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| From | "Jaimie Vernon" <bullseyecanada@hotmail.com> |
| Subject | Jackson set to give up Beatles catalog |
| Date | Thu, 13 Apr 2006 10:51:03 -0400 |
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Michael Jackson Bailout Said to Be Close
By JEFF LEEDS and ANDREW ROSS SORKIN
Michael Jackson, the onetime pop-music king who has endured a lengthy slide
toward insolvency, is close to a deal that would keep him from bankruptcy by
refinancing hundreds of millions of dollars in loans, people briefed on the
plan said last night.
As part of the transaction, he will also agree at some point in the future
to give up a part of a prized asset — a song catalog that includes Beatles'
hits — to the Sony Corporation, people briefed on the plan said.
Mr. Jackson, who spent years racking up debt to underwrite his lifestyle
even as his music career faded, has appeared to teeter on the brink of ruin
several times in recent years. Last month, he all but closed his sprawling
California ranch called Neverland, a move that came after the California
authorities threatened to sue over unpaid wages to ranch employees.
Mr. Jackson used his stake in the song catalog as part of the collateral for
about $270 million in loans from Bank of America. The bank sold the loans
last year to Fortress Investment Group, a New York-based investment company
that buys distressed debt. The entire catalog, of which Mr. Jackson owns 50
percent, has been valued around $1 billion, the people briefed said.
As part of the new agreement, Fortress has agreed to provide a new $300
million loan and reduce the interest payments Mr. Jackson must make.
Under the deal he has been negotiating, Mr. Jackson would agree to provide
Sony — which is co-owner of the Sony/ATV Music catalog with him — with an
option to buy half his stake, or about 25 percent of the catalog, at a set
price, according to the people briefed on the deal.
Should Sony execute its option on the music catalog, it would ensure that
Mr. Jackson was able to pay his debts, these people said.
Executives involved in the deal cautioned last night that some details had
yet to completed and that the agreement could still collapse.
Representatives for Sony and Fortress declined to comment last night. A
representative for Mr. Jackson did not return a call.
But executives involved in the deal said it came after months of talks that
spanned the globe, with meetings from Los Angeles to New York to London to
Bahrain, where Mr. Jackson has been living at the hospitality of Sheik
Abdullah, the ruler's son.
The deal also comes after years of efforts by an eclectic parade of
financial advisers including the California billionaire Ronald W. Burkle and
the Florida entrepreneur Alvin Malnik to offer Mr. Jackson guidance for
extricating himself from his woes. Mr. Jackson's financial managers had been
pressing him to shed a part of his stake in the Sony/ATV venture since
before he stood trial last year on charges of child molestation. He was
acquitted last summer.
Many people close to Mr. Jackson have maintained that he could raise money
to repay his loans — or at least stay afloat — by touring internationally or
working out a series of television and book deals. But the consensus among
his advisers was that he would face bankruptcy if he did not refinance.
Sony has a longstanding interest in keeping Mr. Jackson solvent. If Fortress
had moved to foreclose on Mr. Jackson, he might have been forced into
bankruptcy protection, where his stake in the publishing company could be
put up for auction.
In negotiating the deal, Sony seeks to avoid the prospect that another
bidder could gain ownership of the stake, which the company has long hoped
to control.
Sony has been trying to organize financial partners that could prop up Mr.
Jackson's wobbly finances. In the fall, a Sony representative flew to Dubai
to meet with Mr. Jackson and an adviser, Gaynell Lenoir, daughter of the
late Gerald Lenoir, a lawyer who was a mentor to the lawyer Johnnie Cochran.
Originally, they had tried to hammer out a deal in which Citigroup would
acquire the loans, and offer Mr. Jackson a more favorable interest rate,
around 6 percent, these executives said. Mr. Jackson had been paying more
than 20 percent in monthly interest payments.
Rather than sell the loans to Citigroup, Fortress agreed to match the bank's
terms, the executives said.
The various parties had agreed to the deal in principle a few weeks ago, the
executives said, but the final pact was held up while the companies involved
tried to address questions about potential exposure linked to Mr. Jackson's
remaining legal problems.
Prescient Capital, a New Jersey company that said it helped Mr. Jackson
secure the original financing from Fortress, has sued him for breach of
contract, accusing him of failing to pay millions of dollars in fees for
providing financial advice.
As a result, Mr. Jackson has finally been forced to loosen his grip on one
of the richest of song catalogs.
He paid $47.5 million in 1985 to acquire the ATV catalog, which had roughly
4,000 songs — among them more than 200 tunes written by members of the
Beatles. After 10 months of negotiations with ATV's owner, the Australian
tycoon Robert Holmes à Court, Mr. Jackson bested other suitors including the
music executives Charles Koppelman and Martin Bandier, the London-based
Virgin Records and the real estate entrepreneur Samuel J. Lefrak.
In 1995, as he confronted early financial woes, Mr. Jackson struck a deal to
merge ATV with Sony's publishing arm. The arrangement also provided Mr.
Jackson with a stake in new songs acquired by the venture, like "No Such
Thing" by John Mayer.
Aside from the Beatles songs, the venture has a vast archive including
"Blowin' in the Wind" by Bob Dylan, "Sweet Caroline" by Neil Diamond and
"E-Pro" by Beck.
The catalog also includes the works of songwriters including Stevie Nicks,
Sarah McLachlan, Destiny's Child, Garth Brooks and Richie Sambora of Bon
Jovi. The venture is also a big force in country music, having acquired the
catalog of Roy Acuff and Fred Rose for $157 million in 2002. An archive of
songs from the likes of Hank Williams and Roy Orbison is also included.
Jaimie Vernon,
President, Bullseye Records
"Not Infecting Our Customers' Computers Since 1985!!"
http://www.bullseyecanada.com
http://www.bullseyerecords.com
Author, Canadian Pop Music Encyclopedia
http://jam.canoe.ca/Music/Pop_Encyclopedia/
http://www.myspace.com/jaimievernonsmovingtargetz
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