http://news.yahoo.com/s/n...jackson_dc
NEW YORK (Reuters) - Pop star
Michael Jackson, in a bid to stave off insolvency, said on Thursday he has reached a deal to refinance more than $200 million in loans secured by his prized stake in the Beatles' song catalog.


The loans, which formally came due in December 2005, are held by the Fortress Investment Group, a New York private equity fund that stood to gain Jackson's 50 percent interest in Beatles publishing rights, valued at some $500 million, in the event of a default.

A statement issued from Jackson's representatives in the Persian Gulf state of Bahrain, where he now lives, said the singer has "restructured his finances" with help from Sony Corp., which jointly owns the collection of more than 200 Beatles tunes through Sony/ATV Music Publishing.

It also said Citigroup bank "structured the transaction for the parties."

Jackson, whose music career has been overshadowed in recent years by accusations of child abuse and media focus on his changing appearance, is deep in debt after years of extravagant spending, according to testimony at his trial on child molestation charges last year.

The 47-year-old singer was acquitted on all charges in June after the trial that had threatened to destroy his career and send him to prison for nearly two decades.

The terms of the new financing deal were not disclosed, and it was not immediately clear whether Jackson was forced to give up any of his stake in the song catalog.

People with knowledge of the deal, speaking on condition of anonymity, told Reuters Jackson had agreed to provide Sony with an option to buy about 25 percent of the catalog, or half of his stake, at a set price. One source said Jackson also negotiated a lower interest rate on his debt.

Sony's interest in keeping Jackson solvent stems from its desire to avoid a default that would allow his stake in the publishing venture to go up for auction, and the possibility of another company bidding on it. Sony representatives were not immediately available for comment.

According to prosecution testimony during last year's trial, Jackson had borrowed heavily against his assets, including more than $200 million secured by his share in Sony/ATV. Those loans, first provided by Bank of America Corp., were later sold to Fortress.

Rights to the Beatles music passed to the conglomerate ATV through its purchase of the band's publishing company, Northern Songs, in 1969.

Jackson in turn acquired the 4,000-song catalog, including the Beatles titles, when he bought ATV from the late Australian tycoon Robert Holmes a Court in August 1985. Ten years later, Jackson cut his stake in the catalog to 50 percent after merging ATV with Sony's publishing. Jackson also kept a 50 percent stake in new songs added to the collection.

The Sony/ATV catalog also includes songs like
Bob Dylan's classic "Blowin' in the Wind" and the works of such artists as
Joni Mitchell and
Stevie Nicks. But the Beatles' rights account for an estimated two-thirds of the collection's value.

Industry experts say the catalog is one of the most treasured in the world, especially since the recent explosion in music licensing ranging from movies and television ads to cell phone ringtones and video games.

(Additional reporting by Steve Gorman from Los Angeles)
[Edited 4/13/06 19:07pm]

Once again--a note for all aspiring musicians, composers, and producers:

music publishing is where it's at

For what its worth, here's Friedman's take on this:

Jacko: New Deal Similar to Old Deal He Rejected
Thursday, April 13, 2006
By Roger Friedman

Michael Jackson has managed to do himself in again. It’s an amazing situation, and one only Jackson could pull off.

As I’ve told you for weeks, Sony Music has been trying to negotiate a way for Jackson to hold on to his partnership with them in what’s known as the Beatles catalog, aka Sony/ATV Music Publishing.

As I’ve also told you, long before the New York Times caught wind of it, Sony had convinced Citigroup to help finance the purchase of Jackson’s $270 million worth of loans from Fortress Investment Group. In exchange, Citigroup only wanted 6 percent ownership in Jackson’s holdings.

But a year ago, Jackson had made a fatal mistake. He instigated the sale of those loans by Bank of America to Fortress. The deadline for paying the loans back was Dec. 20. Fortress extended the deadline to Feb. 20, at which time they could have foreclosed on Jackson.

They didn’t, but they also wouldn’t sell to Sony and Citigroup. As I told you in this space, Fortress wouldn’t let go. And, according to my sources, they wanted far more than Citigroup: more like 20 percent.

Now it seems a deal has been struck, but the deal is exactly the same one Jackson was offered last year, before the Bank of America sale, by advisers Charles Koppelman and Alvin Malnik and bankers at Goldman Sachs.

In that deal, Jackson would sell one half of his Sony/ATV holdings, retain the other half and have enough cash to pay off his debts and leave him with a nice piece of change, plus an annual $10 million income.

At the time, Jackson refused, deciding that the Goldman Sachs group was “out to get him.” He asked billionaire Ron Burkle to intercede instead with Bank of America.

Burkle, according to sources, called B of A’s CEO, Ken Lewis, and said he thought Jackson was getting a raw deal from the bank. Lewis was furious.

Jackson’s personal banker at B of A, Jane Heller, had held his finances together with toothpicks for years. B of A was offended by Burkle’s comments, and decided to sell the loans. Fortress, which had already made an offer, was the buyer.

Now, a year later, Fortress — holding Jackson’s notes — has still refused to let go. So now, in addition to Sony and Citigroup, Jackson is also in business with them.

The deal he’s getting isn’t much different from the Goldman Sachs one, and if you think about it, how could it be? Jackson always had one alternative: to sell part of his ownership in the Beatles catalog.

And now the moment has come. Jackson — whose group leaked information to the New York Times yesterday — gets a loan from Fortress for $300 million, but sells Sony half his interest in the company. The details still have to be worked out, but by calculation, in the end, Jackson loses now for not taking the Goldman Sachs deal last year.

Of course, this is what Jackson doesn’t know about Fortress Investments, and what he’ll likely never know unless someone reads him this column.

A few years ago, Fortress financed something called The Songwriters Collective. TSC, as it was known, was designed to help songwriters — mostly in Nashville — so they would get some money for their work. It seemed like a noble idea, but it backfired wildly.

Last year one of the writers in the Collective, Annie Rogoff, sued Fortress to get the rights back to her songs. The case has been settled, and Rogoff got the rights back, but at a high price. If Fortress was interested in helping songwriters, this was not a good example of caring about artists’ rights.

Presently, three different lawsuits are proceeding against Fortress and The Songwriters Collective, according to Rogoff’s attorney. They are similar to Rogoff’s. One is in state court in Tennessee. Two are in federal, one which includes as a plaintiff Holly Lamar, who co-wrote Faith Hill’s biggest hit, “Breathe.” All of the songwriters involved are demanding the return of their rights. In the end, it is likely they will have to buy their own work back from Fortress.

Jackson still has to deal with another manifestation of the Fortress agreement. He is currently being sued for $48 million by Prescient Capital, a one-man operation owned by Darien Dash, cousin of hip-hop entrepreneur Damon Dash.

In late 2004, Dash was asked by Jackson’s brother Randy Jackson to find someone who would put up the financing to buy out Bank of America. Jackson agreed to pay Dash a 9 percent fee if this was accomplished.

Dash found Fortress, which agreed to put up $530 million to get Jackson out of his entire Sony mess. In the end, though, they only had to pony up $270 million. Dash asserts in his lawsuit that he’s owed 9 percent of $530. That comes to $48 million.

Last year, during his short term as Jackson’s financial adviser, Burkle, I am told, spoke with Dash and offered him $1 million as a settlement. Dash refused.

“The problem is, Michael signed the document with him,” says a source.

So even if the legality of the agreement is questionable, Jackson’s liability may yet be proven.

Of course, there’s also another lawsuit, brought by Jackson’s former business partner Marc Schaffel. It’s set to begin June 2 in California, and so far no one from Jackson’s side has indicated that they are not ready.

If Jackson doesn’t show in the case, it’s possible his videotaped deposition, made last September in London, could be played for a jury in lieu of an appearance.

http://www.foxnews.com/st...22,00.html

More Friedman:

Jacko: Advisers Made Sure He Wasn’t Dead
Friday, April 14, 2006
By Roger Friedman

In the middle of the night, two nights ago, Michael Jackson’s valet got a call from his boss’ financial partners in New York. They’d heard rumors, started on Web sites, that Jackson had died overnight in Bahrain.

The financiers were just putting the finishing touches on a deal that Jackson was offered and should have signed last year — to sell half his remaining interest in Sony/ATV Music Publishing, pay his debts and restore some order to his financial house.

The new rumor was so upsetting that I am told a Sony Music financial officer spoke to the valet — probably a security guard who travels with Jackson named Kerry — and asked him if it was true. The guard then went into Jackson’s room and woke him up — it was the middle of the night in Bahrain — to make sure he was still alive.

Luckily for all of them, Jackson was fine.

But the deal, which was only concluded last night around 6 p.m. EDT despite Jackson’s team leaking it to The New York Times and Wall Street Journal, was not yet done.

Interestingly, it is almost the same deal that Jackson completely rejected a year ago. It turned out he was more comfortable making it with Arab advisers than with trusted old American friends who’d counseled and protected him through numerous self-created scandals.

“Michael Jackson doesn’t really pay attention to who he gets in bed with, does he?” said a Jackson insider with a laugh.

No kidding. The deal he’s agreed to make — and is still unsigned — was completed by two Arab lawyers in Bahrain and a mother-son team in Los Angeles. The mother is the daughter of Johnnie Cochran’s late mentor. The son is a lawyer who benefits from the mother’s status.

The mother, Gaynell Lenoir, is typical of the kind of people who’ve come and gone in Jackson’s business life over the years.

Lenoir, who is not an attorney, is the daughter of Gerald Lenoir, the late former partner and mentor of Cochran. Her son, Frank Correa, was described yesterday in the Wall Street Journal as an attorney. But there’s no listing for him on the Web site Findlaw.com, and a Sony insider who worked on the Jackson deal says he did not think Correa was a lawyer of any kind.

They also claim to have a firm called Omni Global, although there’s no record of any business like that in California.

Nevertheless, the pair, who inveigled themselves into Jackson’s business affairs last year, will pick up a fee of around $2 million just for acting as go-betweens in the process.

The Lenoir-Correas didn't have to do much except encourage Jackson to accept a deal similar to the one he was offered a year ago. That group included John Branca, the lawyer who structured the Beatles deal in the first place in 1985; Charles Koppelman and Al Malnik, who saved Jackson from the chopping block several times in 2003-2004; and the bankers at Bank of America, who tried to help him even as Jackson lied to them and cut deals behind their backs.

In this episode, I am told that Branca, who had a 5 percent stake in Jackson's music publishing holdings, extended the deal negotiations for two weeks until he was satisfied that he was protected. He got that protection in the form of a $15 million mortgage on Neverland, Jackson's nearly completely closed ranch.

But late yesterday, as the deal concluded, Branca's 20-year association with Jackson ended as he was bought out entirely. No numbers are available, but it's likely he walked away with anywhere between $10 and $20 million.

But it was Jackson who wasted a year of his life and ours, destroyed many relationships and caused more than 70 families associated with his Neverland ranch to undergo necessary hardships.

Instead, he trusted at various times his children's nanny; his out-of-work brothers, one of whom outed him in an unpublished book proposal; and of course the Nation of Islam. He also wasted about $20 million in interest and legal fees, sources said.

The new deal Jackson has struck doesn't entirely solve his problems. Fortress essentially loaned him $300 million so he could pay them back $275 million in loans. That leaves him with $25 million, which he will squander on worthless souvenirs, shopping for trinkets, traveling first class and plastic surgery. A debt clock will run on interest owed, too, which I bet no one has explained to him.

On the upside, Fortress can no longer foreclose on Jackson. Sony — in a wise move that left Fortress powerless — arranged for a panic button, so to speak. The minute Jackson looks like he's in financial trouble again, Sony can assert its right to finalize its purchase of half of Jackson’s share of their partnership.

If Jackson's half is really worth $500 million, then he would be due $250 million — less expenses, advances and other monies due to Sony. After taxes he would walk away with perhaps $100 million.

And there are still pending lawsuits. Those don't go away. Not only that: Jackson’s ability to judge the characters of potential business associates is so nonexistent that he apparently is doing business with one of his former cronies, the German manager who once owned sex clubs in Hamburg.

Is the saga over? Not likely. But the sympathy for Jackson is exhausted, I think. Today he begins with a clean slate. What he does with it is up to him.

http://www.foxnews.com/st...60,00.html