Thu. Jul 18th, 2024

Kobalt’s New Credit Facility, Securitization Give It Over $1 Billion For Dealmaking

Kobalt Music Group, the publishing home to such names as Paul McCartney and Karol G, has landed a new $450 million revolving credit facility (RCF), the independent music publisher announced Tuesday (March 19).

Coupled with the previously announced joint venture with Morgan Stanley and $266.5 million asset-backed securitization (ABS) transaction, these financial maneuvers provide Kobalt with over $1 billion in funding for acquisitions and investments. 

The RCF “will fuel our growth initiatives and allow us to further fortify our position as an industry trailblazer,” Kobalt CFO Catrin Drabble said in a statement. The RCF was led by Truist and refinances existing Kobalt debt. “Along with the Francisco Partners transaction and Morgan Stanley joint venture, these transactions enable us to continue our investment into the business and our technology with far greater flexibility, simultaneously strengthening the best-in-class service we deliver to our songwriters and partners.”

Kobalt, which boasts a catalog of over 850,000 songs, has had a busy few years reworking its balance sheet. In November 2023, Kobalt received a $700 million investment from Morgan Stanley Tactical Value, a part of the investment bank that puts money into alternative assets such as music. A year earlier, Francisco Partners acquired a majority stake in Kobalt in a deal that also included investments from Dundee Partners and Matt Pincus’ MUSIC.

The company also sold artist development company AWAL to Sony in 2022 for $430 million and sold the Kobalt Music Royalty Fund II to Chord Music Partners, a joint venture of KKR and Dundee Partners, in 2021 for $1.1 billion. 

The ABS, which Billboard covered on Feb. 21, comprises over 5,000 musical works from 66 writers spanning more than 50 catalogs. ATLAS SP Partners was the sole structuring agent and joint bookrunner alongside Truist Securities. Investors’ increased interest in music as an asset class led to numerous previous ABS deals, including HarbourView Equity Partners last week and Concord and Chord Music Partners in 2022.

By Michael

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