Access Industries has completed its acquisition of the Warner Music Group ahead of plan, thanks to compliant regulatory agencies and a resilient bond market willing to absorb $1.045 billion in a new bond offering from the company and shareholders who traded in their WMG stock of $8.25 a share.
Trading in WMG shares is currently suspended as it begins the process of being delisted from the New York Stock Exchange now that it is a privately held company. That process could take up to 10 days, a source suggests. In the meantime, even though it is now a privately held company, it will still report its financials going forward to the SEC just like a publicly traded company, thanks to the $1.045 bond offering, which is divided into three tranches: $695 million senior unsecured notes due in 2018; $200 million in senior unsecured holding company notes due 2019; and an additional $150 million in senior secured notes, according to Debtwire.
That debt is being used to redeem three unsecured debentures issued by the company while under control of the previous owners: the $465 million in 7.375% senior subordinated notes; 100 million pounds ($164 million as of the May 6 signing of the deal) in 8.125% sterling denominated senior subordinated notes; and $258 million in 9.5% senior discount notes. Those notes, all due in 2014, add up to $887 million.
Initially, Access Industries was going to use $1.045 billion in bridge loans from Credit Suisse AG and UBS Loan Finance to retire those bond offering. But instead, Access turned to the bond market immediately, which some Wall Street observers regard as a shrewd maneuver, considering the global economic uncertainty in countries such as Greece, Italy, and even the U.S. If any of those governments default on debt obligation, it could send the debt marketing reeling as liquidity dries up as it did in 2008.
With the new debt offering completed, the company now has a debt structure that consists of $850 million in two new bond offerings that are senior unsecured, and another $1.215 billion in senior secured notes, including the $150 million in new notes, which puts the company's total debt at $2.065 billion.
As part of the process of taking control of the company, the WMG amended its bylaws and certificate of corporation in filings with the SEC. In those filings, the company noted that all directors save for Edgar Bronfman Jr. resigned with the change of control at the company. While it says that going forward the board should number no fewer than two and no more five--down from the 12 directors that served under the prior ownership--the filing is devoid of such details as to who might fill those seats. One other change the filing's note is that the company will switch its fiscal year to match the calendar year from the Sept. 30 year ending that has been used since the 2004 leveraged buyout.