Michael Jackson reaches refinancing deal

By Claudia Parsons

NEW YORK (Reuters) – Pop star Michael Jackson, in a bid to
stave off insolvency, said on Thursday he has reached a deal
with creditors to refinance more than $200 million in loans
secured by his prized stake in the Beatles’ song catalog.

The loans, which formally came due in December 2005, are
held by the Fortress Investment Group, a New York private
equity fund that stood to gain Jackson’s 50 percent interest in
Beatles publishing rights, valued at some $500 million, in the
event of a default.

A statement issued from Jackson’s representatives in the
Persian Gulf state of Bahrain, where he currently resides, said
the singer has “restructured his finances” with help from Sony
Corp., which jointly owns the collection of more than 200
Beatles tunes through Sony/ATV Music Publishing.

It also said Citigroup bank “structured the transaction for
the parties.”

But terms of the new financing deal were not disclosed, and
it was not immediately clear whether Jackson was forced to give
up any of his stake in the song catalog.

The New York Times, citing sources briefed on the
refinancing negotiations, reported earlier that Jackson would
agree to provide Sony with an option to buy about 25 percent of
the catalog, or half of his stake, at a set price.

Sony’s interest in keeping Jackson solvent stems from its
desire to avoid a default that would allow his stake in the
publishing venture to go up for auction, and the possibility of
another company bidding on it. Sony representatives were not
immediately available for comment.

According to prosecution testimony during his trial on sex
abuse charges last year, Jackson had borrowed heavily against
his assets, including more than $200 million secured by his
share in Sony/ATV. Those loans, first provided by Bank of
America Corp., were later sold to Fortress.

Jackson was acquitted by a jury last June of all charges
stemming from accusations made by a teen-age boy that he had
been molested by Jackson at his Neverland Valley Ranch in
central California.

Rights to the Beatles music passed to the conglomerate ATV
through its purchase of the band’s publishing company, Northern
Songs, in 1969.

Jackson in turn acquired the 4,000-song catalog, including
the Beatles titles, when he bought ATV from the late Australian
tycoon Robert Holmes a Court in August 1985. Ten years later,
Jackson cut his stake in the catalog to 50 percent after
merging ATV with Sony’s publishing. Jackson also kept a 50
percent stage in new songs added to the collection.

The Sony/ATV catalog also includes songs like Bob Dylan’s
classic “Blowin’ in the Wind” and the works of such artists as
Joni Mitchell and Stevie Nicks. But the Beatles’ rights account
for an estimated two-thirds of the collection’s value.

Industry experts say the catalog is one of the most
treasured in the world, especially since the recent explosion
in music licensing ranging from movies and television ads to
cell phone ringtones and video games.

(Additional reporting by Steve Gorman)

Reuters/VNU