US-based SESAC Music Group (SMG) has accomplished a USD $889 million entire enterprise securitization (WBS), marking the corporate’s fourth journey to the asset-backed securities market.
The information arrives as music corporations more and more flip to the bond market to fund progress.
US-headquartered SMG – residence to the SESAC PRO, plus Harry Fox Company (HFA), AudioSalad, and different corporations – issued the bonds via a collection of recent five-year senior notes.
These notes are backed by “considerably all SESAC Music Group’s belongings and revenues,” in keeping with SMG – together with subsidiaries in its Performing Rights and Music Companies divisions.
SESAC’s Performing Rights division represents songwriters reminiscent of Ariana Grande, Kurt Cobain, Jack Harlow, Billie Joe Armstrong, and Axl Rose, and composers of music in TV exhibits like Seinfeld, Gray’s Anatomy, Fits, and Trendy Household, and movies like Vehicles 3, Ant-Man and the Wasp, Frozen, and Napoleon Dynamite.
In the meantime, the corporate’s Music Companies arm affords copyright administration, licensing, and royalty assortment providers for rightsholders worldwide by way of subsidiaries reminiscent of AudioSalad, Mint, Audiam, HFA, and Rumblefish.
The brand new WBS transaction brings the whole excellent debt of SESAC, which is majority-owned by Blackstone, to about $1.1 billion.
The securitization acquired sturdy investor curiosity, with demand 3 times oversubscribed. SESAC mentioned this mirrored “strong investor demand underpinning SESAC’s WBS technique.”
MBW understands that SESAC Music Group executed its first tranche of entire enterprise securitization in 2019, securing between $500 million and $600 million.
That was adopted by a second tranche for $335 million in 2022. Final yr, SESAC raised one other $180 million via securitization.
Reasonably than securing finance backed by belongings reminiscent of music rights – like Harmony‘s latest $1.77 billion ABS – SESAC Music Group buildings its debt by securitizing its total firm’s operation.
Comparisons to a mortgage-like construction on personal property will not be unwarranted.
“As we proceed to develop each segments of our enterprise, guaranteeing long-term entry to institutional capital, and persevering with to construct upon our sturdy monetary basis and established repute are essential.”
John Josephson, SESAC Music Group
SESAC partly employs the follow of entire enterprise securitization to assist bankroll its acquisitions.
For instance, the agency used earlier WBS proceeds to assist finance its acquisition of manufacturing music firm Audio Community in 2021.
SESAC Music Group Chairman and CEO, John Josephson, mentioned of SESAC’s newest WBS transaction: “As we proceed to develop each segments of our enterprise, guaranteeing long-term entry to institutional capital, and persevering with to construct upon our sturdy monetary basis and established repute are essential.
“WBS transactions just like the one we simply closed will stay an important a part of our progress technique, permitting us to proceed to decrease our price of capital whereas increasing our world capabilities in assist of the impartial songwriters, composers, publishers, labels, artists and CMOs we serve.”
The timing of SESAC’s newest WBS transaction displays a surge in music business securitizations.
As talked about, simply final week, Harmony closed a $1.765 billion bond providing backed by its 1.3 million music copyrights.
In the meantime, Blackstone-owned Recognition Music Group disclosed plans for a $372 million issuance of five-year bonds backed by its multi-billion-dollar music catalog that features rights from Purple Sizzling Chili Peppers, Justin Bieber and Shakira.
SESAC says its newest WBS issuance “is the most important 144a, rated entire enterprise securitization within the music sector thus far.”
Morningstar DBRS assigned the notes a BBB(sf) ranking. Guggenheim Securities, Barclays Capital, and ING Monetary Markets served as joint bookrunners, whereas Blackstone Securities acted as co-manager.
Virtu World Advisors offered valuation providers, whereas Latham & Watkins offered authorized counsel for SESAC and White & Case for the underwriters.Music Enterprise Worldwide
