Reservoir Holdings, which owns Reservoir Media, is going public on the Nasdaq stock exchange through a reverse merger with a special purpose acquisition company in an apparent move to gain liquidity and a lower cost of capital.
In the end, after investment banking, legal fees and other expenses, Reservoir will be left with $246 million in gross proceeds from the transaction.
That means that the Reservoir shareholders will likely have a lock-up period — maybe 180 days — before they can cash in any of their shares.
This deal will provide Reservoir with a lower cost of capital in the fast-paced, high-stakes music asset trading world, allowing it to follow the Hipgnosis business strategy of finding music assets for acquisition and then tapping the public markets to fund the deals.
“Today we have taken an important step forward in Reservoir’s evolution to fully realize that vision through our partnership with Roth CH II,” Khosrowshahi said in a statement.
The company says it has deployed over $400 million in catalog acquisitions — including recently acquiring the catalog of indie music publishers Shapiro Bernstein — since its inception, and spent another $100 million in frontline creative signings.
“Reservoir has built an outstanding collection of hit songs and soundtracks in both its music publishing and masters businesses, and has a unique and differentiated value enhancement model that drives highly attractive returns.
Roth Capital Partners, LLC and Craig-Hallum Capital Group LLC are acting as placement agents for the PIPE transaction with the anchor share holders while Goldman Sachs is acting as financial advisor to Reservoir.