LOS ANGELES (CelebrityAccess) — On Friday, Live Nation Entertainment, Inc., announced an amendment to its credit agreement that will give the promoter-giant additional breathing room as it navigates the reefs and shoals of COVID-19.
“This amendment provides us additional financial flexibility so that Live Nation is ready to unite fans and artists quickly when the time is right,” said Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. “Given our strong liquidity position, we believe the change to a liquidity test allows the seamless operation of our business over the next year, by which time we expect concerts to be returning to scale.”
The new amendment provides a substantial extension of the agreement from September 30th, 2020 to at December 31st, 2021 and allows Live Nation to use consolidated EBITA from historical periods unaffected by the pandemic.
The deal requires that Live Nation maintain $500 million of liquidity, up from $150 million from the previous amended agreement and will reset Live Nation’s consolidated net leverage ratio upon resumption of its application to 6.75:1.00 with the expectation of a gradual leverage drawdown over the next 3 years to 5.25:1.00.
The agreement also limits Live Nation’s ability to make certain investments and to add new debt, meaning that the promoter is unlikely to make additional acquisitions in the near future.
In their financial filings, Live Nation outlined what they see as potential risks to the company, including the ongoing uncertainty regarding the duration and magnitude of the global COVID-19 pandemic and its knock-on effects.
Live Nation also cautioned that they have considered risks that “markets do not evolve as anticipated, the potential impact of any economic slowdown and operational challenges associated with selling tickets and staging events.”
The amended credit agreement comes just days before Live Nation reveals their Q3 financial results, which are unlikely to be as strong as in previous years.