Jump to content

Sanctuary seeks £130m rescue


artfromtex

Recommended Posts

Sanctuary seeks £130m rescue

Jon Rees, Mail on Sunday

22 January 2006

MUSIC group Sanctuary hopes to announce a £130m rescue package this week to shore up its finances as it risks breaching its extended overdraft limit.

The world's biggest independent record label, with artists including Morrissey, Guns 'N' Roses, Iron Maiden and The Strokes, is expected to announce a massive share issue to raise the funds. The placing is likely to dilute heavily the existing investors' stakes.

Sanctuary owes about £120m to banking giant HBoS, which has agreed to extend its overdraft facilities by £12m to £134m, but only until the end of the month.

It has already warned that it will take a £170m exceptional charge when it unveils its longdelayed annual results for the year to last September, which are due by the end of this week.

Those close to the company insist that Sanctuary can still survive if the fundraising does not go ahead. But the size of its debt means that its lenders could demand a debt-forequity swap if it fails, since without a further extension to its overdraft Sanctuary will find it difficult to continue trading.

On the plus side, the latest album from The Strokes, First Impression of Earth, is doing well and is likely to sell up to 500,000 copies, while Morrissey, the company's best-selling artist, is expected to launch an album in the spring that could sell up to 800,000.

Sanctuary also expects good sales from the forthcoming album from heavy rock band Guns 'N' Roses.

It will use any money raised through the share placing, which is being organised by broker Evolution Securities, mainly to pay down existing debts.

However, such a fundraising is likely to be deeply discounted and so will virtually wipe out the value of existing investors' stakes.

John de Mol, the entrepreneur behind television's Big Brother, is a key investor with a stake of just over 19%. Sanctuary is now worth about £8m compared with £200m two years ago.

It issued the first of a series of profits warnings a year ago after big delays releasing key albums.

source:http://www.thisismoney.co.uk/news/article....09&in_page_id=2

Everything in the article seems to be "short-term" plans. The mention of CD could be a good sign that they anticipate it being released soon enough to help them in their current financial crisis. But then again, it could mean jack shit.

Link to comment
Share on other sites

This company is indeed in trouble. It is unfair to try and burden the survival of the company on several bands. I honestly think they are trying to stay afloat until Axl releases Chinese Democracy. On the other hand he might be looking to leave Sanctuary and by delaying the album he is waiting for the inevitable. He can't just leave as they can sue him for breach of contract and they will sure as hell get money that way. Axl should keep the album to himself and let the company go under and then release it under a strong firm.

Link to comment
Share on other sites

Wow, I knew they were in trouble but I didn't know it was that bad.

And as people said all their plans seem to be short term, just shifting debt around, none of it is a real solution.

And if I was them I wouldn't count on Axl to bail me out. Even if CD does come out this year he owes Geffen $13 million. It'll be a very long time before CD makes any kind of profit.

Link to comment
Share on other sites

i've always wondered this. why is santuary is so much debt? and i don't want an 8 page synopsis, just the facts. thanks.

As I understand it they're a relatively new company and they've been investing a lot of money in various bands without getting as much (or anything in some cases *cough*) back from them.

That article said some of their biggest sellers are expected to sell 500,000 copies and thats not a lot y music industry standards. Not for a companies biggest acts anyway.

Edited by Just_me
Link to comment
Share on other sites

This company is indeed in trouble. It is unfair to try and burden the survival of the company on several bands. I honestly think they are trying to stay afloat until Axl releases Chinese Democracy. On the other hand he might be looking to leave Sanctuary and by delaying the album he is waiting for the inevitable. He can't just leave as they can sue him for breach of contract and they will sure as hell get money that way. Axl should keep the album to himself and let the company go under and then release it under a strong firm.

No he cant wait til his contract is over/company go under because the contract IS to release an album. They will release something from the contract whether it be Chinese Democracy or a DVD etc.

Link to comment
Share on other sites

I don't think this record is gonna come out. Even though there have been some signs I still can't see it actually happening. There is too much to lose image wise. That will never change. But I hope it does sort of but I'm scared it will suck.

Link to comment
Share on other sites

Think of it this way...in order to raise the cash, Sanctuary will sell its shares very cheaply (if that's the correct grammar)...which means we should get it on it, buy as much as we can, and in the event of Chinese Domocracy doing well and picking up the pace, the share price will shoot up, then we can sell.

Even if it doesn't do well, the fact that you own shares means that you're a SHAREHOLDER, and do get some info on forthcoming releases that Joe Public doesn't get....it will just get you a step closer to our main man.

Weird idea, but it may just work.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...