Universal Music Group is opening an over $800 million bond issue to support debt restructuring

Photo credit: Ibrahim Boran

Universal Music Group is opening an $800 million bond issue to refinance existing debt and pay transaction fees and costs.

Universal Music Group announced It plans to raise 750 million euros ($800 million) from the sale of 4,000% senior unsecured notes due 2031. The Notes will be issued from UMG’s Euro Medium Term Note program and will be listed on Euronext Amsterdam Regulation S under the US Securities Act of 1933. Proceeds from the issue will be used to refinance existing debt and to pay transaction fees and costs. UMG expects the offer to close on June 13.

According to the company’s financial statements, UMG had total debt of 2.25 billion euros ($2.4 billion) at the end of 2022 and a net debt to adjusted EBITDA ratio of 0.9. The company sold more than $1 billion of notes in June 2022, half of which were 3,000% senior unsecured notes maturing in 2027. The other half was 3.750% senior unsecured notes due 2032.

BNP Paribas and BofA Securities acted as global coordinators and as active bookrunners on this offering along with Crédit Agricole CIB, Goldman Sachs Bank Europe SE, ING and Mizuho. Citigroup Global Markets Europe AG, Intesa, Mediobanca, Morgan Stanley Europe SE, MUFG Securities (Europe) NV, Natixis, Santander and Société Générale acted as co-managers.

Rating agency Moody’s issued an outlook of “stable” for UMG’s 2022 notes, citing UMG’s “best-in-class music catalogue”, “experienced management team” and “solid financial profile” as well as the support it provides Company of ” “secular tailwind” for the global music industry.

The Moody’s rating also reflected challenges such as UMG’s “continued investment needs to secure new hits”, “increased competition from the emergence of financial players” in the catalog acquisition space, and unforeseen “risks associated with emerging technologies” that have historically been detrimental Music company revenue. UMG recently kept Colombian superstar Karol G’s catalog under its umbrella when she joined Interscope Records.