Reservoir prepares for a NASDAQ listing via a SPAC valuing the company at $788m

By Emmanuel Legrand

New York-based independent music company Reservoir is preparing to be listed on the NASDAQ stock exchange through a reverse merger with a special purpose acquisition company (SPAC).

  According to a regulatory document, Reservoir Holdings is to merge with NASDAQ-listed Roth CH Acquisition Co. II to create a company valued at $788 million. Roth CH Acquisition Co. II is a NASDAQ-traded SPAC with $115m in trust. 

  Existing Reservoir shareholders, the Khosrowshahi family, will be rolling 100% of their equity as part of the transaction.

An important step forward

  The transaction is expected to provide approximately $246m in gross proceeds to Reservoir. The new merged company will be renamed Reservoir Media Inc. in the third quarter of 2021, when the transaction is completed.

  “From day one, our mission has always been to be the best independent music company in the industry. Today we have taken an important step forward in Reservoir’s evolution to fully realize that vision through our partnership with Roth CH II," said Reservoir founder and CEO Golnar Khosrowshahi (pictured, below), who will continue to lead the combined company, alongside current executive team, including President and COO Rell Lefargue and CFO Jim Heindlmeyer.

  Khosrowshahi added: "Our dedication to our songwriters and artists and their music is at the heart of everything that we do, and this path to growth supports our promise to service our clients, enhance value, and build a quality catalogue."

An outstanding collection of hit songs

  Since its creation in 2007, Reservoir has deployed over $400m in catalogue acquisitions, and has also spent an additional $100m on new signings. The he company represents over 130,000 copyrights and 26,000 master recordings.

  Partners of Roth Capital and Craig-Hallum, sponsors of Roth CH II, said Reservoir has built "an outstanding collection of hit songs and soundtracks in both its music publishing and masters businesses, and has a unique and differentiated value enhancement model that drives highly attractive returns."

A diversified portfolio

  They added: "We are excited about Reservoir’s strong cash flow generating capabilities in a growing industry with significant tailwinds. The portfolio is fully diversified in all genres of music with some of the most iconic hits of the past hundred years. We look forward to Reservoir pursuing future organic growth and acquisitions in this exciting sector under consolidation."

  "This deal will provide Reservoir with a lower cost of capital in the fast-paced, high-stakes music asset trading world, allowing it to follow the Hipgnosis business strategy of finding music assets for acquisition and then tapping the public markets to fund the deals," analysed Billboard's EdChristman.