BOSTON (CelebrityAccess MediaWire) – Live Nation announced May 5th that it has agreed to divest three of its non-core real estate holdings located in Boston for approximately $22.5 million in cash plus an earnout at the Orpheum Theatre over the next five years. The properties include the Boston Opera House, Orpheum Theatre and Paradise. The transaction is expected to close in the third quarter of 2009.
Interestingly, the purchaser of the venues is Boston Opera House Ventures LLC, a newly-formed venture with David Mugar, producer of Boston's Fourth of July celebration and the current president of Live Nation New England Don Law as principles. According to the Associated Press, Law and company will operate the venues independently from Live Nation although Live Nation will continue to promote non-theatrical shows at the three venues as well.
Law has a history with all three of the properties and told the Boston Globe that his purchase was motivated by a desire to keep the Opera House under "local ownership."
"I opened the Paradise 30 years ago, we’ve managed and operated the Opera House for a few years, and we’ve been involved in the management of the Orpheum for over 30 years," Law told the Globe.
The sales are designed to provide some much-needed liquidity for the highly-leveraged Live Nation who came in below analysts expectations with their Q1 results.
"This sale will generate a multiple to operating income in excess of 10x and allow us to apply 50% of the proceeds as a permanent reduction in our term loans," said Live Nation CEO/Prexy Michael Rapino. "We are actively working to divest our remaining non-core assets as we continue to enhance our liquidity and de-lever our balance sheet."
Live Nation will recognize a non-cash impairment charge of approximately $7.7 million in the first quarter of 2009 which reflects the difference between the sales price and the carrying value on the company’s balance sheet driven primarily by the 2004 value of the Boston Opera House. This non-cash charge does not affect the company’s liquidity, adjusted operating income or operating cash flows. –by CelebrityAccess Staff Writers