SoundCloud plans to replace its CEO as part of a new funding deal

Investors want to replace the CEO of SoundCloud, the troubled music-streaming service, as part of a new round of investment.

Under terms of a proposed funding deal circulated this week, former Vimeo CEO Kerry Trainor would run SoundCloud in place of founder and current CEO Alex Ljung, who will stay on as chair of the company’s board. Trainor would also bring in a new chief operating officer, according to investor documents that lay out details of the new round.

SoundCloud plans on raising around $170 million, in a deal that would value the company at $150 million prior to the new investment. Most of the new money would come from Raine Group and Temasek.

In the past, SoundCloud had valued itself at $700 million, and in 2014, the company thought it could sell itself for more than $1 billion to Twitter. Last year, it also talked to rival streaming service Spotify about a sale.

I’ve asked Ljung, Trainor and SoundCloud PR for comment. (UPDATE: A day later, SoundCloud PR sent out this release confirming my story. One bit of additional info: Mike Weissman, who worked with Trainor at Vimeo, will join as COO.) Trainor left Vimeo, IAC’s video service last year. Last month, former Vimeo general manager Anjali Sud took Trainor’s old job.

The last time I wrote about SoundCloud, back in March, I reported that the company was struggling, looking for money, and that investors thought the company might go for $250 million — about the amount of money SoundCloud had raised over its lifetime.

Since then, things have gotten worse: Last month the company laid off 173 people — 40 percent of staff.

The new funding would be used in part to pay off SoundCloud’s existing debt, including a $70 million credit line it took on in March, and would dramatically reset SoundCloud’s cap table.

As Axios’s Dan Primack noted earlier, Ljung has told existing investors that if they don’t accept the new funding proposal, he “suggests the company would not be able ‘to continue as a going concern.’”

This article originally appeared on Recode.net.

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