Warner Music Group raised $540 million through a sale of 3.75% senior secured notes offering to help fund three acquisitions worth $710 million, the company announced Wednesday (Nov. 17). WMG will use the net proceeds and cash on hand for these acquisitions of “certain music and music-related assets,” or for “general corporate purposes” if it does not close on any of the deals, according to one of its SEC filings. The company has signed non-binding letters of intent for the three deals.
WMG has signed non-binding letters of intent for the three acquisitions, which would have added additional revenue and adjusted EBITDA of $42.8 million and $34.4 million, respectively, to the company’s fiscal year ending Sept. 30, 2021. Those gains would represent a 0.8% increase to WMG’s $5.3 billion of revenue and a 3.2% increase to its $1.1 billion of adjusted EBITDA.
This isn’t the first time WMG has taken advantage of low interest rates for acquisitions and sounder financial footing. Since its June 2020 initial public offering, Warner has lowered its average cost of debt from 4% to 3.2%, and has no debt maturities until 2028, the company noted in its Nov. 15 earnings call. The same month, WMG conducted a private offering for $535 million of 3.875% senior secured notes to redeem $300 million of 5.0% notes. Two months later, WMG announced an offering for $550 million of 3.0% senior secured notes. And in November 2021, WMG sold $250 million of notes to help pay for two undisclosed acquisitions that totaled $338 million.