Spotify In Hunt For $500 Million In Convertible Debt
Burning cash, getting ready for battle or both? Just 6 months ago, Spotify completed a $526 million funding round; and now the music streamer is reportedly meeting with bankers and investors in search of $500 million in convertible debt.
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Spotify is preparing to meet with bankers and investors to raise an additional $500 million, according to documents obtained by Swedish newspaper Svenska Dagbladet. The funds would be packaged as convertible notes that would become stock discounted by 17.5% if Spotify successfully completes an IPO. In the interim, Spotify would pay 4% interest, or $20 million per year.
$1.5 Billion Raised + IPO Within 1 Year
If the deal is completed as expected, Spotify will have raised $1 billion in less than 12 months and more than $1.5 billion since launch.
The documents also reveal Spotify's plan to go public within a year. If the company fails to complete an IPO within 12 months, interest on the $500 million jumps to 2.5% every 6 months. The report also shows that Spotify believes that it currently controls 45% of the global streaming market. Multiple sources point to Spotify nearing 100 million paid and free users worldwide.
Since Spotify isn't commenting, it is hard to know if the $500 million signals a deeply unprofitable business model, smart cash acquisition to bankroll the battle ahead or maybe a bit of both.
One website out of nowhere will bring that company to it’s knees
All those music streaming companies have no future. All of them will shut down. Music is free. Only free services such as YouTube will survive in the long run.