The cash-strapped pop star on trial for child molestation finds some of his assets threatened.
May 5, 2005: 2:27 PM EDT
By Krysten Crawford, CNN/Money staff writer
Michael Jackson may lose his stake in the lucrative Beatles song catalog, as well as other assets.
NEW YORK (CNN/Money) - Michael Jackson, the legendary pop star facing child molestation charges, could lose his stake in the lucrative Beatles music catalog as well as the rights to his own platinum-selling songs.
Two loans estimated at $270 million that are tied to the Beatles catalog and other assets have been sold by Bank of America, the nation's No. 2 bank, to a private hedge fund, according to sources familiar with the transaction.
Jackson's financial troubles have been known for years. To secure the Bank of America loans in 2001, Jackson offered as collateral his 50 percent stake in a Sony partnership that holds copyrights to more than 200 Beatles songs. The loans were also backed by Jackson's own music library and a partial deed on his Neverland ranch in Santa Ynez, Calif.
Technically Jackson has defaulted on the loans, one source said.
Typically, when a debtor defaults on a loan, terms are either renegotiated or the debtor is forced into bankruptcy. Another option is for the lender to sell the loan -- and the collateral with it -- to another party. Hence Bank of America's sale of the loans to the hedge fund, New York-based Fortress Investment Group.
Depending on negotiations with Fortress, the risk that Jackson could lose the copyrights to the Beatles songs as well as his own hit recordings is real.
...Forensic accountant John Duross O'Bryan said Jackson is spending about $20 million to $30 million a year more than he earns.
With assets totaling $130 million and about $415 million in liabilities, the result is "an ongoing cash crisis," Duross O'Bryan testified.
To fund his lavish lifestyle, Jackson has borrowed against his assets. Duross O'Bryan said that one of the loans that Bank of America sold to Fortress, valued at $200 million, is due in December 2005.
A Bank of America spokesman declined comment.
Losing the Beatles rights would put into play one of the world's most valuable song portfolios.
Jackson, 46, acquired the Beatles song catalog in 1985 for $47.5 million, outbidding ex-Beatles singer/guitarist Sir Paul McCartney. He sold a piece of his stake to Sony a decade later, creating a joint venture called Sony/ATV Music Publishing. The venture is now believed to be worth more than $400 million.
Jackson's Mijac Music, which owns the copyrights to Jackson hits and other songs, is thought to be worth roughly $75 million, according to reports.
Despite Jackson's shaky finances, the long-term value of song libraries valued at $475 million drew Fortress Investment's interest, speculated James Dunn, a vice president at InvestorForce, a Wayne, Penn.-based investment adviser to institutional investors.
"That's clearly the trade they're making" in placing a bet on Jackson's debts.
Hedge funds are largely unregulated investment vehicles that are designed for wealthy investors looking for big returns on riskier bets. According to InvestorForce, there are more than 4,000 such funds with more than $800 billion in assets.
A small fraction of hedge funds invest in what are known as distressed securities and include debts like Jackson's.....
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BEST
NEWS
EVER
And what would really be awesome, in my humble opinion, is if McCartney didn't get the entire catalog but if Ringo, McCartney, Olivia, and Yoko got it back in a four way partnership.... this way McCartney's ego could still be held in check relative to things like is past desire to switch his name on the song writing credits for certain songs, etc. Yoko would still have that ability, but a tiny bit less if McCartney got full publishing writes (he would still have to clear most things with the other three estates).
Best Fricking News Ever -- I jumped up and down for 3 minutes doing a dance when I read this article.....
_________________ i was dreaming through the howzlife yawning car black when she told me "mad and meaningless as ever" and a song came on my radio like a cemetery rhyme for a million crying corpses in their tragedy of respectable existence
Joined: Sun Oct 17, 2004 7:19 pm Posts: 39068 Location: Chapel Hill, NC, USA Gender: Male
I remember when Michael bought those rights. McCartney was like his best friend and he was like, "Hey, Michael, if you really want to be smart, buy the rights to some music. That's gonna be where the money is at." And then MJ outbid McCartney for his own tunes. What a fucker!
_________________ "Though some may think there should be a separation between art/music and politics, it should be reinforced that art can be a form of nonviolent protest." - e.v.
Michael Jackson's net worth is estimated at $350 million. The bulk of his wealth comes from his 50% stake in Sony/ATV Music Publishing, which holds the publishing rights to about 4,000 popular songs and generates an estimated $80 million in annual revenue. Among the catalog's artists:
The Beatles (virtually every song written by the Fab Four)
Elvis Presley
Willie Nelson
Destiny's Child (acquired under Sony's purchase of EMI's catalog)
The Pointer Sisters
Stevie Nicks
Sly and the Family Stone
Conway Twitty
Pearl Jam
Acuff-Rose Music Publishing, a big country catalog that includes songs by Roy Acuff, Fred Rose, Hank Williams and Roy Orbison
_________________
emanon wrote:
I think I either need to drink less to become more alert, or more so as not to care.
Joined: Mon Oct 18, 2004 4:50 pm Posts: 3955 Location: Leaving Here
CopperTom wrote:
I thought MJ owned their catalog.
Thanks.
I thought MJ had a joint venture going with Sony where he owned some part of Sony, not necessarily Pearl Jam's catalog directly. I don't have a link to the information though, I used to have it.
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