Concord is raising $850 million through an existing asset-backed security (ABS), according to a new report by Kroll Bond Rating Agency (KBRA). These new notes are the third series of notes of a $2.6 billion ABS. The proceeds will be used to acquire approximately $217 million of assets that will be contributed to the ABS’s collateral pool, according to the Tuesday (Oct. 8) report. The new notes will also redeem the $500 million of the 2023 series of notes from the same ABS.
Concord issued notes totaling $1.8 billion in 2022 and followed with another $500 million from the same ABS in 2023. Some of those proceeds were used to acquire Round Hill Music Royalty Fund in 2023 and Mojo Music and Media in 2022. Assets from those acquisitions were placed into the ABS as collateral in July, according to KBRA’s report.
“We’ve very much liked the capital structure [of an ABS] that allowed us to relatively easily draw new debt for new acquisitions,” Concord CFO Kent Hoskins told Billboard earlier this year. The 2022 ABS had a “relatively low” loan-to-value ratio in the “low 40s,” according to Hoskins, which provided a buffer to do the 2023 issuance that funded the Round Hill acquisition.
With the addition of the Round Hill and Mojo Music assets, the value of the catalog backing the ABS grew from $4.2 billion to $5.1 billion, the report says. The catalog includes more than 1 million compositions, master recordings and related assets by artists such as Genesis, Phil Collins, R.E.M., Carrie Underwood and Creed and gets 65% of its revenue from the U.S. Another 14% of revenue comes from Europe and 9% is derived from the U.K. Frontline titles account for just 1.5% of the titles.
Numerous music companies have raised capital through an ABS, which allows an issuer to borrow money against the revenue created by music assets used as collateral in the transaction. In 2022, Chord, a venture of KKR Credit Advisors and Dundee Partners, did a $733 million ABS and Hipgnosis Song Management raised $222 million with one. Earlier this year, HarbourView Equity Partners and Kobalt put together $500 million and $267 million ABS deals, respectively. Sources have told Billboard that far more unpublicized securitizations have closed in recent years.
