“Drat” is the tone deaf cry to be heard from both EMI and Warner as their plans to issue MBSs (Music Backed Securities) have been scuppered by the recent turmoil in the credit markets.
Both companies have been considering issuing billions of dollars of debt by securitising against their publishing catalogues reports Joshua Chaffin in today’s FT. All in a bid to counteract the damage being done by the fall of the CD empire, and the unstable new digital ground, which is a proving to be a distribution nightmare.
The proceeds could have been used to refinance outstanding debt, pay a dividend to frustrated shareholders and reinvest in core operations.
However, this move is looking highly unlikely due to the distressed credit markets.
In 1997, David Bowie raised $55m by selling the rights to a group of songs he recorded before 1990, says Joshua, and EMI and Warner were planning a larger scale version of the same deal, issuing bonds backed by music publishing arms that feature songs from thousands of artists. Warner was hoping to raise as much as $2bn but it’s bankers have decided not to pursue the option.
Poor Guy Hands’ taste in music (along with his ability to manage temperamental artists Sarko style) is proving to be clearly out of date, as Terra Firma’s £4bn ($8.2bn) acquisition of EMI earlier this year is certainly leaving him in “No man’s land”. As Lina Saigol reported earlier this week, this impulse buy has put Mr Hands into a “wild panic”.
So it does beg the question who has their second hand CD-Os…
