Crisis-ridden music company Sanctuary Group Plc. is planning to come out with a share offer worth 100 million pounds to 130 million pounds to the public later this month, according to sources. The company, Britain's largest independent record company behind music greats such as Sir Elton John and Beyonce, has a market value of just 12 million pounds, and the shares to be offered, according to market analysts, will have to be highly discounted in order to attract investors. It is also likely to wipe out the existing shareholders.
The offer may come towards the end of this month or in the new year.
Sanctuary has a 135 million-pound loan and credit arrangement with HBOS, which is said to have exhausted. HBOS had asked accountants Ernst & Young to conduct an independent viability study in order to satisfy itself that the group could continue trading.
The company is now planning to restate its last three years' accounts, which may include a write-off of about 150 million pounds. It had issued a number of profit warnings this year and said it will make a loss this year before interest, tax and one-off charges.
Sanctuary's current investors include Endemol's co-founder John de Mol, the inventor of Big Brother, with 19 per cent, its management, led by co-founder Andy Taylor, and Fidelity, Morgan Stanley, Goldman Sachs and UBS.
The company had cut some 175 jobs, which may bring in savings to the extent of 16 million pounds. Sanctuary is also implementing a management restructuring, which may see Andy Taylor, co-founder and executive chairman, giving up his role to a new non-executive director, while remaining as chief executive.
Founded in 1976 by Taylor and his friend Rod Smallwood, the company had grown rapidly through acquisitions, including Sir Elton John’s management firm and companies specialising in music catalogues, licensing and artist management. Analysts say the unstructured expansion globally, including the 2003 acquisition of Music World Entertainment, had led to its present predicament.
The company's share price closed at an all-time low of 3.25 pence on Friday.
Sanctuary had earlier been in talks with bidders like Warner Music, but the plans did not materialise.
Posted
on : Mon, 05 Dec 2005 08:25 GMT | Banking News
By : Mike Lawson
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