Ares leads $70m debt financing to SoundCloud

The music company is uncertain about its solvency through 2017. 

Ares Capital Corporation, Kreos Capital and Davidson Technology have provided a $70 million loan to SoundCloud, the Berlin-based borrower said on Thursday.

New York-based Ares served as security agent on the deal, according to a UK regulatory filing.

Those documents show Kreos Capital provided the capital from its fifth debt fund, which closed on €400 million in January 2016, while Davidson deployed from its Growth Debt Fund, targeting €100 million and launched in January 2014.

Further details on the financing were not disclosed. Ares declined to comment.

“This new funding will enable SoundCloud to strategically grow our technology and personnel resources to fuel our expected 2.5 times year-over-year growth in 2017, while building a financially sustainable platform,” SoundCloud said in a statement.

The financing comes after the online audio streaming platform reported a €52.22 million loss in 2015, according to a director’s report this January.

The company hopes the success of the rollout of its new subscription service over the next three years will boost its financial position, but the director also cautioned that additional debt may be necessary to keep the company afloat.

The report read: “Risks and uncertainties above may cause the company to run out of cash earlier than that date, and would require the Group to raise additional funds which are not currently planned. These matters give rise to a material uncertainty about the Group’s ability to continue as a growing concern.”

SoundCloud has become of the world’s largest online music platforms in the world since the company was founded in 2008, according to its website.

The firm has over $193 million in equity commitments from several investors, including Twitter Ventures ($70 million); Institutional Venture Partners and the Cherin Group ($60 million); and Kleiner Perkins Caufield & Byers ($50 million), according to Crunchbase.

Ares Capital Corporation has become one of the largest BDCs. Through one transaction alone – Ares’s acquisition of American Capital –added over $3 billion in assets last year. Ares listed $12.3 billion in assets at the beginning of this year.