds, which came with a 2.00% interest rate and will mature in 2025. It also plans to use the money raised to pay off debts owed through a revolving credit facility, as well as for general corporate purposes.
The new tranche of Live Nation’s convertible bonds will mature on January 15, 2030. Prior to October 15, 2029, the bonds will be convertible only during certain periods, and under certain conditions. After that, they will be convertible at any time.
Live Nation will be able to redeem the bonds after January 24, 2028, under certain conditions, including that the company’s stock price is at least 130% of the conversion price (i.e., the price at which the bond can be converted to shares).
According to Live Nation’s most recent earnings statement, the company was carrying $5.67 billion in net long-term debt in Q3 of this year. Within that was $400 million owed on the 2.00% convertible bond due in 2025, which Live Nation aims to partly repurchase.
It also included $1.2 billion in senior secured notes at 6.5%, due in 2027; $1 billion in senior convertible bonds at 3.125%, due in 2029; and $950 million in senior notes at 4.75%, due in 2027.
The company reported $19.75 billion in assets during Q3. By Investing.com’s calculations, the company has a debt-to-capital ratio of 0.2, indicating a “moderate” level of debt.
Live Nation’s credit outlook took a hit in May after the US Department of Justice launched an antitrust lawsuit against the company, seeking a breakup of Live Nation’s concert business and its ticketing business, Ticketmaster.
S&P Global reaffirmed the company’s ‘BB-’ issuer credit rating, but changed its outlook to “negative.”
“The heightened regulatory scrutiny, financial costs, and potential disruption of Live Nation’s competitive position in the live events industry from the antitrust lawsuit could impair the company’s creditworthiness and thereby potentially result in a lower rating,” S&P Global said.Music Business Worldwide