eRomano Posted January 24, 2006 Share Posted January 24, 2006 DATE: January 22nd 2006TITLE: Sanctuary seeks £130m rescueTEXT: 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:Thismoney.co.ukURL:http://www.thisismoney.co.uk/news/article....09&in_page_id=2RELATED DISCUSSIONS:http://www.mygnrforum.com/index.php?showtopic=60071http://www.mygnrforum.com/index.php?showtopic=60079RELATED LINKS:Axl Rose Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.