Will the last one out at Red Ant Entertainment please turn out the lights?
The label’s parent, Alliance Entertainment, has retained investment bankers Donaldson, Lufkin & Jenrette to find purchasers for Alliance’s stake in Red Ant, the label bowed by former MCA Music Entertainment Group chairman Al Teller.
But the recent departure of top Red Ant execs may make a sale difficult and a liquidation more likely.
And if the search is unsuccessful, it is likely that Red Ant will file for bankruptcy protection.
So far, a pair of majors have passed on buying the label, which has an annual overhead of just north of $10 million.
Alliance, which filed for bankruptcy court protection July 14, also received court approval Wednesday to amend its debtor-in-possession (DIP) financing agreement with Chase Manhattan Bank and is now permitted to provide interim financing to Red Ant to keep the label’s doors open during the search for a suitor.
Chase, which is owed more than $200 million by Alliance, is leading a consortium of banks helping Alliance restructure in an effort to salvage its investment in the music distribution firm.
Alliance, which has $330 million in long-term debt and revolving credit and $204 million in outstanding obligations, is said to have assets of more than $500 million.
Last week Red Ant G.M. Randy Miller ankled for a post with Sire Records Group, and promotion veep Nancy Levin is heading to MCA Records with a handful of staffers. Next to A&R, the promotion department is key to a label’s operation.
The label currently boasts around 20 acts, including the hotly contested Symposium, and asserts it will release 25 albums in 1997.
Red Ant will be on the market until Aug. 1, with final bids due by then. Red Ant’s assets will go to the highest bidder pending court approval. An August 13 court date has been set to review the terms of the sale.
“We believe that the announced sale process, combined with the new financing, is the best method for Alliance to maximize the value of this important asset.” said Teller, chairman/CEO of Alliance.
Red Ant also owns a 50 % interest in Delicious Vinyl, an urban music label whose roster includes Pharcyde, N’Dea Davenport, Brand New Heavies, Born Jamericans and Whoridas.