Savage beast

9 May 2017 By Jennifer Saba Follow @jennifersaba

The streaming-music service is getting a $150 mln injection from private-equity firm KKR. It’s also shaking up the board and exploring a sale as it struggles to stem losses and get listeners to pay. With Spotify eating its lunch with subscriptions, Pandora is waving white flags.

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Pandora said on May 8 it entered into an agreement for a $150 million strategic investment from private-equity firm KKR.

KKR will receive newly designated Series A convertible preferred stock paying quarterly dividends at an annualized rate of 7.5 percent in cash, or 8 percent if paid in kind. The preferred is convertible into common stock, cash or a combination at a conversion price of $13.50 per share.

The company has the option of increasing the offering to $250 million. Richard Sarnoff, KKR’s head of media and communications, private equity investing in the Americas will join Pandora’s board.

Pandora also announced it is exploring strategic options, including a possible sale, in the 30 days before the financing from KKR is set to close. Centerview Partners and Morgan Stanley are advising the board on strategic alternatives.

Chairman James Feuille and Peter Gotcher will resign as directors and the board is forming an independent committee chaired by Timothy Leiweke to identify and appoint new board members. Pandora is also recommending that shareholders approve a resolution to declassify the board and provide for annual elections of directors in the future.

The company reported first-quarter revenue rose 6 percent year-over-year to $316 million. Subscriptions generated 20 percent of revenue. Net loss widened to $132.3 million from $115.1 million the same quarter in 2016.

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