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SFX Entertainment Plan Filed

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SFX Entertainment filed with the U.S. Bankruptcy Court a Third Amended Joint Plan of Reorganization and Second Amended Disclosure Statement with respect to the Third Amended Joint Plan of Reorganization.

According to the Disclosure Statement, “The Plan proposes the issuance of two classes of securities: New Series A Preferred Stock and New Common Stock. The shares of New Series A Preferred Stock to be issued shall have a face amount and a liquidation value as of the Effective Date equal to (i) the Tranche B DIP Facility Claims, exclusive of any Incremental Tranche B DIP Loan Claims, plus (ii) the Original Foreign Loan Claims, plus (iii) the New Series A Preferred Stock Additional Amount, which shall be earned on the Effective Date. The New Series A Preferred Stock shall, among other things, (i) accrue PIK dividends at 15% per annum and shall be perpetual preferred with a mandatory redemption at the Liquidation Preference, upon a Liquidity Event, (ii) have voting rights entitling it to vote on a 20:1 ratio to the voting rights of the New Common Stock, and (iii) have such other terms and conditions as set forth in the applicable New Governance Documents or the New Series A Preferred Stock Certificate.”

The Disclosure Statement continues, “The Plan also proposes the issuance of three series of Warrants: the Series A Warrants, the Series B Warrants, and the Series C Warrants. Holders of Series A Warrants shall receive rights that, upon the occurrence of a Liquidity Event prior to the termination and expiration of the Series A Warrants, entitle such holders to consideration (payable in cash, securities or other property, or a combination thereof, at the option of the New Equity Issuer) equal to such holders’ pro rata allocation…of twelve-and-a-half percent (12.5%) of the aggregate fair market value of the New Common Stock in such Liquidity Event…; provided, however, that the Series A Warrants shall be subject to dilution by the Series B Warrants and Series C Warrants.”

In addition, “The Series B Warrants and Series C Warrants shall dilute the Series A Warrants above the Equity Value Threshold. Holders of Series C Warrants shall receive rights that, upon the occurrence of a Liquidity Event prior to the termination and expiration of the Series C Warrants, shall entitle such holders to consideration (payable in cash, securities or other property, or a combination thereof, at the option of the New Equity Issuer) equal to their pro rata share (calculated based on the proportion that a Holder’s Series C Warrants bears to the aggregate amount of Series C Warrants distributed) of one percent (1%) of the amount by which the aggregate fair market value of the New Common Stock in such Liquidity Event…The Series B and the Series C Warrants shall dilute the Series A Warrants above the Equity Value Threshold.”

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