At this scale, debt is always bad option. There are not many company in the world which can repay more than 1billion$ with interest. The demand of debt at this level is so low, that either they should be doing it at pretty low interest rates or not at all.
Spotify raises $1B in debt with devilish terms to fight Apple Music
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Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#12This 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.
I can't tell if you're using a convoluted metaphor or you meant to comment on the fracking article that's also on the front page right now.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#13How can early employees defend themselves? What stock structures, if any, fight against this? Is there nothing possible common stock holders can do to protect themselves aside from pray the founders have some shred of morality?
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#14How can early employees defend themselves? What stock structures, if any, fight against this? Is there nothing possible common stock holders can do to protect themselves aside from pray the founders have some shred of morality?
Like all common share holders, they have almost no options. Not being a lawyer I can't speak to what is legally possible, but I imagine it's hard to prove that moves like this are necessarily not in the best interests of the shareholders as a whole. Common shareholders just happen to be a tiny, tiny percentage of the whole.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#15This is significant. It shows a do or die attitude and a fact that many companies at this level are not self-aware enough to recognize; that their competition (Apple) will kill them, or, they will dominate this space.
Will be interesting to see how this plays out.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#16This is significant. It shows a do or die attitude and a fact that many companies at this level are not self-aware enough to recognize; that their competition (Apple) will kill them, or, they will dominate this space. Will be interesting to see how this plays out.
What are the "many companies" under real threat by Apple? I think the set is fairly small?
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#17How can early employees defend themselves? What stock structures, if any, fight against this? Is there nothing possible common stock holders can do to protect themselves aside from pray the founders have some shred of morality?
Very little can be done, and it's designed that way. Capital > labor, all that.
The best option is to attempt downside protection by selling shares in the secondary market, even at a discount - of course, Spotify being a EU company, I don't know how difficult it is to do that, though I imagine (like most other things) it's more regulated (aka. tougher to do) than in the US. Even if easy, it's getting harder and harder to find secondary market buyers.
Rough out there!
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#18"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…
Surprise surprise, employees lose out again. But I guess they were already in danger of getting nothing if this is the deal management struck.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#19How can early employees defend themselves? What stock structures, if any, fight against this? Is there nothing possible common stock holders can do to protect themselves aside from pray the founders have some shred of morality?
Note that the founders interests are aligned with the early employees, they are all taking an equal haircut. Either (a) the founders are sacrificing themselves for the sake of the company which means they were already in dire straits or (b) they actually believe that this will be a net positive for the value of common shares, e.g. by avoiding a down round.
Well, actually, (c) the founders have lost their controlling interest and are being strong-armed by early investors, but early investors' preferred share privileges are usually not very helpful by this point.
Re: Spotify raises $1B in debt with devilish terms to fight Apple Music
#20"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 =)
Why would Apple care about Spotify's stock price?