YMU explores financial restructuring, owing current lenders £70m (report)

Talent management firm YMU Group, home to a transatlantic music division, is exploring a financial restructuring.

That’s according to Sky News, which reports that the company has recently been involved in talks over its finances “following a slump in profits exacerbated by the pandemic”.

Citing sources in the City – London’s financial district – Sky reports that YMU lenders Permira Credit and Lloyds Banking Group “hired AlixPartners several weeks ago to undertake an independent business review of the agency”.

The Sky article suggests that Permira Credit and Lloyds Banking Group are owed approximately GBP £70 million by YMU – equivalent to USD $87 million at current exchange rates.

The Sky article suggests that a restructuring process at YMU may be headed up by a new Chief Restructuring Officer, and was “likely to draw takeover interest from industry rivals”.

However, a further source cited as being “close” to YMU suggested there were no grounds for concern about the company’s future.

According to YMU’s latest available annual accounts filed at UK Companies House, turnover for YM&U Topco Ltd for the year ended December 31, 2021 was GBP £41.4 million (see below).

That represented an increase on the firm’s turnover of GBP £37.6 million in the prior year (FY 2020).

At the end of 2021, according to the filing, YMU held net liabilities of GBP £74.7 million “largely as a result of the Group’s long-term borrowings, which are not repayable until 2025 and beyond”.

At the same stage, says the filing, YM&U Topco Ltd had GBP £8.29 million in cash.

Giving further detail on its borrowings from Lloyds Banking Group and Permira Credit, YMU wrote in its FY 2021 annual report: “As part of the loan facilities with Permira Credit Solutions Ill G.P. Limited, Permira Managed Account GP S.A.R.L. and Lloyds Bank plc, the Company has issued a cross guarantee secured on the assets held by the Company and certain other companies within the Group.

“The cross guarantee relates to borrowings of YM&U Group Services Limited, comprising a loan facility of £38,443,000 and a drawn acquisition facility of £15,242,000 with Permira, and with Lloyds Bank a loan facility of £5,888,000 and [USD] $12,000,000 and a revolving credit facility of £4,000,000.

“As at 31 December 2021 the amounts owed on the facilities including interest were £69,854,000 (2020 – £70,706,000).”

The FY 2021 filing mentioned that YMU’s debt covenants as part of its “revised banking agreement” included “a combination of a minimum liquidity cover, a minimum EBITDA and a net debt ratio”.

The Permira loan facilities, confirmed the filing, are repayable on 28 September 2025. The revolving credit facility and the Lloyds Bank facility, it said, are repayable on 28 March 2025.

YM&U Topco Ltd’s income statement as at December 31, 2021

YMU, which works with talent across music, sports, arts, and entertainment, is majority-owned by private equity firm Trilantic.

YMU was born in 2018, after UK-born James Grant Group, then part-owned by Metric Capital, sold a majority stake in its business to Trilantic and rebranded as YMU.

In music, YMU’s global roster of talent includes Common, Steve Aoki, Travis Barker (US) plus James Arthur, Gary Barlow, Years & Years and Jesy Nelson (UK).

The company is also home to a London-based Business Management operation, previously known as OJK, which looks after the accounts of a number of top music stars.

The YMU Group is led by Mary Bekhait, who became its global CEO on January 1, 2021, stepping up from her previous role as UK CEO.

Bekhait was previously Managing Director of YMU’s entertainment division prior to her appointment as UK CEO in September 2019.

US-based Matt Colon, manager of superstar producer and DJ Steve Aoki, serves as YMU’s Global President of Music.

He joined YMU Group in 2017, when Deckstar, which was co-founded by Colon, was acquired by James Grant Group.

Prominent media and advertising executive Linda Yaccarino, now Twitter’s new CEO, was appointed to the role of Group Chair of YM&U in February.

Simon Cowell signed to YMU’s talent roster in summer 2022, and the company said at the time that he would be managed by YMU’s Group Executive Director Chris Hughes.

According to a filing on UK Companies House, Hughes resigned from YM&U Topco Ltd as a Director of the firm in April this year.Music Business Worldwide