Money can’t buy me love, but it helps the share price

Both Warner and EMI have shelved plans to securitise their publishing catalogue, due to the problems in the credit markets, according to the Financial Times.

In each case, they would have hoped to raise cash from selling a bond that a) paid a return secured on the cash flows from the back catalogue sales and b) was secured on the ownership on the library. These funds would have allowed the groups to pay down debt and return some funds to their private equity shareholders in either dividends or share buy backs.

For Terra Firma, owners of EMI, they would have been keen to reduce the significant proportion of their funds presently invested in EMI. For Warner, they would have wanted to support their ailing share price which is languishing at $7.

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