Concord is raising $850 million through an existing asset-backed security (ABS), according to a new report from Kroll Bond Rating Agency (KBRA). These new notes are the third series of notes of a $2.6 billion ABS. The proceeds will be used to acquire approximately $217 million in assets that will contribute to the collection of ABS collateral, according to the report on Tuesday (8 October). The new notes will also redeem the $500 million 2023 series of notes from the same ABS.
Concord issued bonds totaling $1.8 billion in 2022, followed by another $500 million of the same ABS in 2023. Some of those proceeds were used to acquire Round Hill Music Royalty Fund in 2023 and Mojo Music and Media in 2022. Assets from those buyouts were placed in ABS as collateral in July, according to the KBRA report.
“We really liked the capital structure [of an ABS] this allowed us to relatively easily raise new debt for new acquisitions,” said Concord's CFO Kent Hoskins he said Bulletin board earlier this year. The 2022 ABS had a “relatively low” loan-to-value ratio in the “low 40s,” according to Hoskins, which provided a buffer for the 2023 issuance that funded the Round Hill acquisition.
With the addition of the Round Hill and Mojo Music assets, the value of the ABS-backed catalog increased from $4.2 billion to $5.1 billion, the report said. The catalog includes more than 1 million compositions, master recordings and related items from artists such as Genesis, Phil Collins, REM, Carrie Underwood and Creed and receives 65% of its revenue from the US Another 14% of revenue comes from Europe and 9% come from the UK Frontline titles represent just 1.5% of titles.
Many music companies have raised capital through an ABS, which allows the publisher to borrow money against the revenue generated by music assets used as collateral in the transaction. In 2022, Chord, a business of KKR Credit Advisors and Dundee Partners, did a $733 million ABS and Hipgnosis Song Management raised $222 million with one. Earlier this year, HarbourView Equity Partners and Kobalt put together $500 million and $267 million ABS deals, respectively. Sources said Bulletin board that many more unlisted securitizations have been closed in recent years.
