Sony proceeds with plan to sell music publishing unit: WSJ

[Tygger]

Krizkil, the value of NL for tax purposes is not a reflection of its market value (see my comment to Ivy below). It is incorrect to believe NL is not valuable because of the figure the Estate and the IRS arrived at.

NL and Sony/ATV are considered major assets. MJ One is not an asset. As per one of the several articles Greenburg posted today in praise of Michael’s posthumous earnings, the only assets listed below are the two catalogs; MiJac and Sony/ATV. I wish he included percentages so readers could see how much of the earnings each driver contributed.

This year Jackson again leads our Halloween-spooky list of the 13 top-earning dead celebrities, pulling in $115 million over the past year. The main drivers of his afterlife fortune: Vegas Cirque du Soleil show Michael Jackson One, the Mijac Music catalogue, recorded music sales and half of the Sony /ATV publishing empire.
http://www.forbes.com/sites/zackoma...he-13-top-earning-dead-celebrities-of-2015/2/

Estate tax valued Neverland at 0. (meaning market value minus liabilities). IRS tax valued it at $1.7 Million

Are you sure it was market value? The asking price is $100M. Seems more assessment value minus liabilities.

I wish he could pull this one off, but I don't see any comparison with the ATV deal. In 1984 Michael was able to cash out $ 50M. There is no way the Estate can fork out $ 1B, especially still having 100's of millions of unpaid debts.

I agree with you. I prefer to see this asset (as well as NL) remain with the beneficiaries. However; in this instance, I cannot see an investor(s) assisting the Estate to purchase Sony’s 50% when there is a lien on the Estate’s 50%.

I do see a comparison to the Sony/ATV deal but, it is not the original catalog purchase. Ironically, it is the current NL deal.

For Branca to devise a consortium, he will have to find an investor(s) who is willing to purchase Sony’s 50% outright while allowing the Estate to maintain its 50%.

The NL deal is beneficial to Colony as it will recoup its investment, maintenance costs, fees, etc. because the purpose of the NL deal is to sell; they are not particular to whom NL is sold to. The NL deal is beneficial to Michael and now his Estate as they have the opportunity to retain the asset by purchasing Colony’s 50% and refunding to Colony their maintenance costs, fees, etc. (ROFO rights) or collecting their portion of the sale proceeds if NL is purchased by another after they decide they do not want to match another party(ies) offer (ROFR rights).

Greenburg, referred to this situation with Sony/ATV when he stated the below:

But Jackson could be in line for an even bigger payday: Sony is exploring a sale of its half of Sony/ATV, the catalogue it shares with the singer’s estate. Though the Jackson estate has stated its intention to buy out Sony, a big spender could theoretically come in and buy out both sides.
http://www.forbes.com/sites/zackoma...he-13-top-earning-dead-celebrities-of-2015/2/

Therefore, a potential investor(s) or a consortium that some here believe in will take the role of Colony in the NL scenario. This potential investor(s) will not have the advantages that Colony has with the NL deal unless the sole purpose of their investment relationship with Estate is to eventually own the catalog outright. This means the Estate will sell their half to the consortium instead of Sony or another third party.

I see no outcome where the Estate owns the catalog outright because they cannot afford it. I do not believe there is any consortium that will invests several millions to purchase Sony’s 50% so the Estate can be in debt for more than half of the catalog. Tis illogical.

I believe Branca knows this as well and I believe he taking a public-friendly (apologies, I cannot think of a better phrase) stance. Tis better in public to portray a view that he is hopefully in retaining the asset as there may be backlash if he had stated the Estate would sell. The Estate will most likely sell its half but, if the public believes the Estate did their best to retain this asset - despite no true intention to do so - it will minimize backlash.

 

[Tygger]

That deal MJ signed is moronic, idiotic, awful and I don't know what else. He always signed such stupid deals. Why would they have to sell their half if there is a bidder. Why Sony can't just sell their half and leave Estate's part alone if they don't want to sell. Of course Branca can't come up with billion $ in a month. My guess is that they'll have to sell it and all fanatics will attack Branca and the Estate and sadly MJ will turn in his grave because that's the one thing he was always frightened.

No. The deal Michael signed allowed his Estate to be in a very fortunate position regarding the pending sale of both NL and Sony/ATV. Please see below for more detail:

Quite confusing like I said.

It can be. Allow me to clarify below:

The buy-sell is one of the most important agreements, if not the most important agreement, between investors because it dictates agreed upon scenarios for the termination of the investing relationship. Allowing a current investor(s) to purchase the selling investor’s shares before another allows the investment to stay “in house” so to speak (ROFO). Allowing a current investor(s) to match another buyer’s offer continually allows the current investor(s) to retain the investment and again the investment may remain “in house” (ROFR). A ROFR offer may be more attractive than a ROFO offer in financial terms.

The partnership between Sony and the Estate for Sony/ATV has most likely not changed since its inception as the partnership between Michael and Colony for NL did not change. Changing debt repayment terms does not affect the original partnership terms; those are separate. In both cases, these contracts gave Michael very beneficial rights to retain an asset which we know was his preference. His Estate is in the position to choose if they will retain an asset or not which empowers them. Thus a contract Michael signed in his lifetime empowered his estate because it allows the executors to make a decision about retaining these assets (Sony/ATV and NL). Without ROFO and ROFR, they would be in a weakened position and they could accurately state they have their hands tied because they would not be granted the opportunity (afforded a right) to make a decision that is beneficial to the estate in their view.

So such clause wouldn't bring anything to the table for MJ but would mean Sony could have bought/can buy MJ's share anytime they want.

No. Michael would have to trigger an exit clause as Sony is now doing. Only then would Sony be able to purchase Michael’s portion. Michael preferred to retain his assets. Michael and his Estate have never triggered the exit clause. The Estate has been aware since late 2013 that Sony intended to trigger the exit clause.

Like I said before, the leaked emails showed Sony wanted to sell their share so I can't imagine why they would try to buy MJ's share if their goal is to sell. That's another thing that doesn't make much sense to me.

Sony cannot purchase Michael’s share unless the Estate triggers the exit clause which they have not. We have confirmation from Lynton’s email that Sony indeed triggered the exit clause so the Estate can purchase Sony’s share. The Estate is not in the position to do so however; they are in the position to decide if they will retain the asset (secure financing to purchase) or sell their portion to another. They can also trigger the exit clause while Sony is the current co-owner of Sony/ATV or trigger the exit clause after a potential buyer is secured. If the former, it does not mean Sony will purchase the Estate's portion at all. They will simply not exercise the ROFO/ROFR rights like the Estate is doing with NL and will most likely do here with Sony/ATV.

Adding:

I can only hope that Branca will be involved with the sale so they can get a good partner. (If it works the way we think it does).

No. It would be a conflict of interest for an executor to profit from the sale of an estate asset. As per the Sony leaked emails, Sony did consider Branca to be qualified however; they could not figure how to surpass the conflict hiring him for this position would pose.

 

[Billie Jean 78]

But why would the Estate even think of selling the catalog?? Surely it's a money making machine and on the long run they will have repaid the Estate's debts and the Estates beneficiaries will only profit from owning the catalog from that moment on. If they sell it, they will repay the debts in an instant, yes, but any future profits for Beneficiaries will be lost. I do not see how selling could be a good idea.

Not even mentioning that this would mean doing something that Michael feared for his life. It's not like NL because yes, NL costs money, but the catalog makes money.

Another question regarding the sale - Does Prince have anything to say about the sale of the catalog? I'm asking because he is 18 now, hasn't he gotten some controll over the Estate by now?

 

[Allusio]

I don't really understand where is the idea of the Estate selling their part of the catalogue coming from?!
Imo, they can think up something to buy or just to work along with new partner or partners. Well, time will tell. But we sure need to wait and see the results before making any conclusions on what is silly and what is not, we so far know no details or even basic plan from any parties.
Somehow as for business wise decisions I trust executors.

 

[ivy]

Are you sure it was market value? The asking price is $100M. Seems more assessment value minus liabilities.

tax value is market value minus liabilities. That being said we don't know exactly what they used for market value or what they used for liabilities. Also remember for estate tax purposes they are doing the valuation in 2009. the assessment value was around $30 Million. Probably they used something more than that but not $100 Million.

 

[krikzil]

Krizkil, the value of NL for tax purposes is not a reflection of its market value (see my comment to Ivy below). It is incorrect to believe NL is not valuable because of the figure the Estate and the IRS arrived at.

NL and Sony/ATV are considered major assets. MJ One is not an asset. As per one of the several articles Greenburg posted today in praise of Michael’s posthumous earnings, the only assets listed below are the two catalogs; MiJac and Sony/ATV. I wish he included percentages so readers could see how much of the earnings each driver contributed

Tax vs market value -- LOL, duh. I never said NL wasn't valuable. It's just not a "major asset" for the Estate if you first have to buy it back from Colony.

Personally, I'm not going to underestimate Branca with regard to a Sony buyout and I'm not convinced a forced sale of the Estate's portion is a foregone conclusion either. (Greenburg offered this scenario as well.) I see pros and cons with all scenarios so I'm not completely invested in any one in particular although the idea of a new partner for Sony's 50% does give me pause.

And categorize MJOne however you wish; as Greenburg notes -- it's a major driver for the Estate's bottom line. (Revenues were $100M+ its first year, for example.). Given the 50/50 split, I'd be interested to have a breakdown of profit after production costs, as well. We know what ATV is generating.

tax value is market value minus liabilities. That being said we don't know exactly what they used for market value or what they used for liabilities. Also remember for estate tax purposes they are doing the valuation in 2009. the assessment value was around $30 Million. Probably they used something more than that but not $100 Million.

I have to wonder how they came up with that number. Of course it would be great if NL fetched that amount so the Estate might see some $ but it just seems unrealistic. I'd love to know exactly how much Colony's total is at this point too. (Probably would explain why they shot for the moon with that listing price.)

 

[Tygger]

But why would the Estate even think of selling the catalog?? Surely it's a money making machine and on the long run they will have repaid the Estate's debts and the Estates beneficiaries will only profit from owning the catalog from that moment on. If they sell it, they will repay the debts in an instant, yes, but any future profits for Beneficiaries will be lost. I do not see how selling could be a good idea.

Sony/Estate are business partners for Michael’s masters and investment partners for Sony/ATV. The business relationship helped the investment relationship which included favorable debt repayment terms. There is no true logic to the Estate investing with another partner who may change the debt repayment terms unfavorably.

As you said, the asset pays for itself. However, the Estate is in no position to afford to purchase Sony’s 50%. As they have debt on their half, they will most likely sell it. It is truly unfortunate to the beneficiaries because they will potentially lose the two largest assets Michael fought to retain, NL and the Sony/ATV catalog.

Not even mentioning that this would mean doing something that Michael feared for his life. It's not like NL because yes, NL costs money, but the catalog makes money.

I beg to differ regarding NL because the equity outweighs costs but, I understand your point.

Another question regarding the sale - Does Prince have anything to say about the sale of the catalog? I'm asking because he is 18 now, hasn't he gotten some controll over the Estate by now?

No and he has no say on the sale of any asset.


Ivy, seems like assessment value and not market. If you have access to the debt figure on NL in 2009, it is most likely in the $20M range which would allow the Estate to arrive at $0 equity and IRS at less than $2M equity.


Krizkil, NL is a major asset as per the traditional definition regardless of the Estate refusing to purchase Colony’s 50%. My categorization of MJOne as a non-asset is a fact, not my view. There will be no forced sale of the Estate’s 50% but, it will most likely be sold by choice. Tis my view Branca is taking a public-friendly stance despite full knowledge the Estate's 50% will most likely be sold. He is attempting to manage the pending backlash that was poorly managed with the announcement of the sale of NL.

I am interested in reading scenarios those who support the consortium ideal have. I would like to know how the Estate retaining their 50% that holds debt would be attractive to consortium investors.

 

[Koopa Troopa]

So much buzzkill. I'll hang on to business genius Branca's statement until anything else is confirmed. Said Branca: “We intend to buy the company.”

 

[Tygger]

So much buzzkill. I'll hang on to business genius Branca's statement until anything else is confirmed. Said Branca: “We intend to buy the company.”

Do you remember this interview with Branca and CBS 60 Minutes? I believe you are aware NL is being sold.

Lara Logan: Tell me about the music catalog, the publishing catalog that you advised Michael to buy.

John Branca: We started with the Sly & the Family Stone catalog, we bought some rock classics, People Get Ready by Curtis Mayfield. Dion & The Belmonts, Runaround Sue, The Wanderer. When a Man Loves a Woman. Great Balls of Fire. Shake, Rattle, and Roll. But then one day I got the call that the Beatles catalog was for sale. It was called ATV Music. And it was as if we had hit the mother lode.

Lara Logan: And you paid?

John Branca: The price was $47.5 million. And we later merged it with Sony's music publishing company to create one of the biggest publishers in the world, Sony ATV Music, that the estate, to this day, owns 50 percent of.

Lara Logan: And so how much is that worth today?

John Branca: I -- I wouldn't want to speculate about what it's worth, but it --

Lara Logan: Come on, John. You didn't --

John Branca: It's --

Lara Logan: You didn't make all this money in this town without knowing what your investments are worth.

John Branca: Well, it would be speculation at this point.

Lara Logan: It's estimated to be worth, like, a billion dollars.

John Branca: Michael's half?

Lara Logan: Yes.

John Branca: Well, you know, you never really know what something's worth until you go to sell it. And we are not sellers. We are not gonna sell any assets.
http://www.cbsnews.com/news/michael-jacksons-lucrative-legacy-08-09-2013/

 

[Soundmind]

Sony/Estate are business partners for Michael’s masters and investment partners for Sony/ATV. The business relationship helped the investment relationship which included favorable debt repayment terms. There is no true logic to the Estate investing with another partner who may change the debt repayment terms unfavorably.

As you said, the asset pays for itself. However, the Estate is in no position to afford to purchase Sony’s 50%. As they have debt on their half, they will most likely sell it. It is truly unfortunate to the beneficiaries because they will potentially lose the two largest assets Michael fought to retain, NL and the Sony/ATV catalog.



I beg to differ regarding NL because the equity outweighs costs but, I understand your point.



No and he has no say on the sale of any asset.


Ivy, seems like assessment value and not market. If you have access to the debt figure on NL in 2009, it is most likely in the $20M range which would allow the Estate to arrive at $0 equity and IRS at less than $2M equity.


Krizkil, NL is a major asset as per the traditional definition regardless of the Estate refusing to purchase Colony’s 50%. My categorization of MJOne as a non-asset is a fact, not my view. There will be no forced sale of the Estate’s 50% but, it will most likely be sold by choice. Tis my view Branca is taking a public-friendly stance despite full knowledge the Estate's 50% will most likely be sold. He is attempting to manage the pending backlash that was poorly managed with the announcement of the sale of NL.

I am interested in reading scenarios those who support the consortium ideal have. I would like to know how the Estate retaining their 50% that holds debt would be attractive to consortium investors.

oh really! Branca did not bother with the fans reaction when he announced that he is selling Neverland. No one is talking about selling the catalog but those who can't phantom the idea of mj owning it alone and the anti Branca pro conspiracy idiots. The debtors are willing to finance the estate's deals because MJ's earnings are DOUBLE those of someone as successful as Beyoncé, his assets are in a much better financial situation now. The estate got a loan of $ 220 million to finance their share in BMI deal. That speaks volume about the trust the banks have in the estate now.

 

[Tygger]

oh really! Branca did not bother with the fans reaction when he announced that he is selling Neverland.

Who was audience for the Estate's two statements regarding NL that was posted on this forum?

No one is talking about selling the catalog but those who can't phantom the idea of mj owning it alone and the anti Branca pro conspiracy idiots.

I do not believe the Estate considers Greenburg to be any of the above labels you mentioned.

But Jackson could be in line for an even bigger payday: Sony is exploring a sale of its half of Sony/ATV, the catalogue it shares with the singer’s estate. Though the Jackson estate has stated its intention to buy out Sony, a big spender could theoretically come in and buy out both sides.
http://www.forbes.com/sites/zackoma...he-13-top-earning-dead-celebrities-of-2015/2/

The debtors are willing to finance the estate's deals because MJ's earnings are DOUBLE those of someone as successful as Beyoncé, his assets are in a much better financial situation now. The estate got a loan of $ 220 million to finance their share in BMI deal. That speaks volume about the trust the banks have in the estate now.

Care to post details about this $220M loan?

 

[ivy]

I have to wonder how they came up with that number. Of course it would be great if NL fetched that amount so the Estate might see some $ but it just seems unrealistic. I'd love to know exactly how much Colony's total is at this point too. (Probably would explain why they shot for the moon with that listing price.)

I think Colony is around $50 Million at least by now - mainly due to the interest. I did some hypothetical calculations and there was a Forbes article saying around $50 Million too. I too think $100 Million asking price is a little too high. Before MJ died there was an article in which they said it can fetch $50 to $70 Million. Perhaps that's more realistic.

Ivy, seems like assessment value and not market. If you have access to the debt figure on NL in 2009, it is most likely in the $20M range which would allow the Estate to arrive at $0 equity and IRS at less than $2M equity.

they could have used the assessment value but I'm not sure what you qualify as market value. $100 Million isn't market value, it's asking price. If/when it sells whatever it fetch would be the market value for 2015/16. Then you need to consider how much will it fetch if it was sold in 2009 when MJ was alive to determine the market value for 2009. It's not an exact science.

As for the debt figure in 2009, I'm pretty sure it was around or even over $30 Million. The original loan was $23 Million, Colony was guaranteed $3.3 Million fee, Barrack said they spent $3 Million on renovations in an interview before MJ's death. Added all together it makes $29.3 Million add to that interest at libor plus 14%, it would easily be over $30 Million in 2009.

I am interested in reading scenarios those who support the consortium ideal have. I would like to know how the Estate retaining their 50% that holds debt would be attractive to consortium investors.

how is estate's debt relevant to consortium? Consortium is gonna buy Sony's share and get the profits from that share. Estate's debt and how Estate uses it's profits to pay the debts would be irrelevant to them. What's more important to ask is if the people will see catalog business as a good investment. The leaked documents (and common knowledge) shows music industry is in decline, this also affects catalog revenues. Plus Sony/ATV has gross earnings of $600 Million but only $100 M operating income due to acquisition loans and only $23 Million per partner guaranteed.

Do you remember this interview with Branca and CBS 60 Minutes? I believe you are aware NL is being sold.

I don't see the relevance? Estate isn't selling Neverland, Colony is. The only thing Estate doing is not buying it back. You can't really blame them for Colony's decision to sell.

edited to add

Care to post details about this $220M loan?

I'm pretty sure Soundmind is referring to Estate's (almost) 10% share at EMI versus the $2.2 Billion amount spent to acquire it. That means Estate had to put in $220 Million for that purchase. That means they either paid that upfront (unlikely IMO) or got a loan - which they are probably paying back from EMI profits.

 

[shadowgamesmedia]

so what does this mean for the future of the copyrights ??

 

[Tygger]

they could have used the assessment value but I'm not sure what you qualify as market value. $100 Million isn't market value, it's asking price. If/when it sells whatever it fetch would be the market value for 2015/16. Then you need to consider how much will it fetch if it was sold in 2009 when MJ was alive to determine the market value for 2009. It's not an exact science.

As for the debt figure in 2009, I'm pretty sure it was around or even over $30 Million. The original loan was $23 Million, Colony was guaranteed $3.3 Million fee, Barrack said they spent $3 Million on renovations in an interview before MJ's death. Added all together it makes $29.3 Million add to that interest at libor plus 14%, it would easily be over $30 Million in 2009.

Assessment value for NL hovered around $30M each year and has not lost value. I am inclined to believe the assessment value may have been used. It is possible however that assessment and market were similar in 2009. I believe I already stated the $100M was not market value but an asking price so I have no confusion there.

how is estate's debt relevant to consortium? Consortium is gonna buy Sony's share and get the profits from that share. Estate's debt and how Estate uses it's profits to pay the debts would be irrelevant to them.

No. A consortium would be developed so the Estate can own the catalog 100%. That has been the reasoning in this thread. I have not read a statement where Branca prefers the Estate retain 50% and another own Sony's 50% unless I missed an article. Those supporting a consortium will have to understand that potential investors will not find a deal attractive where they invest monies only for the Estate's gain.

I don't see the relevance? Estate isn't selling Neverland, Colony is. The only thing Estate doing is not buying it back. You can't really blame them for Colony's decision to sell.

No and you continually misrepresent the NL deal for your reasons. The Estate owns NL 50% and they have to purposefully decide to not exercise their ROFO rights and THAT is why NL is for sale to another now. The Estate can still purchase NL over another due to their ROFR.

There is NO way for NL to be sold without the Estate's agreement that it be sold.​

I'm pretty sure Soundmind is referring to Estate's 10% share at EMI versus the $2.2 Billion amount spent to acquire it. That means Estate had to put in $220 Million for that purchase. That means they either paid that upfront or got a loan - which they are probably paying back from EMI profits.

That is how I understood it. The Estate does not have $220M to spare. Any financier was impressed with an asset that pays itself as the EMI catalog and the Sony/ATV catalog does.

 

[ivy]

No. A consortium would be developed so the Estate can own the catalog 100%. That has been the reasoning in this thread. I have not read a statement where Branca prefers the Estate retain 50% and another own Sony's 50% unless I missed an article. Those supporting a consortium will have to understand that potential investors will not find a deal attractive where they invest monies only for the Estate's gain.

we disagree about what is a consortium. Estate owning 100% of the catalog isn't a consortium but a loan in my perspective.

Example of a consortium is how Sony/ATV bought EMI. Sony put in 29%, Estate put 9% and 62% of the investment was put by other parties. I personally said similar thing is possible such as Estate puts the 10% needed to buy Sony's share and the other parties put in the needed money for the 90%. And the end result be Estate owning 55% of the whole catalog while other investors own 45% of it.

No and you continually misrepresent the NL deal for your reasons. The Estate owns NL 50% and they have to purposefully decide to not exercise their ROFO rights and THAT is why NL is for sale to another now. The Estate can still purchase NL over another due to their ROFR. There is NO way for NL to be sold without the Estate's agreement that it be sold.

Now I'm not sure if you even read the Neverland deal. It's very clear that sale decision is Colony's only and they didn't need MJ's approval. Estate doesn't own 50%, you can't find that anywhere on the deal. I already said Estate didn't exercise the right of first offer aka decided not to buy it back. Perhaps we are talking semantics here. You might see Estate not exercising ROFO as consent to sale and it's fine. I don't share that opinion. I see it as Colony's decision to sell and Estate's decision to not to buy back.

And I appreciate if you watch your tone especially accusatory approach. Remember people are entitled to have opinions, even opinions different than yours.

 

[krikzil]

As you said, the asset pays for itself. However, the Estate is in no position to afford to purchase Sony’s 50%. As they have debt on their half, they will most likely sell it. It is truly unfortunate to the beneficiaries because they will potentially lose the two largest assets Michael fought to retain, NL and the Sony/ATV catalog.

Except MJ didn't fight to retain NL. That's your narrative but the facts don't support it as has been pointed out previously: The foreclosure and Trustee auction. The LLC with Colony where the purpose was to sell NL within a year. The LV house he planned to purchase.

Now I do agree he didn't want to sell the catalog. I just don't think it's a foregone conclusion that the Estate will sell.

Krizkil, NL is a major asset as per the traditional definition regardless of the Estate refusing to purchase Colony’s 50%.

Yes, for Colony. The Estate doesn't own 50%. It has an 87.5% undivided membership interest in the LLC which is a very different thing.

 

[krikzil]

I think Colony is around $50 Million at least by now - mainly due to the interest. I did some hypothetical calculations and there was a Forbes article saying around $50 Million too. I too think $100 Million asking price is a little too high. Before MJ died there was an article in which they said it can fetch $50 to $70 Million. Perhaps that's more realistic.

Thanks. Yes, that seems more realistic.

 

[Tygger]

we disagree about what is a consortium. Estate owning 100% of the catalog isn't a consortium but a loan in my perspective.

Branca stated: “we intend to buy the company.” Branca did not state he wanted controlling interest in Sony/ATV which is what you are suggesting. From your scenario, where the Estate devises a consortium so it can have controlling interest, it is still unclear why such a deal would be attractive to a consortium of investors if the Estate is the true benefactor. Why would a consortium assist the Estate in increasing its shares when it has debt on its current shares?

And I appreciate if you watch your tone especially accusatory approach. Remember people are entitled to have opinions, even opinions different than yours.

I would appreciate if you do the same.

I read the contract as did you. It seems the crux of your issue is that believe the contract is not beneficial to Michael and in turn his Estate as per their statements. Tis fine however; it does not change the facts that the contract contains certain rights which do indeed benefit Michael and in turn his Estate.

Do you remember your statement on undivided interest in the NL thread? Albeit a bit rude in tone, I have reposted below:

and now please go and research undivided interest and you'll see majority percentage doesn't give "controlling" to anyone. or do you need my help? In short in a undivided interest regardless of the percentages each owner has equal rights on the property.

Based on media reports, we know for fact that the rights that can be exercised at the termination of the NL investment relationship can also be exercised in the termination of the Sony/ATV investment relationship. If you believe the NL deal is somehow disadvantageous to the Estate, are you willing to state the same about Sony/ATV which Branca was behind?

Krizkil, your narrative of Michael conflicts with his reality which allows his Estate to list NL as an asset. Whether you believe he fought to retain it or not, he indeed retained it. As for the 50%, see Ivy's comment on undivided interest above.

 

[ivy]

Branca stated: “we intend to buy the company.”

I don't think it needs to mean 100%. Sony and MJ Estate bought EMI with other investors. So Estate can buy the company with other investors. We'll have to disagree.

From your scenario, where the Estate devises a consortium so it can have controlling interest, it is still unclear why such a deal would be attractive to a consortium of investors if the Estate is the true benefactor.

According to your logic then Estate shouldn't have spent any money on EMI because other people had the majority share. An investment is an investment. If you think catalogs are a good business than you would see why would anyone would want to own a share even though it might be minority share.

Do you remember your statement on undivided interest in the NL thread?

I don't remember when I posted that but by equal rights I meant equal using rights - not a 50%-50% divide or ownership. In other words the undivided interest gave Colony the right to use the WHOLE property despite it had 12.5% interest. Plus now that we know the contract the undivided interest alone cannot be enough to describe the situation. We now know Colony controlled the decision to sell, we now know colony is the managing partner and MJ (and Estate) is just consultants etc. and so on. So sorry I strongly disagree that Neverland is 50-50%. Clearly Colony has more control, more power and more equity on Neverland and Estate's control/power/ rights are limited to ROFO and ROFR. again this is something we'll have to agree to disagree.

Based on media reports, we know for fact that the rights that can be exercised at the termination of the NL investment relationship can also be exercised in the termination of the Sony/ATV investment relationship. If you believe the NL deal is somehow disadvantageous to the Estate, are you willing to state the same about Sony/ATV which Branca was behind?

By now you should realize that you are one of the few people who think Neverland situation is an investment and many people disagree with that. On the other than it should also be clear that catalog is a revenue generating business. So no, I don't think an apple is the same thing as an orange.

Plus my comments about Neverland deal wasn't limited to ROFO or ROFR. There were several other things in that deal that wasn't much to MJ's advantage. I repeatedly mention ROFO and ROFR (and let's be honest if it wasn't for me posting about it & document no one would have known about it). Even ROFO and ROFR gives MJ (and Estate) to buy back Neverland - hence a benefit- I wouldn't classify the overall contract as advantageous. Colony being able to make decisions including a sale decision without MJ's consent, libor +14 percent interest and the 10% to Tohme etc are all quite disadvantageous in my book.

 

[Tygger]

According to your logic then Estate shouldn't have spent any money on EMI because other people had the majority share. An investment is an investment. If you think catalogs are a good business than you would see why would anyone would want to own a share even though it might be minority share.

No need to twist my logic. What you are missing is the Estate has debt on their 50%. That is not akin to the EMI deal. You are suggesting others will invest to help the Estate increase their share despite having debt on their current share.

We now know Colony controlled the decision to sell, we now know colony is the managing partner and MJ (and Estate) is just consultants etc. and so on. So sorry I strongly disagree that Neverland is 50-50%. Clearly Colony has more control, more power and more equity on Neverland and Estate's control/power/ rights are limited to ROFO and ROFR. again this is something we'll have to agree to disagree.

Again, you are twisting the contract to seem disadvantageous because the Estate’s statements suggested it was. Michael was not just a consultant to the sale; he was empowered to decide if he would retain NL or not which is what his Estate was allowed to do. Colony does not have more control as per your own admission. Please remember it was the Estate’s inaction for five years that allowed Colony’s equity to increase.

Allow me another question: if Estate/Colony would have been granted commercial zoning for NL and the Estate decided to exercise their ROFO rights, would you still believe the NL deal was disadvantageous for the Estate?

If you believe the NL deal is somehow disadvantageous to the Estate, are you willing to state the same about Sony/ATV which Branca was behind?

You did not answer the question.

I repeatedly mention ROFO and ROFR (and let's be honest if it wasn't for me posting about it & document no one would have known about it).

By, the way, you did mention Michael had ROFR rights however; it was me who stated he had ROFO rights as well. With ROFO, it meant Colony could not initiate a sale without presenting the offer to Michael and therefore his Estate FIRST. The Estate did not exercise ROFO and that is why NL is being offered at $100M to the public. Again, Colony is NOT able to accept a sale offer without presenting that offer to the Estate FIRST.

I have said several times in this thread that Michael had the right of first refusal. After re-reading the contract, I see Michael indeed had right of first refusal (ROFR) AND right of first offer (ROFO). Both of these rights show this contract was not as horrific as many have suggested, including Michael's Estate.

Sony/ATV includes these same rights. Are you willing to state Sony/ATV is somehow as disadvantageous as the NL deal despite Branca being behind Sony/ATV?

 

[ivy]

No need to twist my logic. What you are missing is the Estate has debt on their 50%. That is not akin to the EMI deal. You are suggesting others will invest to help the Estate increase their share despite having debt on their current share.

as I already mentioned, it's irrelevant. first of all in my scenario Estate is investing their own money to increase their share. other people are using their own money to get their share.

Again, you are twisting the contract to seem disadvantageous because the Estate’s statements suggested it was.

nothing to do with what Estate said and it's not "twisting", it is my opinion. You'll have the accept that I have a different opinion than you. No accusatory claim will make me change it.

Colony does not have more control as per your own admission.

I said the opposite.

Please remember it was the Estate’s inaction for five years that allowed Colony’s equity to increase.

Not quite. It wasn't a loan to payback. Plus I disagree in regard to "inaction". The reason it took some time was probably due to trying to find options.

Allow me another question: if Estate/Colony would have been granted commercial zoning for NL and the Estate decided to exercise their ROFO rights, would you still believe the NL deal was disadvantageous for the Estate?

You are limiting yourself to ROFO and ROFR and I can't be any clearer that I base my opinion on more than just that. If they had commercial zoning, it would have become a revenue generating asset hence justify a buy back decision/ exercise ROFO. However that alone doesn't solve other issues with the contract. 14%+ interest is still to high, 10% for Tohme is too high, Colony being managing partner when MJ/EState being a consultant isn't equal. Even only having 5 days to match any offer isn't that good. You think ROFO and ROFR makes it okay, I think other elements are still problematic. I'm not going to repeat myself again. So let's agree to disagree.

You did not answer the question.

I did.

 

[Tygger]

as I already mentioned, it's irrelevant. first of all in my scenario Estate is investing their own money to increase their share. other people are using their own money to get their share.

What monies? They will have to find a financier as they did with EMI. A financier may not be so keen to support the Estate increasing their debt past their 50%.

You did not the original question; no worries. You seem to have realized ROFO/ROFR was advantageous to Michael and his Estate in the NL deal. If the Estate had any issues with the other terms, they could have renegotiated the terms with their joint venture partner, Colony as they did with their partner Sony regarding debt repayment terms. If these rights are advantageous in the NL deal, I am sure you also believe it to be advantageous for Sony/ATV.

 

[ivy]

You seem to have realized ROFO/ROFR was advantageous to Michael and his Estate in the NL deal.

Not that advantageous. and I was trying to say even though we agree it's a good thing there are other problems.

Plus you seem to limit yourself to Estate while I look this from MJ perspective as well. The deal was to sell it in a year - by November 2009. The deal gave MJ the right to buy it back or match the offers but if MJ did not have the money to buy it back or match the offer that was a pretty much an empty right. (I think by November 2009 MJ wouldn't have any money to buy back Neverland due to TII production costs he had to pay back first before seeing any profit).

Let's try it with an example. You and I sign an agreement about one of a kind memorabilia I own. I give you the ROFO and ROFR rights. I decide to sell it for $50,000 but you don't have the money. So despite you have ROFO and ROFR rights and despite you want to buy the item, you can't. Now tell me was the original ROFO/ROFR was advantageous for you or it didn't mean much as you didn't have the money to exercise those rights?

But we discussed this all before so how about I don't repeat myself especially on a thread NOT about Neverland and you reread the old discussion if you need a refresher. I'm pretty sure everyone got the point both of us trying to make.

 

[krikzil]

Krizkil, your narrative of Michael conflicts with his reality which allows his Estate to list NL as an asset. Whether you believe he fought to retain it or not, he indeed retained it. As for the 50%, see Ivy's comment on undivided interest above.

It's not a belief but facts in evidence. MJ didn't fight to retain it but entered into a deal -- after having almost lost at it to auction in the first place -- for it to be sold. The Estate has an interest in potential profits only. If you have to buy back something, you don't own it.

 

[Tygger]

It is truly unfortunately how difficult it is to have a conversation in threads involving the Estate. Despite the expected difficulty, it makes me proud that those who read the threads (members and lurkers) become knowledgeable about these subjects and take value from these conversations as no one knows where their lives may lead them.

Michael was no one’s fool.

Learn from him and make sure contracts contain protective clauses and beneficial rights such as ROFO AND ROFR. Both the NL and Sony/ATV contracts contain these rights so that one legally has a CHOICE about the future of an asset. Rights are never meaningless, moot, or lack value only because one chooses to not exercise them. Better to not exercise them than to not have them at all.

But we discussed this all before so how about I don't repeat myself especially on a thread NOT about Neverland and you reread the old discussion if you need a refresher.

Being purposefully rude has not changed my view in the past. It will not change my view now.

Krizkil, you are interpreting a fact as am I. I do not view Michael’s actions – entering a partnership to save an asset from auction - as those of a man who does not want to retain an asset while you do. Michael was not buying the property from Colony so much as he would (and his Estate will when a buyer is secured) reimburse Colony’s investment in the joint-venture partnership. No matter; we had the conversation before.

 

[LastTear]

I can certainly agree that it is difficult to have a conversation in these threads, it is also very difficult to read them.

Whilst I don't want to take anything away from Michael first refusal is pretty standard on a contract that involves a partnership.

 

[shadowgamesmedia]

i would be really interested in how things turn out

 

[krikzil]

It is truly unfortunately how difficult it is to have a conversation in threads involving the Estate. Despite the expected difficulty, it makes me proud that those who read the threads (members and lurkers) become knowledgeable about these subjects and take value from these conversations as no one knows where their lives may lead them.

Why difficult and expected? Because folks have differing opinions? .

Michael was no one’s fool.

Learn from him and make sure contracts contain protective clauses and beneficial rights such as ROFO AND ROFR. Both the NL and Sony/ATV contracts contain these rights so that one legally has a CHOICE about the future of an asset. Rights are never meaningless, moot, or lack value only because one chooses to not exercise them. Better to not exercise them than to not have them at all.

And no one said he was. And as LastTear noted, those clauses are pretty standard.

Being purposefully rude has not changed my view in the past. It will not change my view now.

Ironic.

Krizkil, you are interpreting a fact as am I. I do not view Michael’s actions – entering a partnership to save an asset from auction - as those of a man who does not want to retain an asset while you do. Michael was not buying the property from Colony so much as he would (and his Estate will when a buyer is secured) reimburse Colony’s investment in the joint-venture partnership. No matter; we had the conversation before.

Yip but I see you still felt the need to repeat yourself yet again.

 

[Tygger]

Full repeat.^^

ROFO/ROFR is not a standard to members here. It is a concept that has since been learned and tis a good thing.

 

[LastTear]

I can't pretend to know what the other members here know or don't know, but the lesson has been repeated many times so if they haven't got it now they never will.