Indie music conglom Sanctuary Group, on the verge of closing its doors, has persuaded its two key creditors — Halifax Bank of Scotland and hedge fund Highbridge — to lend it a further £12 million ($21 million), ahead of an emergency stock market fund-raising effort.
The fact that it retains the support of its bankers could be key to persuading investors to buy stock in the company. Sanctuary hopes it can raise up to $229 million from the issue of new shares.
In recent months, Sanctuary has axed 25% of the company’s workforce, and assets such as Sanctuary Mobiles — the successful mobile TV studios unit — have been sold to raise much-needed cash.
The latest move to secure a bridging loan is necessary, the company says, because the first quarter traditionally is the quietest time of the year for music companies. The company wants to make sure it has enough working capital to survive until its fund-raising rescue package kicks in.
The exact extent of Sanctuary’s financial difficulties will become known at the end of this month, when it publishes its results for 2005.
Sanctuary currently has the No. 1 album in the U.K., the Strokes’ “First Impressions of Earth.” (RCA released the album in the U.S.) Due in the near future are new albums by Sanctuary’s biggest-selling artist, Morrissey, and former Led Zeppelin front man Robert Plant.