Harmony has efficiently closed its newest Asset-Backed Securities (ABS) transaction, which sees the corporate elevate $850 million in debt financing via a personal securitization backed by its catalog of music rights.
The corporate mentioned on Monday (October 28) that the transaction would “gas strategic development and acquisition[s]” and that it underscores its “ongoing effort to strategically develop and monetize its music property and place the corporate as a consequential pressure within the music business”.
Harmony’s ABS transaction is securitized by royalties from its catalog of over a million compositions, grasp recordings, and associated property together with works recorded by The Beatles, Carrie Underwood, Low-cost Trick, Creed, Genesis, Kiss, Mike + The Mechanics, Otis Redding, Phil Collins, Plain White T’s, R.E.M., R.E.O. Speedwagon, and The Rolling Stones.
Apollo, via its Capital Options enterprise, Apollo International Securities, LLC, and along with its affiliate Redding Ridge Asset Administration, structured the asset-backed securitization and led an investor syndicate for the transaction.
ATLAS SP Securities, a division of Apollo International Securities, LLC, acted as a joint bookrunner for the transaction.
As first reported by MBW, a report printed by Kroll Bond Ranking Company earlier this month revealed that proceeds from Harmony’s newest ABS transaction had been used to accumulate a $217.3 million catalog from “a extremely profitable Latin Music artist and songwriter”.
The artist in query was later confirmed by Harmony to be Daddy Yankee, the Puerto Rican celebrity whose La Última Vuelta World Tourgenerated an estimated USD $198 million in 2022.
Harmony acquired components of the music publishing and recorded music catalog of the reggaetón star, together with rights to his personal hits together with Rompe, Gasolina, and Con Calma, plus his featured artist position on Despacito.
As well as, the acquisition covers some identify, picture, and likeness (NIL) rights.
Kroll’s report referred to the $850 million ABS transaction because the issuance of the Collection 2024-1 Notes. This marks the third sequence of Notes issued as a part of a broader $2.6 billion bond providing backed by music rights from Harmony’s catalog.
The primary sequence of notes (the Collection 2022-1 Notes) arrived in 2022, totaling $1.8 billion, and was claimed on the time to be “the biggest asset-backed securitization providing of music rights within the business so far by way of each measurement of issuance and variety of property (over a million copyrights)”.
Harmony’s second sequence of notes (the Collection 2023-1 Notes), totaling $500 million, was issued in October 2023.
Based on the report issued by Kroll, proceeds from the newest transaction (the Collection 2024-1 Notes), can be used to repay the $500 million Collection 2023-1 excellent notes, “fund reserve accounts as wanted, pay sure transaction bills, and different basic company functions”.
Upon the redemption of the Collection 2023-1 Notes, Kroll says it is going to withdraw the associated scores, and solely the Collection 2022-1 Notes and Collection 2024- 1 Notes will stay excellent.
Kroll’s report famous that “further collateral was contributed into the securitization” in July 2024 following Harmony’s acquisition of the Spherical Hill Music Royalty Fund Restricted property in 2023 and Mojo Music and Media (additionally in 2023), which Kroll’s report instructed had been valued at a mixed $606.3 million.
Based on the Kroll report, an impartial third social gathering valued Harmony’s catalog at $5.1 billion.
Credit score: Elena Goss
“This transaction represents one other important milestone for Harmony and the worldwide music business as we shut our third music ABS providing, persevering with our strategic efforts to raise and assist the artists and writers in our catalog.”
“This transaction represents one other important milestone for Harmony and the worldwide music business as we shut our third music ABS providing, persevering with our strategic efforts to raise and assist the artists and writers in our catalog,” mentioned Bob Valentine, CEO of Harmony.
“We’re proud to handle a catalog with such a exceptional depth of inventive expertise and cultural significance.
“We’re grateful to our financing companions, Apollo and ATLAS SP, for serving to us create a long-term capital construction that helps our development and strengthens the monetary basis that permits us to maintain investing within the music business. As we develop to new heights, our focus continues to be squarely on our artists and the unimaginable artwork they create.”
“Harmony’s administration has demonstrated distinctive imaginative and prescient in constructing a catalog that displays the breadth and evolution of recent music, and we’re happy to work with Harmony as soon as once more on this important transaction.”
Bret Leas, Apollo
Bret Leas, Apollo Companion and Co-Head of Asset-Backed Finance, mentioned: “Harmony’s administration has demonstrated distinctive imaginative and prescient in constructing a catalog that displays the breadth and evolution of recent music, and we’re happy to work with Harmony as soon as once more on this important transaction.”
“By anchoring and structuring this ABS, we now have continued to assist Harmony unlock the worth of their extraordinary music catalog.”
Paul Sipio, Apollo
Apollo’s Paul Sipio added: “By anchoring and structuring this ABS, we now have continued to assist Harmony unlock the worth of their extraordinary music catalog. We’re proud to supply a tailor-made answer to assist their success.”
FTI Consulting served because the backup supervisor for the transaction, with the Financial institution of New York Mellon appearing as trustee. Virtu International Advisors, LLC offered valuation companies, whereas DLA Piper offered authorized counsel for Harmony and Milbank LLP for Apollo associates.
Elsewhere, in July, Apollo confirmed that it was the lead investor in a USD $700 million “capital answer” for Sony Music Group.
This “capital answer”, mentioned Apollo, is meant to fund “investments within the music business”.Music Enterprise Worldwide
