There’s some drama playing out around the cap table of Reservoir Media – the Nasdaq-listed music rights company.
Irenic Capital, which owns around 8% of Reservoir, has issued a statement today (September 30) outlining its intentions as an activist shareholder of the company.
That statement reads: “On September 30, 2024, Irenic Capital Management LP believed that the securities of [Reservoir] are substantially undervalued and encouraged the Company to undertake a full strategic review of all alternatives to maximize shareholder value and to form a special committee of the Board to oversee such review process.
“In addition, Irenic Capital stated that it may consider, explore and/or develop plans and/or make proposals with respect to, among other things, the matters set forth.”
To summarise: Irenic is demanding a strategic review of Reservoir, and threatening that it will issue its own proposals to shareholders if such a review is not undertaken.
In response to Irenic Capital’s statement, a Reservoir spokesperson told MBW: “The Reservoir Media Board of Directors values shareholder input and we remain focused on executing our strategy to drive value, in line with our fiduciary duty to all shareholders.”
(MBW’s read on that statement: the reference to focus on “executing our strategy” – as opposed to anyone else’s strategy – may suggest that Reservoir’s management is thus far relatively unruffled by Irenic’s demands.)
At the time this story was published, Reservoir Media’s share price currently sits at USD $7.79 on the Nasdaq, representing a market cap of approximately $504 million.
That share price is up approximately 10% year-to-date, and up 30.5% YoY (see below), according to Google Finance.
Understanding Reservoir’s ownership structure helps one understand the challenge Irenic Capital has presented to its board.
According to the latest relevant SEC filings, Irenic Capital owns 5.299 million shares in Reservoir, representing 8.1% of the company.
That ownership stake is dwarfed by that of Wesbild Inc, which owns more than 28.5 million shares in Reservoir, representing approximately 44% of the company’s equity.
Wesbild Inc, run by Chairman, Hassan Khosrowshahi, is a subsidiary of Persis Holdings Ltd, which represents the investment interests of the Khosrowshahi family.
Golnar Khosrowshahi is the founder and CEO of Reservoir. Since establishing Reservoir in 2007, she has steered the company to represent over 150,000 copyrights and 36,000 master recordings.
The company generated USD $144.9 million in annual revenues in the 12 months to end of March 2024, its fiscal year. That figure was up 14% YoY organically, or 18% YoY including acquisitions.
Other institutional shareholders in Reservoir include Richmond Hill Investments Inc – via ER Reservoir LLC – which owns 13.64 million shares, according to SEC filings. That equates to approximately 21% of Reservoir’s equity.
Elsewhere, companies such as BlackRock own single-digit institutional stakes in Reservoir.
Manhattan-headquartered Irenic Capital was founded by Adam Katz and Andy Dodge.
Katz is a former Associate Portfolio Manager at Elliott Management; Dodge previously served as an Investment Partner at Indaba Capital Management.
According to Irenic’s website: “Irenic invests in public companies and works collaboratively with firm leadership. Our goal is to produce improvements in operating and financial performance that create long-term value for the company and its owners.”Music Business Worldwide