Pandora gets cash, hunts for buyer

Pandora Media Inc. received $150 million from KKR & Co. and will step up its efforts to explore strategic options, including a possible sale of the Internet radio company.

Richard Sarnoff, who oversees KKR’s media and communications holdings in the Americas, will join Pandora’s board, one of several governance changes, according to a statement Monday. Two directors will leave and the company will form an independent board committee to help guide the moneylosing Web music service.

Pandora held out the possibility it could find a buyer in the 30 days before the KKR investment closes. The company’s cash has dwindled to a little over $200 million from $382 million two years ago because of acquisitions.

Corvex Management LP, which holds almost 10 percent of the stock, has pressured Pandora to improve its performance or sell. Sirius XM Holdings Inc., the satellite-radio provider controlled by billionaire John Malone, has sometimes expressed interest in doing a deal for Pandora, though executives have downplayed their desire for a merger on other occasions.

The Oakland company reported first-quarter financial results after markets closed. The net loss widened to $132.3 million while revenue grew 6.3 percent to $316 million, shy of analysts’ estimates. The loss of 24 cents excluding some items was smaller than the 34-cent average of analysts’ estimates.

Under the agreement, KKR will purchase $150 million in a new designated Series A convertible preferred stock. The stock will yield at least 7.5 percent and is convertible into common stock at $13.50 a share. Pandora also has the option to increase the investment to a total of $250 million.

As part of the board changes, James M. P. Feuille and Peter Gotcher will resign. Timothy Leiweke, an independent director, will form a new committee to identify and appoint new directors.