Soundwave reportedly has debts of nearly $26 million
Citing an audit report prepared by Deloitte, entertainment industry technical publication CX is reporting that Soundwave has debts of nearly $26 million.
A cloud currently hangs over the future of the event, with boss AJ Maddah confirming yesterday that Soundwave will “definitely” not be taking place in 2017. A decision about the fate of the 2016 event, headlined by Disturbed and Bring Me The Horizon, is expected to be made this afternoon.
Back in September, Deloitte was appointed to audit Soundwave Pty Ltd after the business entered into voluntary administration following a hearing held at the NSW Supreme Court in September with creditors World Stages – who had applied for its winding up over an unpaid debt.
At the time, Maddah assured fans that the festival would go ahead as scheduled in 2016, explaining that the business that had entered into voluntary insolvency was a former operating company, which had no bearing on the event’s future.
Citing the Deloitte report, CX reveals that Soundwave Pty Ltd has 186 unpaid creditors including production suppliers, venues, bands and the Australian Tax Office which is reportedly chasing the company for more than $6 million.
CX also notes that Soundwave was a profitable business in 2013 when the event grossed $62 million, but that the company has since made several poor investments including:
– Harvest Festival which ran at a loss for two years and was cancelled in 2013;
– A $5 million stake in the Big Day Out, which was put on ice in 2013; and
– The purchase of Billy Hyde Stage Systems which saw a downturn in rentals when rival promoters took their business elsewhere.
The CX article claims that the business, now known simply as Stage Systems, is set to be sold for just $600,000; “a fraction of what they paid for it several years ago”.
“Soundwave is now struggling to stage the 2016 festival,” CX alleges. “With burned suppliers likely to require pre payment for supply of services. The report shows a contributing factor in the failure of the 2015 festival was ‘higher costs due to the (tighter) availability of rental supplies and inability to negotiate discounts previously received’. In other words, suppliers were charging more as they faced more risk.”
According to the Deloitte report, the 2016 festival has been funded, at least in part, by advance ticket sales. It reveals that Soundwave had received $1.9 million in ticket sales prior to their appointment in September.
To rectify Soundwave’s debts, Maddah had reportedly proposed to contribute some proceeds from the 2016 festival plus funds from the sale of Stage Systems to rectify Soundwave’s debts. But CX claims that “at best creditors could receive 25 cents in the dollar”.
FL has reached out to Soundwave for comment.