It’s all change at troubled 7digital.
Following the arrival of new chairman and investor Tamir Koch, whose consortium now has a controlling stake, CEO John Aalbers and CFO Julia Hubbard have exited with immediate effect. Koch is president and owner of eMusic.
Aalbers only joined the company in April and recently spoke to Music Week about the turnaround strategy. The new CEO is Paul Langworthy, the current COO, who has been involved in devising the revised business strategy. Aalbers will assist during a three-month handover.
Michael Juskiewicz, the current CFO of eMusic, will be taking on the CFO duties and will be assisted by Hubbard until mid-September. She will remain as a director until a UK-based finance director can be secured.
7digital has warned it could enter administration unless £4.5m of investment is secured by the end of the month.
Aalbers said: "When I joined 7digital in April this year the team and I were immediately challenged with the financial difficulties faced by the company. We urgently set about looking for ways to refinance the business through a combination of asset sales and fundraising. Three and a half months on, we have largely completed the rescue by securing a new, strategic majority investor, which has stated that it is prepared to invest further funds. The final phase of the fundraising is in progress and we expect an additional £4.5m to be raised in the coming weeks.
"These funds will provide the company with the necessary resources to implement the revised strategy and put the company on a solid path towards both growth and profitability. Nevertheless, the company needs to further consolidate and control our operating costs to support the new model. To this end, Julia Hubbard and I have reached the conclusion, and the board agrees with our recommendation, that it would be in the company's interest for me and Julia to step down. Alongside other cost-cutting initiatives already in motion, this will save the company close to £1m per annum, reducing cash burn in the most effective way.”
This will save the company close to £1m per annum, reducing cash burn in the most effective way
In an exclusive interview with Music Week, Koch recently spoke about the synergies for his blockchain project at eMusic.
Koch said: "I'd like to thank John for his leadership and Julia's strong support in meeting the financial challenges faced by 7digital and for successfully steering the company through these rough waters to safety. I also thank John and Julia for continuing to advise and support the company during the upcoming months to ensure a smooth transition to Paul and Michael."
Langworthy said: "It's certainly been a challenging period for 7digital but we are now emerging from that with a clear sense of purpose and excitement. We have a well-defined strategy and we are very determined to execute it. I'm looking forward to taking over the reins from John with whom I have enjoyed working immensely. My confidence in our success is founded on both our new board, whose ambition and vision will drive the company forward with real energy, and on our talented team, who have shown enormous resilience during these difficult times. We are ready to take the company forward as we enter an exciting new chapter."