Jackson Estate Steers to Next Challenge: Loan Refinancing

[Good Lets Dance]

If you are not willing to face some harsh realities! And NO it is NOT Tabloid BS...

By ETHAN SMITH

Nearly a year after Michael Jackson's death, the managers overseeing his estate have stabilized its precarious financial situation, but at least one major liability still looms: a $300 million loan due at the end of this year.

Thanks to the surge of fan interest sparked by Mr. Jackson's death, the singer generated an estimated $200 million posthumously, allowing the estate to pay off tens of millions of dollars in debt and avert foreclosure on the suburban Los Angeles complex where the singer's mother lives.

Since Mr. Jackson's death last June 25, his businesses have been run by the singer's longtime lawyer, John Branca, and a music-industry veteran and personal friend of Mr. Jackson's named John McClain. Unlike traditional executors, Messrs. Branca and McClain are aggressively managing Mr. Jackson's affairs as a going concern. The estate's primary beneficiaries are Mr. Jackson's three young children and his 80-year-old mother, Katherine, who is now the children's guardian.

Meanwhile, Mr. Jackson's absence from the equation has eliminated the chaos and out-of-control spending that reigned during his life.

Using income from past music sales and advances against future ones, music-publishing royalties, a film-rights sale and various other licensing deals, the estate has paid off nearly $200 million of the $500 million debt the singer had used to fund his extravagant spending in his final years.

The estate has collected as much as $125 million in royalties and advances from Sony Corp.'s Sony Music, which has sold 31.5 million Jackson albums since his death and plans to distribute an album of previously unreleased music around November. Corporate sibling Sony Pictures paid another $60 million for the rights to "This Is It," the documentary about rehearsals for Mr. Jackson's planned comeback concert series.

Mijac, the publishing company that controls the copyrights to songs written by Mr. Jackson, is on track to generate $35 million in royalties. The estate is set to collect $11 million in dividends from Sony/ATV Music Publishing, the joint venture with Sony Corp. that controls 251 songs by the Beatles. Television and merchandise deals could generate another $10 million, while deals to create a videogame and two Cirque du Soleil shows based on Mr. Jackson's music are set to provide additional revenue later this year. The Sony Music deal guarantees Mr. Jackson's estate significant additional cash advances in coming years, too.

However, Mr. Jackson's biggest financial obligation remains unresolved. A $300 million loan from Barclays PLC, backed by his 50% stake in SONY/ATV, matures at the end of the year. To secure the loan in 2006, Mr. Jackson appealed for help from Sony, which dispatched two executives to meet him in Dubai and negotiate terms under which it would guarantee the loan.

At the time, Mr. Jackson was in danger of defaulting on a $270 million loan held by hedge fund Fortress Investment Group LLC. As part of the agreement under which Barclays ultimately refinanced that debt, Mr. Jackson granted Sony an option to buy half of his stake in the company at any time for a fixed price of $250 million. At the time that was a generous valuation, but Sony/ATV's value has since soared to around $2 billion.

The Jackson estate and Sony have held talks about whether the company will again guarantee a refinancing of the debt backed by Mr. Jackson's Sony/ATV stake. If it won't, the estate could be forced to sell its stake in Sony/ATV at a steep discount, though that would still generate enough cash to wipe out the Barclays loan with hundreds of millions to spare. But Sony may have an incentive to reach a deal on refinancing, because buying out Mr. Jackson's estate would require it to pay hundreds of millions of dollars for an asset it already effectively controls.

All of this stands in stark contrast to the state of affairs when Mr. Jackson died. Despite being poised for what was heralded as a major comeback concert series, his finances were in shambles and he was unable to meet some of his most basic financial obligations.

Among the unpaid bills at the time of his death, Mr. Jackson had not paid $341,000 to Thomas Mesereau, the lawyer who successfully defended him against charges of child molestation in 2005. That bill and many other creditors' claims, including invoices from several other law firms, have now been paid.

The singer was also months behind on utility bills for his longtime family home in Encino, Calif., where his mother, Katherine, now lives with his three children, along with the children of two of his brothers. The Los Angeles Department of Water and Power, owed nearly $9,000, was threatening to disconnect service. AT&T Inc. was owed $1,300.

More troubling, Mr. Jackson had fallen behind on the payments for a $5 million IndyMac loan secured by the house. The property was scheduled to enter foreclosure the day after Mr. Jackson died. A nearby condominium, four months behind on loan payments and homeowners' dues, was also threatened with foreclosure, according to people familiar with the matter. Mr. Jackson's representatives have now paid off those loans.

Mr. Jackson was living in a rented mansion in Holmby Hills, a ritzy neighborhood near Bel Air, covering his sizable personal overhead with a $35 million cash advance from AEG Live, the concert promoter that was planning to stage his London concerts. That loan, too, has been repaid.

Mr. Jackson's debts were spiraling out of control in other ways, too. A loan backed by Mijac carried a crushing 16.5% interest rate, to be paid out of royalties generated by the company. When the royalty payments fell short of the towering cost of servicing the debt, any unpaid interest was piled on to the principal. As a result, by the time of his death, the Mijac loan had reached $75 million, with $11 million due in annual interest, which was several million dollars more than the catalog was generating annually. The loan has now been refinanced with an interest rate of less than 4%. And thanks to increased album sales since Mr. Jackson's death and a new deal for public-performance royalties, the catalog is generating enough cash to pay off the refinanced loan a little more than a year from now.

Looking to raise cash Mr. Jackson had planned, then scrapped, an auction of most of his personal effects from Neverland, his 2,600-acre ranch near Santa Barbara. In 2008, after he had defaulted on a $24.5 million loan backed by the ranch itself, the property was spared from foreclosure when Colony Capital LLC, a Los Angeles real-estate investment firm, bought the note and put the property into a joint venture with Mr. Jackson. That venture is structured in such a way that Colony is responsible for the ranch's overhead, maintenance and tax costs.

If the property is sold, Colony is entitled to recover its costs, including the $24.5 million is paid to take over the busted loan, with the majority of the additional proceeds going to Mr. Jackson's estate. People with knowledge of the situation say that because of logistical issues, Neverland is unlikely to be converted into a public attraction like Elvis Presley's Graceland, making a sale the most likely outcome, though it doesn't appear imminent.

http://online.wsj.com/article_email/SB1 ... DMyWj.html

[Good Lets Dance]

The Phrase that really worries me is this....

Meanwhile, Mr. Jackson's absence from the equation has eliminated the chaos and out-of-control spending that reigned during his life.

Please don't discount this at the 1st paragraph! The Havenhurst House was due for Forclosure The Day After MJ Died! There was an overdue $9,000. H20 & Elec. Bill, Plus $1,300 Phone Bill. Plus the Condo was 4 Mos. behind on payments and HOA fees.

The timing of MJ's death is certainly "Convenient" to all this! OK, Maybe the May "Anniversary Dinner" was the Family plan to Hoax MJ's death? But what if someone decided to really kill him to eliminate his $34 Million per year drain?

By the way - what happened to the "Edit' function?
l

[*Mo*]

The Phrase that really worries me is this....

Meanwhile, Mr. Jackson's absence from the equation has eliminated the chaos and out-of-control spending that reigned during his life.

Please don't discount this at the 1st paragraph! The Havenhurst House was due for Forclosure The Day After MJ Died! There was an overdue $9,000. H20 & Elec. Bill, Plus $1,300 Phone Bill. Plus the Condo was 4 Mos. behind on payments and HOA fees.

The timing of MJ's death is certainly "Convenient" to all this! OK, Maybe the May "Anniversary Dinner" was the Family plan to Hoax MJ's death? But what if someone decided to really kill him to eliminate his $34 Million per year drain?

By the way - what happened to the "Edit' function?
l

I still think that another person (IMO a bad double) is responsible for the financial chaos.  The moment Mike 'died', that person could no longer continue spending Mike's money or sign deals for him.  I have posted the different signatures several times, it's clear they differ too much from each other to be signed by one and the same person.

Regarding the Anniversary Dinner - I started a thread about it 6 weeks ago.  That was no Anniversary Dinner, as Joe and Katherine got married on November 5, 1949.  That get together took place 6 months before the actual anniversary, and Joe and Katherine separated years ago already.
viewtopic.php?f=17&t=10895&start=0&hilit=Anniversary+Dinner

[Grace]

If you are not willing to face some harsh realities! And NO it is NOT Tabloid BS...

http://online.wsj.com/article_email/SB1 ... DMyWj.html

Well, who runs that mag?
Do we know the colour?
Would we consider this is giving the truth?

http://wwwwakeupamericans-spree.blogspot.com/2007/08/owner-of-fox-news-now-owns-wall-street.html

I don't.

[truthprevails]

I still think that another person (IMO a bad double) is responsible for the financial chaos.  The moment Mike 'died', that person could no longer continue spending Mike's money or sign deals for him.  I have posted the different signatures several times, it's clear they differ too much from each other to be signed by one and the same person.

Mo, I believe there could be another explanation for the different signatures (other than a double), such as various people trying to siphon money off of MJ by making it look like Michael signed things he didn't actually sign - hence forging his signature, which was after all in the public domain.  I actually wonder, in the case of people whose signatures are public property, how the hell anyone knows for sure which contracts are signed by them and which have forged signatures?!