2 days ago
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The Weeknd is seeking $1 billion in financing with a music catalog-backed deal that will give him $250 million in cash (Alexa, play “Starboy”) plus $750 million in debt (never mind, play “Cry for Me”), Bloomberg reports.
An investor group called Chord Music Partners currently owns 50% of his publishing. The once-and-future Abel Tesfaye (he said he plans to retire the name The Weeknd) now wants to cash out $250 million in equity from what’s left of his catalog, plus raising $500 million in senior debt (lower interest, must be paid back first) and $250 million in junior debt (higher interest, must be paid back second). Lyric Capital Group is leading the discussions to find investors for the $1 billion.
The structure of the deal suggests that The Weeknd plans to launch business ventures with the $1 billion. The interest rates will certainly be higher than bond yields or stock market returns, or why would Lyric and the other investors take on risk? And it is risky, for everyone but especially for Tesfaye. He’s going to be in debt for $750 million, half of Taylor Swift’s career net worth. Add in the fact that he’s trying to cash out $250 million in equity from his catalog now — meaning he won’t have the same option later — and it’s hard to see how his music career alone can pay this back.
Granted, the deal might not go through. Usually investor groups like to announce the sale once it’s closed, instead of advertising the action to potential investors by giving interviews to Bloomberg. But if it does happen, there’s really only two ways this ends: The Weeknd joins the ranks of billionaire business owners like Rihanna and JAY-Z, or he files for bankruptcy.
It’s a colossal risk by an ambitious artist who is looking to level up one more time. Alexa, play “Blinding Lights.”
In January, Tesfaye released what is expected to be his last album as The Weeknd, Hurry Up Tomorrow.
English (US) · 