SFX Entertainment to issue series A preferred, common stock under plan

By Caroline Salls

Pittsburgh, July 26 – SFX Entertainment, Inc. filed its plan of reorganization and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

SFX said the proposed plan calls for the issuance of new series A preferred stock and reorganized SFX common stock.

The preferred stock will have a face amount equal to the amounts outstanding under the company’s tranche B debtor-in-possession facility, plus the amounts outstanding under foreign loan documents, plus an additional amount equal to 2% of the amount outstanding under the tranche B DIP facility and the foreign loans.

The new preferred stock will accrue PIK dividends at 15% and will be perpetual preferred with a mandatory redemption upon a liquidity event.

The plan also proposes the issuance of class A and class B contingent value rights (CVRs).

Holders of CVRs will receive rights that, upon the occurrence of a liquidity event, entitle them to a cash payment.

Holders of tranche A DIP facility claims will be paid in full in cash, while holders of tranche B DIP facility claims will receive 100% of the new preferred stock and new common stock to be issued under the plan, subject to dilution by a new second-lien equity facility.

Holders of other secured claims will have their claims reinstated, be paid in full in cash or receive the collateral securing the claims.

Holders of pre-bankruptcy second-priority secured claims will receive a share of either the CVRs or a notes cash pool payment.

Holders of general unsecured claims will receive a share of either the CVRs or a GUC cash pool payment.

Holders of SFX interests will receive no distribution. Interests in other debtors will either be reinstated or be released, waived and discharged.

SFX, a New York-based producer of live events and entertainment content, filed bankruptcy on Feb. 1. The Chapter 11 case number is 16-10238.

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