Live Nation Cuts $500M, Adds $120M Credit Line
Live Nation Entertainment has announced a series of financial moves designed to help the live music and event giant weather the COVID-19 pandemic.
Live Nation has secured a new $120 million revolving credit facility which will extend the company’s unused available credit. With the new lifeline, Live Nation has approximately $940 million in available debt capacity, including $400 million in undrawn term loan A capacity and $540 million in available revolver capacity, the company stated.
The company has amended an existing credit agreement, suspending their net leverage coverage under its existing senior secured credit agreement for the second and third quarters of 2020.
Starting in the fourth quarter of 2020 and extending through the second quarter of 2021, the net leverage covenant will instead be evaluated based on Live Nation’s consolidated EBITDA from the second and third quarters of 2019, ameliorating the impact of the spring and summer of 2020 from the calculus of its senior creditors, providing for some financial stability.
Live Nation is also implementing some cost-savings measures to reduce fixed costs and conserve cash. The raft of measures announced on Monda includes salary reductions, with senior execs at the company taking a pay cut of up to 50%, while CEO Michael Rapino has agreed to forgo 100% of his salary for the duration of the salary reduction program.
Additional cost reduction efforts include hiring freezes, a reduction in the company’s use of contractors, rent re-negotiations, furloughs, and reduction or elimination of other discretionary spending, including, among other things, travel and entertainment, repairs and maintenance, and marketing.
Other cost reductions will come from artist and venue partners. Live Nation announced that it is reducing advances in both its ticketing and concert businesses and re-evaluating capital expenditures and other cash-related activities. The company hopes to realize up to $500 million in cost reductions in 2020 and the elimination or deferral into 2021 of $800 million in cash outflows.
Live Nation also provided a glimpse of the financial impact of the pandemic, noting that all concert operations ceased in the middle of March with about 8,000 shows impacted by the shutdown.
For rescheduled shows that have offered refunds over the past month, 5% to 20% of fans have requested refunds while the vast majority preferred to hold on to their tickets for the future date.
“The live entertainment industry has delivered incredible global growth for over 20 years, which speaks to the great passion and resilience of fan demand,” said Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. “With this additional liquidity, the flexibility in our debt covenants, and cost-cutting efforts, we believe that Live Nation has the financial strength to weather this difficult time. We will be ready to ramp back up quickly and once again connect audiences to artists at the concerts they are looking forward to.”