When word spread that Apple was preparing to spend $3 billion to buy Dr. Dre and Jimmy Iovine’s headset and music streaming businesses, a lot of smart people took a look at Beats’ financials and scratched their heads.
PrivCo, which tracks privately owned companies, covers the stuff we already knew about Beats, including:
— Its ill-fated sale to HTC that even Iovine describes as a “culture clash” that “crashed and burned”
— Its $500 million rescue last October by a leveraged buyout team at the Carlyle Group
— The $205 million in dividends that Dr. Dre and Iovine each pocketed shortly afterward
But PrivCo also adds details from “thousands of pages of documents” it claims to have in hand, including Beats’ unpublished income and balance sheets and the terms of various loan, merchandising and royalty agreements dating back to 2006.
According to PrivCo, Beats in June 2013 was only days away from default on hundreds of millions of dollars of debt, and was saved from bankruptcy with a short-term, high-interest note, due next month that was secured by the rights to all Beats assets, trademarks and equity.
The report is unsigned, except for a summary quote from PrivCo founder and sometime movie producer Sam Hamadeh:
I’m not familiar with Hamadeh’s work at PrivCo, but I gather it’s been hit and miss. According to a 2012 Reuters column, he was right about Facebook’s and Zynga’s disappointing IPOs and Palo Alto Networks’ somewhat better one.