Music streaming service Pandora has secured a USD150 million investment from KKR.
The deal will see Richard Sarnoff, KKR’s head of media and communications private equity investing in the Americas, join Pandora’s board of directors.
"We are happy to be partnering with KKR on this investment," says Naveen Chopra, chief financial officer at Pandora. "A strong balance sheet gives us the ability to accelerate growth investments when appropriate and to compete aggressively in a rapidly changing, complex market."
“We are excited to support the long-term growth of Pandora with this investment,” says Sarnoff. “A true pioneer in digital music, we believe that Pandora is uniquely positioned over the long term given the sheer size of its user base, the quality of its new subscription services and the fact that it has created one of the few scaled streaming media businesses in the US. The launch of Pandora Premium is yet another example of innovation at a company that created the modern-day music recommendation engine. And we believe that the next few years should be transformational for the company."
Under the terms of the investment, KKR will purchase an aggregate of USD150 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 annualised rate of 7.5 per cent if paid in cash or 8 per cent 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 USD13.50 per share. The offering may be upsized to a total of USD250 million should the company determine to issue additional shares.
The offering is subject to customary closing conditions, including regulatory approval, and it is not expected to close earlier than 8 June 2017. The offering is also subject to a customary fiduciary termination right in favour of Pandora.
