Pandora Media Inc. is struggling with growing losses and a poor outlook for its online music which has prompted it to shake up its board of directors and pick up the pace in its efforts of finding a buyer.
The company, based in Oakland, California, said Monday that it had received an infusion of $150 million from private equity company KKR & Co.
Two Pandora directors are scheduled to leave and the c
ompany will create a new board committee that is independent of the others that will seek new members.
In addition, joining the board will be the media and communications director at KKR Richard Sarnoff.
The quick pace of growth of both Apple Music and Spotify, as well as the billions of dollars being invested by Google and Amazon in music, have put a great deal of pressure on Pandora to move beyond being an internet radio business and become a new streaming service that seeks paying subscribers.
Pandora has entered into the artist services and ticketing business as well. Investors like Corvex Management a hedge fund have questioned that particular strategy and has urged a sale due to losses and a plunging stock price.
One analyst on Wall Street said the Pandora balance sheet was in a state of deterioration and was at risk.
Pandora states that it can add new customers because the paid streaming service market remains in its infancy, but over 100 million people across the globe already are paying for a streaming music service of some type, including over 20 million in the home market of Pandora.
On Monday, Pandora hopes to find a buyer within 30 days which is when the investment by KKR closes.
Pandora introduced a paid service at a later date that most expected and will not be generating any significant revenue from its subscribers for at least the next three to four months, said CFO Naveen Chopra.
The cash and near-term investments of the company have been dwindling and sit at slightly more than $200 million from a 2015 balance of $382 million due to ongoing losses and acquisitions.
Pandora faced payments to record labels that could have sparked a crisis.
Under its agreement, KKR is purchasing $150 million in new convertible preferred stock. This stock will give a yield of a minimum of 7.5% and can be converted into common stock at the share price of $13.50.
Pandora has an option as well to increase the investment to up to $250 million.
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