Pandora has had its ups and downs. The company is currently involved in considering whether or not it would sell itself. It is considering a strategic review and towards the same, the company may agree to take a cash infusion in case it decides that it wouldn’t sell itself off to a third party.
A private equity firm KKR has agreed to invest $150 million in the company. The company would receive preferred Series A stock in return for the sum.
Speaking about KKR’s investment, Pandora’s CFO Naveen Chopra wrote,
A strong balance sheet gives us the ability to accelerate growth investments when appropriate and to compete aggressively in a rapidly changing, complex market.
KKR would also be paid a 7.5 to 8 percent quarterly dividend, with one of its executives receiving a seat in Pandora’s board. Two board members James M. P. Feuille and Peter Gotcher will resign while KKR’s Richard Sarnoff takes a seat.
Pandora reported a mixed quarter. It’s $316 million revenue fell a couple of million short of estimates. And it delivered a loss of $0.24 EPS per share compared to an expected $0.34 EPS loss. The total number of subscribers grew by 20 percent year over year, However, total listener hours slipped from 5.52 billion in Q1 2016 to 5.21 billion this quarter.
Here is how the deal could work out:
KKR will purchase an aggregate of $150 million in a new designated Series A convertible preferred stock of Pandora. Pandora will pay dividends to the holders of the preferred stock quarterly at an annualized rate of 7.5% if paid in cash or 8% if paid in kind, at its option. The Series A preferred stock is convertible into common stock, cash or a combination thereof at a conversion price of $13.50 per share. The offering may beupsized to a total of $250 million should the Company determine to issue additional shares.
Pandora has also been facing falling stock prices despite measures like layoffs to maintain a positive balance sheet. Let’s see if the company manages to save itself with a KKR investment or, if it ends up getting acquired.
