The House of Blues parent company has filed a registration statement with the SEC for an initial public offering of its common stock.
Net proceeds from the offering will be used to redeem outstanding shares of its preferred stock, to repay a portion of HOB Entertainment’s senior credit facility and for general credit purposes. The company owns and operates nightclubs, concert venues and Web sites in addition to promoting concerts.
Co-lead underwriters of the offering are Goldman, Sachs & Co. and Merrill Lynch & Co. Donalaldson, Lufkin & Jenrette and Prudential Securities acting as co-managers.
“Looking at those underwriters, I’d say HOB’s financial expectations are pretty high,” Ryan, Beck media and entertainment analyst Dennis McAlpine told Daily Variety. “But until the SEC releases the numbers, it’s impossible to place a value on the deal.
“How much of this money will be used to pay down debt? Or will they be using it to expand? If it’s the latter, will HOB be buying or building?”
HOB floated the idea of constructing a dozen House Of Blues clubs in markets where it operated amphitheatres when it paid Seagram more than $190 million for the 20 Universal Concerts venues in September.
It’s hardly coincidental that HOB’s proposed IPO comes on the heels of the purchase of top live entertainment promoter SFX by radio behemoth Clear Channel (Daily Variety, March 1). As McAlpine says, “Given the consolidation that’s been sweeping the concert business in the past couple of years, there’s certainly room for another major entity.”
“HOB is a very solid brand,” notes Michael J. Wolf, managing partner of entertainment/media analysts Booz Allen & Hamilton. “It’s not like they’re operating theme restaurants. Consumers find watching live entertainment fascinating.”
HOB owns, operates or exclusively books the seven House Of Blues clubs as well as 20 amphitheatre, theater and area concert venues. It also digitally distributes live music content through its HOB.com website.
Last week (Daily Variety, March 6), HOB inked deals with the MTVi Group — a network of music websites that includes MTV.com, VH1.com and SonicNet.com — to co-present live pay-per-view music events on the HOB Web site.