Deals for music rights have never been more competitive, with new-school players like Hipgnosis Songs Fund and Round Hill Music building (and spending) considerable war chests to acquire catalogs.
Warner Music Group, the world’s third biggest music rights company, is evidently determined to show it can play that game too.
WMG has today (October 19) announced to Wall Street that its parent, WMG Acquisition Corp, has raised $250m in additional Senior Secured Notes via a private offering.
What’s particularly important about this money is that Warner has confirmed that it “intends to use the net proceeds of the offering to fund a portion of aggregate cash considerations of certain acquisitions”.
Expect those “certain acquisitions” to be making MBW headlines any time soon.
The new $250m debt adds to Warner’s existing acquisitive spending power – i.e. the $532m in cash/cash equivalents that appeared on the company’s balance sheet at the end of June 2020.
Industry sources suggest that the new $250m debt figure is quite deliberate, and is likely to be spent on targeted acquisitions in the music space, rather than spent piecemeal on multiple smaller buyouts.
Twice this year, Warner has splashed the cash on unorthodox acquisition targets for a traditional music company. In August, WMG acquired media meme-maker IMGN Media for an initial payment of $85m, while back in April it bought HipHopDX, an online hip-hop news and reviews site, for an undisclosed fee.
Today’s news comes a week after MBW reported that New York-based Round Hill Music plans to IPO a new public fund on the London Stock Exchange in November, raising $375m to finance music rights acquisitions.
Warner Music Group’s $250m debt raise today is additional to $550m in Senior Secured Notes issued to the company in August this year.
The crucial difference, there: Warner doesn’t intend to spend that $550m sum on music rights, instead deploying it to “repay a portion of [our] senior term loan facility, to pay certain other related fees and expenses and to use any remaining net proceeds for working capital and other general corporate purposes”.
Last November, Warner announced that it was partnering with a new $650m fund from Tempo Music Investments, set to be spent on catalog acquisitions in music, with financial backing from Providence.
Warner Music Group floated a portion of its company on the NASDAQ in June.
Both WMG’s new $250m Senior Secured Notes offering, and the firm’s previously announced $550m Senior Secured Notes offering, have been taken at a 3.0% rate, and are due in 2031.Music Business Worldwide