Digital music service Pandora has received a USD 150 million cash injection from investor KKR. As a result, Richard Sarnoff, KKR head of Media & Communications Private Equity investing in the Americas, will join Pandora’s board of directors. Having secured the financial commitment, Pandora said it will be evaluating all sorts of potential strategic alternatives, including a sale, before the financing closes. Centerview Partners and Morgan Stanley will continue to advise the board of directors regarding its ongoing review of strategic alternatives.
Pandora also announced some other governance changes, with the support of its major stockholders. James Feuille and Peter Gotcher will resign from the board of directors, and the board will form an independent committee, chaired by independent director Timothy Leiweke, to identify and appoint new directors as the company moves forward. The board will also recommend declassifying the board at the upcoming AGM and providing for the annual election of directors in the future.
Under the terms of the investment, KKR will buy USD 150 million worth of new Series A shares Pandora will be issueing. The company will pay dividends to the stock holders at an annualised rate of 7.5 percent if paid in cash or 8 percent if paid in kind. The Series A is convertible into shares, cash or a combination at a conversion price of USD 13.50 per share. The offering may be upsized to a total of USD 250 million should Pandora decide to issue additional shares. The offering is subject to the usual closing conditions and it is not expected to close earlier than 8 June.
