‘Soundcloud cannot survive if sale of new shares is rejected’

According to director Alexander Ljung of music service Soundcloud, the company will not be able to survive if the existing shareholders do not agree to a rescue deal in which the equivalent of 144 million euros in new shares will be sold.

Axios reports this on the basis of a letter that Soundcloud has sent out to its shareholders; the website says it has it. Existing shareholders must approve or block the sale of new shares by Friday at the latest. The new investors would be commercial bank The Raine Group and Singaporean sovereign wealth fund Temasek.

According to Recode, the current director Ljung must leave as soon as the investment round is approved. He would then be succeeded by former Vimeo director Kerry Trainor. Ljung would remain on as a member of Soundcloud’s board of directors.

The letter would state that the new round of investment will make it possible to pay off existing debt and create a situation in which Soundcloud faces a strong, independent future. If the deal doesn’t go through, the company would soon run into money problems. Soundcloud has previously held acquisition talks with Spotify and Twitter, but these came to nothing.

Soundcloud has been in dire straits for some time now. In early July, it was announced that the company would lay off 40 percent of its staff and close offices to cut costs. In total, 173 people were laid off, which was necessary, according to Ljung, to make the company healthy again. In 2014, the company was still valued at $640 million; now that is only 150 million dollars.

Update, 18:53: Director Alexander Ljung announces that the investments are complete and that he is leaving his post as CEO.