At the end of last month, Concorde reportedly began a process that would see it become the last major music company to launch a bond offering via securitized royalties from copyrights.
According to a Bloomberg report, financial giant Global Apollo Management was selling a $1.65 billion bond secured by the music rights of Concordewhich will mark the music company’s first securitization.
On Thursday (December 8), Concord confirmed successful price fixing $1.8 billion senior ratings guaranteed by what he says is a “significant portion” of his catalog of sound recordings and songs.
According to a press release, Apollo, through its Capital Solutions business, structured the ABS (asset-backed securities) transaction and formed a syndicate of investors led by funds managed by Apollo.
JP Morgan served as co-structuring agent for the transaction. Concord says proceeds from the issue will be reinvested to support the company’s growth in 2023 and beyond.
The transaction is claimed by Concord to be “the largest music rights asset-backed securitization offering in the industry to date in terms of issue size and number of assets (over one million music rights). ‘author)”.
Concord’s new five-year-old facility draws on a catalog of over one million musical assets spanning a wide range of genres, including over 300 Grammy Award winners and over 400 recordings with Gold, Platinum, Multi -Platinum and Diamond Recording Industry Association of America (RIAA) certificates.
Works from the securitization only catalog include songs and recordings by Phil Collins, Creedence Clearwater Revival, Daft Punk, Miles Davis, Danny Elfman, Evanescence, John Fogerty, Genesis, Imagine Dragons, Isaac Hayes, James Taylor, Jewel, Joan Sebastian , Nine Inch Nails, Pink Floyd, Cyndi Lauper, Little Richard, Nikki Six, Otis Redding, REM and many more superstars.
Concord adds that its catalog is valued at more than $4 billion, “resulting in a loan-to-value ratio of approximately 44% for the offering” and the ratings are rated A+ by KBRA.
Concord says in its press release that its transaction “reflects the growing value of music copyrights and the increased interest of financial institutions in music royalties as a long-term, annuity-like asset class. “.
“The music industry is experiencing a period of sustained expansion, fueled by exponential growth in the global streaming market, new marketing platforms, increased demand from vinyl record collectors and, with the integration of new technologies, diverse platforms for marketing music,” adds Concord. . “These factors combined benefit both legacy catalogs and new releases while generating revenue for artists and songwriters.”
“Concord has taken the next step in its own evolution and for the entire global industry by pricing the largest music ABS transaction in history.”
Bob Valentine, Concorde
“Concord has taken the next step in its own evolution and for the entire global industry by pricing the largest music ABS transaction in history,” said Bob Valentine, Concord’s Chairman.
“I am proud to help lead a company associated with the astounding depth and breadth of artistry represented by the works funded by this securitization. I am also extremely grateful that a significant number of top-notch financial institutions have taken note of our success to date and have chosen to participate in our future.
Valentine added, “As we continue to better position Concord as a leader in the industry, our goal remains the same: to elevate the voices of artists and musicians using the global, independent platform we have been assembling for decades. years.
“We are grateful to our financial partners at Apollo and JP Morgan who have helped us develop a long-term capital solution that reflects the strength of the portfolio we have built to date and further validates our active management strategy. “
“We are excited to provide a flexible and tailored structured solution that supports their continued growth.”
Bret Leas, Apollo
Bret Leas, Apollo Partner and Head of Asset-Backed Finance, said, “Concord’s experienced management team continues to build a world-class asset catalog with well-rounded cash flow and diversification characteristics. suitable for asset-backed lending.
“We are excited to provide a flexible and tailored structured solution that supports their continued growth.”
“Having known Concord’s board and management team for many years, we are pleased to support their future success.”
Paul Sipio, Apollo Capital Solutions
Paul Sipio of Apollo Capital Solutions, added: “This transaction leverages the scale of our investment platform alongside our growing Capital Solutions business to create, anchor and syndicate a comprehensive financing solution.
“Having known Concord’s board and management team for many years, we are pleased to support their future success.”
Today’s news comes just over 12 months MBW I told you that that financial obligations were about to become a big issue in the music business.
This prediction has come true time and time again over the past year, with a number of headlines on our pages about music companies launching bond offerings via securitized royalties from copyrights.
In December 2021, for example, private equity firm Northleaf Capital announced that it was raising $303.8 million by selling asset-backed securities (ABS) backed by music rights – including songs created by Pete Townshend for The Who and by country star Tim McGraw.
According Bloombergthe titles would be supported by both publishing and sound recording rights, as well as other sources of revenue, on a total of 52,729 songs.
These songs make up part of the Spirit Music Group catalog; Spirit has a total portfolio of over 100,000 music assets.
Our prediction came true again in February, when MBW reported that in the second half of October 2021, KKR – via his company Chord Music – acquired a large portfolio rights of Kobalt for 1.1 billion dollars and intended to securitize this catalog into bonds.
According Bloomberg, KKR Credit Advisors uses a catalog of 65,000 songs – including hits from The Weeknd, Stevie Nicks and Childish Gambino – to sell more than $732 million in asset-backed tracks backed by publishing and sound recording royalties .
During the summer, more news from this world comewith a Kroll Bond Rating Agency (KBRA) pre-sale reportconfirming that hipgnosis was in the process of launching its own set of music royalty-backed bonds – a $221.65 million securitized offer.
American Music Licensing/Collection Company, SESAC also closed a $335 million bond transaction over the summer. This offer was in fact a securitization of the entire company, which Bloomberg assimilated in his report at the time to SESAC “effectively mortgaging” his company.
In September, Concordeacquired the publishing and recorded music catalogs of Tony Banks, Phil Collins and Mike Rutherford, as well as the publishing and recorded music catalog from their years in the band Genesis under an agreement Thethe wall street journalreported be “valued at over $300 million”.
The news follows a series of recent mergers and acquisitions activity by Concord, such as its purchase assets of HitCo entertainment and its eight-digit acquisition from Australia and New Zealand based music publisher, Native Tongue.
FTI served as valuation agent for the transaction and KBRA provided rating services. DLA Piper served as counsel to Concord and King & Spalding LLP as counsel to Apollo subsidiaries.
Reed Smith and Greenberg Traurig served as special advisor with respect to musical assets for Concord and for Apollo subsidiaries, respectively.The music industry around the world
