Sanctuary in £130 million Rescue
Such a large-scale fundraising exercise is expected to be deeply discounted and will almost wipe out the value of remaining shareholders' interests. Investors include John de Mol, the founder of Big Brother producer Endemol.As part of the financial restructuring, the company is expected to agree to some management changes. In particular, Andy Taylor, the co-founder who moved to become executive chairman two years ago, is expected to cede his role of chairman to a new non-executive director. He will remain as chief executive. Michael Miller, the company's long-serving finance director, is also expected to move aside although he is not expected to leave the company.
As part of the proposed rescue package, Sanctuary's accounts are expected to be restated with an exceptional write-off of up to £150m. The refinancing, which the company's advisers hope to finalise early in the new year, is expected to be managed by Evolution, the corporate finance house.
Sanctuary has endured a dreadful year with a string of profit warnings starting in January. Over the summer, Sanctuary opened its books to several potential bidders, including Warner Music and several private equity groups. No offer materialised as the possible predators walked away after carrying out a preliminary study of the group's accounts.
Sanctuary executives are understood to be confident that the company can continue as a going concern, however, with or without the rescue financing. They have denied the suggestion that the share issue is a last-ditch attempt to survive.
The company, which a year ago was riding high on the successful comeback of singer Morrissey and a new deal with US singer Beyonce, was founded by Mr Taylor and Rod Smallwood in 1976. Many analysts blame its recent woes to over-ambitious expansion, in particular the 2003 purchase of Music World Entertainment, the US urban music management company owned by the father of Beyonce, Mathew Knowles. Although the singer performed well for the group, other artists such as Earth, Wind and Fire and De la Soul did not.
The company has already shed 175 jobs, a quarter of its workforce, in October.
1 Comment
Oh no, not John de Mol, the biggest money eating greedy bastard in showbizz, only to be topped by $haron...
oh well, let's hope that sanctuary will survive this crisis...