The Art market is tanking— Sotheby's has even bigger problems.
The auction house owned by highly leveraged billionaire Patrick Drahi is pushing off payments and issuing IOU's to employees while it waits for a $1 Billion financial lifeline from Abu Dhabi.
The WSJ reports:
Sotheby's carries $1.8 billion in debt, almost double the level it had before Patrick Drahi purchased it in 2019.
The value of its bonds swooned in the first half of the year as investors worried that declining sales and higher interest rates would choke off the company's cash flow.
Sotheby's told its bondholders the auction portion of the business had a loss of $115 million in the first half of the year, compared to a $3 million profit in the first half of 2023.
Rival Christie's, owned by luxury magnate François Pinault, has also taken a hit, with its auction sales dropping nearly a quarter during the first half of the year.
Sotheby's adjusted operating free cash flow fell to $144 million in the 12 months ended June 30, a 43% decline from the same time last year, according to data from New Street Research.
The auction house has received a lifeline with a $1 billion deal to sell a stake to Abu Dhabi sovereign-wealth fund ADQ, which it hopes to close later this year.
See the full story on the WSJ here:
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