Spotify raises $1B in debt with devilish terms to fight Apple Music
1–10 of 232 posts
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#2"TPG and Dragoneer can sell their shares just 90 days after the IPO, before the 180-day lockup period ends for Spotify’s employees and other investors."
Among many the bad terms disclosed in the article, IMO this is probably the worst - basically, this right is a license to cash out and torpedo the company within 3 months (just the right amount of time to see how the market reacts to Spotify's first earnings call as a public company..), leaving the other investors (and employee common stock holders!) with greatly devalued stock.
Of course they have a disincentive not to do this: if they did start to sell after 90 days, the stock would start plummeting before they could sell all shares, so the last shares that TPG/Dragoneer sell would be worth much less than the first bucket of shares, but if they do sell it means that things are very, very bad and they'd rather cut their (20% discounted...) losses, and will be much, much better off than the other investors and employees 3 months later.
godspeed Spotify!
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#3ANNNDDD GOODBYE ONE BILLION DOLLARS
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#4"TPG and Dragoneer can sell their shares just 90 days after the IPO, before the 180-day lockup period ends for Spotify’s employees and other investors." Among many the bad terms disclosed in the article, IMO this is probably the worst - basically, this right is a license to cash out and torpedo the company within 3 months (just the right amount of time to see how the market reacts to Spotify's first earnings call as…
Oh, and I would not be surprised if Apple basically times major announcements re: Apple Music (subscriber numbers, if good, or new product features, etc.) around Spotify's IPO date and first earnings call to kill the pricing on both front - if I were Apple, I know I would =)
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#5Box survived something like this, although they're below IPO price.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#6"TPG and Dragoneer can sell their shares just 90 days after the IPO, before the 180-day lockup period ends for Spotify’s employees and other investors." Among many the bad terms disclosed in the article, IMO this is probably the worst - basically, this right is a license to cash out and torpedo the company within 3 months (just the right amount of time to see how the market reacts to Spotify's first earnings call as…
Oh, and I would not be surprised if Apple basically times major announcements re: Apple Music (subscriber numbers, if good, or new product features, etc.) around Spotify's IPO date and first earnings call to kill the pricing on both front - if I were Apple, I know I would =)
I have to also assume this has already been considered in the game theory. So something else unexpected, unpredictable perhaps.
Edit: The more I think about it, doing nothing would be most optimal. Doing nothing is so much more cost effective when you know it's a inevitable decline.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#7This is a pretty horrible deal. I'm glad I don't have to work in that industry, it's basically a strip mine that's leaching off toxic waste into the environment now.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#8This is a pretty horrible deal. I'm glad I don't have to work in that industry, it's basically a strip mine that's leaching off toxic waste into the environment now.
lol, I actually know a few guys making decent coin leeching vanadium out of toxic waste (tailing ponds) from old strip mines.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#9The value seems OK if there is a good IPO (>10 billion) in the near future. I think the issue is now Spotify largely HAVE to IPO quickly and successfully. This is a big risk as with the current bear market that could easily deteriorate further creating a situation where the business would be better waiting for for a few years. And they are now cornered into not taking an IPO, or not taking it at great cost.
And I wouldn't put it past Goldman to use background influence to delay the expected listing to get themselves ever favorable terms by adding a few years to the process. I'd be interested to know the cap on the share price discount that goes up 2.5% every extra six months. And what would happen in a private buyout? Is this deal a poison pill against not listing from management? Possibly management want to ensure this listing happens largely no-matter what markets do.
Maybe I'm a skeptical person but it seems there could be rationale to this deal we dont see. I know Spotify are struggling to compete on the growth of paid subscribers. Maybe this is managements way to get a profitable exit before the struggling financials really show and markets get more rational on unicorns.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#10Jesus Christ, that's not clickbait, those really are devilish terms. It's debt, they lose $200MM of shares at the time of IPO, and they very well could end up paying 15% interest yearly on this. And when the IPO happens, if it follows the general IPO trend and tanks at first, it's very possible TPG and Dragoneer will want to get out -- dumping 1.2 billion of Spotify onto the market and absolutely destroying the share price three months before employees can sell.
Let's say they have a $8.5 billion IPO and they decide to sell: suddenly, 15% of their company was just dumped onto the market. There's no way they could survive that.