Warner raises $300m from the sale of senior notes

Warner Music Group has raised $300m by selling senior secured notes, in order to pay off a chunk of its four-year-old term loan debt.

WMG’s term loan was taken out in 2012, and reached a high point of $1.31bn after it used debt money to buy Parlophone Label Group in 2013.

At the close of its last announced fiscal quarter (end of March 2016), this chunk of debt had reached $1.27bn.

Warner’s total long-term debt at this juncture stood at $2.89bn.

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By issuing a bond offering of $300m of senior secured notes, the company has now been able to pay down $295.5m of the term loan, bringing it under $1bn – down to around $980m.

Wells Fargo and Credit Suisse have been appointed as back office / administrative partners for the new senior secured notes.

The main advantage to Warner of swapping one form of debt (term loan) for another (senior notes) is certainty: the senior notes are set at a fixed rate of interest, while the long-term term loan moves with the market on a floating rate.

The $300m of senior secured notes will remain on a fixed rate until 2023.

Interest on the Notes will accrue at the rate 5% per annum and will be payable semi-annually, commencing on February 1, 2017.

Last month, Moody’s upgraded WMG to a ‘B1’ rating – noting that the company had achieved a ‘stable outlook’ in the eyes of the market.

Warner subsequently issued some guidance on its latest fiscal quarter – the three months to end of June – which MBW discovered would be the company’s biggest Q3 since Len Blavatnik’s Access Industries bought it in 2011.

Blavatnik celebrated the fifth anniversary of his Warner ownership this month by telling WMG staff:

“It’s the thought of what WMG could be in the future that makes me want to stay in the music business for a very long time.

“Some of you have heard me talk about the importance of the WMG brand. It’s not the logo itself that counts; what matters is what it means. You all play a huge part in that.”Music Business Worldwide

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