Concord Closes $850 Million ABS to Fuel Strategic Growth and Acquisition

Rhea-AI Summary

Concord has successfully closed an $850 million asset-backed securitization (ABS) backed by its music catalog, marking its third securitization offering. The notes are secured by royalties from a catalog of over one million songs, including works by renowned artists like The Beatles, Carrie Underwood, and The Rolling Stones. The catalog is valued at more than $5 billion, resulting in a 52% loan-to-value ratio. Apollo (NYSE: APO), through its Capital Solutions business, structured the ABS and led the investor syndicate. The notes received ratings of A+ from KBRA and A2 from Moody's. Proceeds will be used to retire the private 2023-1 note issuance, fund acquisitions, and support growth.

Positive

• Secured $850 million in senior notes through ABS offering
• Music catalog valued at over $5 billion
• Strong credit ratings: A+ from KBRA and A2 from Moody's
• Conservative 52% loan-to-value ratio indicates strong asset backing
• Portfolio includes over 1 million songs with 400+ RIAA certifications

Negative

• Taking on additional debt through securitization
• Funds partially used to retire existing debt (2023-1 note issuance)

Insights

Financial Analyst

The $850 million ABS offering by Concord represents a significant financial milestone in the music industry. With a $5 billion catalog valuation and a conservative 52% loan-to-value ratio, coupled with strong credit ratings (A+ from KBRA and A2 from Moody's), this deal demonstrates robust financial engineering. The transaction benefits Apollo through its Capital Solutions business by generating fee income and establishing a stronger foothold in the music royalties sector. The deal's structure, combining securitization with active management capabilities, creates a sustainable financing model that could become a blueprint for future music industry deals. The high-quality collateral pool, featuring over 1 million songs including works from legendary artists, provides stable, predictable cash flows that support the investment-grade ratings.

Music Industry Analyst

This securitization deal highlights the growing sophistication of music catalog monetization. The transaction's size and structure validate the music industry's evolution as an institutional-grade asset class. The actively managed component is particularly noteworthy, as it allows Concord flexibility to optimize the portfolio's performance. The catalog's diversity, featuring over 300 GRAMMY winners and 400+ RIAA-certified recordings, provides strong downside protection through genre and era diversification. For Apollo, this reinforces their position in the music financing space while providing exposure to a defensive asset class with streaming-driven growth potential.

This Marks the Company’s Third Securitization Offering, Strengthening its Position in the Music Industry

NASHVILLE, Tenn. & NEW YORK--(BUSINESS WIRE)-- Concord, the world’s leading independent music company, has successfully closed a new series of $850 million in senior notes backed by a diverse catalog of music assets. This marks Concord's third securitization offering and is cross-collateralized with the notes offered in 2022, which, taken together, now make up the largest music-backed asset-backed securitization to date. These issuances underscore Concord's ongoing effort to strategically grow and monetize its music assets and position the company as a consequential force in the music industry. The notes will be secured by music royalties from a pool of catalogs containing over one million songs, including iconic works recorded by The Beatles, Carrie Underwood, Cheap Trick, Creed, Genesis, Kiss, Mike + The Mechanics, Otis Redding, Phil Collins, Plain White T’s, R.E.M., R.E.O. Speedwagon, and The Rolling Stones.

Apollo (NYSE: APO), through its Capital Solutions business, Apollo Global Securities, LLC, and together with its affiliate Redding Ridge Asset Management, structured the asset-backed securitization (ABS) and led an investor syndicate for the transaction. ATLAS SP Securities, a division of Apollo Global Securities, LLC, acted as a joint bookrunner for the transaction. Proceeds from the issuance will be used to retire the private 2023-1 note issuance, fund additional acquisitions, and support Concord’s continued growth.

"This transaction represents another significant milestone for Concord and the global music industry as we close our third music ABS offering, continuing our strategic efforts to elevate and support the artists and writers in our catalog," said Bob Valentine, CEO of Concord. "We are proud to manage a catalog with such a remarkable depth of artistic talent and cultural importance. We are grateful to our financing partners, Apollo and ATLAS SP, for helping us create a long-term capital structure that supports our growth and strengthens the financial foundation that allows us to keep investing in the music industry. As we grow to new heights, our focus continues to be squarely on our artists and the incredible art they create."

The catalog is valued at more than $5 billion, resulting in an approximate 52% loan-to-value ratio for the offering, and the notes are rated A+ by KBRA and A2 by Moody’s. Concord’s new 5-year notes issuance is backed by an actively managed catalog of more than 1 million unique music assets spanning a wide range of genres, including over 300 GRAMMY Award winners and more than 400 recordings with Gold, Platinum, Multi-Platinum, and Diamond Recording Industry Association of America (RIAA) certifications.

"Concord’s management has demonstrated exceptional vision in building a catalog that reflects the breadth and evolution of modern music, and we are pleased to work with Concord once again on this significant transaction,” said Bret Leas, Apollo Partner and Co-Head of Asset-Backed Finance. “By anchoring and structuring this ABS, we have continued to help Concord unlock the value of their extraordinary music catalog. We are proud to provide a tailored solution to support their success,” added Apollo’s Paul Sipio.

FTI Consulting served as the backup manager for the transaction, with the Bank of New York Mellon acting as trustee. Virtu Global Advisors, LLC provided valuation services, while DLA Piper provided legal counsel for Concord and Milbank LLP for Apollo affiliates.

CONCORD is the world’s leading independent music company. The Company supports more than 125,000 artists and songwriters whose works are licensed, marketed, and performed globally. Concord's growing catalog of 1.3 million songs, compositions, sound recordings, films, plays, and musicals is one of the most impactful and culturally relevant collections of creative rights in history.

Concord is headquartered in Nashville with additional offices in Los Angeles, New York, London, Berlin, Melbourne, and Miami.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241028844885/en/

Jin Lee

concord@milkandhoneypr.com

Source: Concord

FAQ

What is the size of Concord's latest ABS offering structured by Apollo (APO)?

Concord's latest ABS offering, structured by Apollo (APO), is $850 million in senior notes.

What is the current valuation of Concord's music catalog backing the ABS?

Concord's music catalog backing the ABS is valued at more than $5 billion.

What are the credit ratings for Concord's 2024 ABS notes?

The ABS notes received ratings of A+ from KBRA and A2 from Moody's.

How will Concord use the proceeds from the $850M ABS offering?

The proceeds will be used to retire the private 2023-1 note issuance, fund additional acquisitions, and support Concord's continued growth.