HOLLYWOOD — In the latest in a series of bond issues backed by an entertainment firm’s assets, Charles Koppelman’s CAK Universal Credit Corp. has structured a $29 million loan for performing rights org Sesac.
The bonds, billed as the music industry’s first triple-A securitization, will be backed by a share of the Nashville-based society’s revenues generated by its portfolio of royalty payments.
The financing was provided on a 10-year, fixed-rate basis and will be used to fuel Sesac’s expansion.
The performing rights society has been challenging the status quo established by industry titans ASCAP and BMI, offering artists higher royalty rates and upfront payments. It is the only for-profit performing rights society.
“Sesac chairman Stephen Swid clearly understands the tremendous potential that asset-backed financing has for fueling corporate growth,” Koppelman said.
“His transaction demonstrates to the music industry that asset-backed financing, if structured creatively, can be obtained on extremely attractive terms,” added UCC prexy Robert D’ Loren, who structured the deal.
Swid said the money will help Sesac expand its repertoire and integrate watermarking technology into its tunes in order to ensure accurate performance royalty payments.
Formed in 1930 to protect the copyrights of domestic and foreign music publishers and creators, Sesac represents more than 3,200 clients.
The Sesac deal is the latest twist in the royalty-backed bond industry, which was spawned in 1995 by the structuring of bonds backed by David Bowie’s future recording royalties.
Recent deals have included bonds backed by James Brown’s catalog (orchestrated by David Pullman, the architect of the industry) and TVT Records’ February pact with Koppelman to issue bonds backed by its repertoire and portfolio of labels.
The Sesac deal also reunites Koppelman with Swid. The pair formed SBK Music Publishing, which was later sold to EMI.