Michael May Beat Bankruptcy
by Sarah Hall
Apr 13, 2006, 11:45 AM PT
Michael Jackson may be able to moonwalk his way out of his monetary problems after all.
The onetime King of Pop is said to be close to cutting a deal that would allow him to avoid bankruptcy by refinancing millions of dollars in loans, the New York Times reports.
As part of the deal, Jackson would reportedly agree to offer Sony the chance to acquire half of his stake in the Sony/ATV Music Catalog--a prized asset, which includes scores of Beatles hits, as well as songs by Elvis Presley and Bob Dylan.
Jackson and Sony currently each own 50 percent of the catalog, which is valued at an estimated $1 billion. Jackson purchased his half for $48 million in 1985.
Ownership of the catalog has been a major factor in keeping Jackson's lavish lifestyle afloat over the years. But recently, there have undeniable signs that his bank balance has hit rock bottom.
Last month, he took the step of shutting down the bulk of operations at Neverland Ranch, after narrowly avoiding legal action from California authorities, who had threatened to sue the entertainer over unpaid wages owed to his employees.
Jackson used the song catalog as part of the collateral against $270 million in loans from Bank of America, a debt that prosecutors frequently referred to during his child-molestation trial last year, alleging that concern over the massive sum may have led Jackson to drink heavily, molest a 13-year-old boy and plot to ship the child and his family off to Brazil. (He was later acquitted of all charges.)
The outstanding debt was long believed to be the financial straw that would break Jackson's bank. But last year, Bank of America sold off the loans to Fortress Investment Group, a New-York based investment company that buys distressed debt, which in turn gave Jackson an extension on his payment plan.
As part of the new deal, Fortress would provide Jackson with a new $300 million loan and reduce his interest payments.
If Sony chooses to exercise its option to purchase 25 percent of the music catalog from Jackson at a set price, it would ensure that Jackson would be able to make good on his debts, sources familiar with the deal told the Times.
Sony has a vested interest in keeping Jackson's head above water--if Fortress elected to foreclose on the entertainer, it could force him into bankruptcy protection, meaning that his interests in the catalog could be sold off at auction.
The deal was not yet final, and could still fall apart, sources cautioned the Times.
Since the conclusion of his trial in June 2005, Jackson has spent the bulk of his time in Bahrain, where he has reportedly been looking into employment opportunities.
Sounds like he could use a steady paycheck right about now.
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