Bug Music, which has about $26 million in net publisher's share, is being shopped through an auction process, according to sources.

The company's proposed sale, first reported in this morning's New York Post, has already been through one round of bids, with second round offers due June 18, according to sources.

At least three bidders in the auction have made it to the second round, including Sony/ATV Music and the Warner Music Group. Other bidders are said to include Evergreen Copyrights, the Chrysalis Group and one financial firm that is new to the publishing music space, sources say.

The auction is being conducted by JP Morgan Chase on behalf of Bug Music. In September 2008, JP Morgan Chase was lead bank in a consortium that provided Bug Music with a $200 million credit facility.

According to sources, Bug Music has annual revenues of about $70 million, of which $26 million is NPS and about $14 million is overhead. That would leave about $12 million in earnings before interest, taxes, depreciation and administration. Sources say they expect Bug Music to be sold for $250 million to $300 million, which is a multiple of 10-12 times NPS. While the company's historical copyrights have solid EBIDTA, some executives familiar with the company say that Bug's more recent deals make the valuations tough, because their NPS is lower than the 10-12 NPS multiple being talked about for the overall company. Other aspects of Bug Music that made the deal tricky, according to sources, is that about 25% of its NPS comes through administration deals, which usually run for three to five years, and the company's debt, which it has accumulated through making acquisitions, sources say.

Executives at the company's named in this story either could be reached or declined to comment