Intellectual Property & Music Business · Senza categoria

MICHAEL JACKSON MIGHT HAVE WANTED TO SELL SONY/ATV. BUT NOT TO SONY

On May 25, 2005, Michael went to court, along with his parents, to listen to Chris Tucker’s cross-examination. Meanwhile, the two trusts created by Fortress for the specific acquisition of Bank Of America was processing plenty of documents.

MJ’s loans with Bank of America were an investment deal at ten years, both expiring in December 2005. From the execution copies of assignment and assumption agreements, between Bank of America and Fortress, there was a fourth loan agreement with MJ-ATV Trust, which appeared to have no balance. Actually, there existed specific unfunded commitments within the loan of about 3.5 million dollars and was also contemplated an undertaking to look at a $25 million further advance based upon due diligence and an analysis of the underlying assets.

Fortress Music Trust II held this money, and Yucaipa Company – Mr. Burkle organization, instructed to credit it to the MJ’s accounts.
It constituted the first Fortress refinancing of the Jackson Entities Bank of America Debt.

On May 25, 2005, the Jackson Entities entered into a new advance agreement with Fortress and requested an extension of credit for $25 Million. Fortress agreed to stop any action against the default under the BOA loan documents.

On June 13, the Jury reached the verdict. Michael acquitted on all counts! The trial is over, and on June 14 attorney Tom Mesereau gave an interview to Larry King:

With his passport back, Michael does not lose time, and already mid-June rumors tell he was in Paris with his kids to meet with documentary-maker Mark Stewart – the son of racing legend Sir Jackie Stewart. At the end of the month, he flies to Manama in Bahrain as guests to Prince Abdullah, a friend of his brother Jermaine.


When Jackson arrived in Bahrain, beside the open and pressing financial issue to refinance the now Fortress debt, he owed substantial amounts of money to his trade creditors, business and legal advisors, and employees. The situation precipitated Jackson’s efforts to seek new financing.

Pictures surfaced of MJ in Dubai for his birthday, along with Media comments of him trying to spend further money on useless amenities and in glittering parties.

Instead, MJ was around the Middle East with a Bahraini delegation to discuss and looking for fresh alternative refinancing. His middle east exilium was not a walk along the Arab sea.

At just one month of his acquittal back to back shitty events started again: 

  • July: Prescient sued MJ for $48 million for the direct Fortress acquisition of the BOA loans.

  • In New Orleans, there was a court proceeding in the Joseph Bartucci case. Michael was fined $ 10 000 for not showing at the hearing. The trial was later denied: it was another case of someone trying to extort money.

  • September: Michael had to go to London to give deposition of Marc Schaffel‘s lawsuit. Jackson lawyer filed a countersuit against Marc Schaffel, accusing him of misappropriating artwork, funds, and mishandled financial records. Schaffel was involved in“What more can I give,” a song supposed to would have raised 50 million dollars for victims and families of the September 11 terroristic attack and that Sony and some Jackson representatives lobbied to refrain the release. Schaffel was a well-known sex industry scumbag, and when MJ discovered his background, immediately ended the association with him. Schaffel was desperate to get the single release and was around the press, claiming he owned the song. In reality, he had no rights to exploit, distribute, or in any way interest in the master recording of ‘What More Can I Give.'” Shaffel was booted off of the recording project because of his lack of musical expertise and the rights to the song, was of Michael Jackson. He falsified books and records to try to get as much money as possible from Michael Jackson before the termination of his collaboration. After being fired, he postdated $784,000 in checks he wrote on behalf of the company Neverland Entertainment. When asked by an attorney to explain his fraudulent actions, he answered: “I just didn’t want to get caught holding the bag for expenses Mr. Jackson had agreed to,”; adding that MJ agreed to keep paying his expenses (including basics like rent and utilities) for another six months after letting him go.

  • John Branca filed UCC Financing Statements against the MJ Trusts in California. Branca claimed 5% of MJ-ATV’s membership interest in Sony/ATV and 5% of MJPT’s interest in the MIJAC Catalog.

Meanwhile Media reported a lot of fun and leisure. Michael and his kids back to Dubai. A great scandal was created when MJ mistakenly entered a “ladies’ room” in the Egyptian Court of IBN Battuta Mall in Dubai. The episode shows as an innocuous individual, in front of the opportunity reveals its wretchedness: the woman was a teacher.

Michael was shopping at the Emirates Mall in Dubai with Chris Tucker.

Michael was attending the Dubai Desert Rally Racing Tournament at Le Meridien Mina Seyahi Hotel in Dubai with a close friend and renowned UAE rally driver, Mohammad Ben Sulayem, and Saeed Hareb, managing director of the Dubai International Marine Club.

In Bahrain, Sheik Abdullah’s record label displayed posters advertising of 2 Seas Records single “Music to Heal the Pain” using images of the Katrina disaster and conveniently leaving out MJ’s name.

  • While in USA Dieter Wiesner filed a civil complaint against Michael and his company Triumph demanding $64 million for fraud & breach of contract of MJ Net Entertainment.
  • Good Morning America aired a recording of anti-semitic remarks during a phone call taped without permission two years before by Wiesner. The tape was given by the lawyer of Dieter Wiesner and Marc Schaffel.

Michael and family in Muscat (Oman) having dinner at the American Ambassador’s residence in Oman for Thanksgiving.

Most of Jackson’s efforts in the Middle East were to refinance his debts and liabilities, including the Fortress debts, and I call them debts and not loans because Fortress purchased a debt from BOA but did not provide any sort of refinancing project after that.

On November 26, 2005, MJ formalized an arrangement with AQ Business Consultants to assist him in obtaining new financing. AQ Business Consultants is a company organized under the laws of the Kingdom of Bahrain. The agreement provided that AQ would receive one percent (1%) of the financing committed to the project of loan financing. They commenced an aggressive effort to secure new financial commitments.
However, although they located several entities interested in the transaction, two main obstacles prevented a quick refinance securitization: Sony consent to Jackson’s for any further guaranteed loan and the Fortress right of last offer to provide financing for Mr. Jackson.

For example, Istithmar World, an investment group owned by the government of Dubai, expressed interest in providing Jackson with the necessary refinancing in exchange for his interest in the
Sony/ATV. MJ was not the idealistic fool that many fans still want to believe. He was wise and skilled when it came to business, also for the Sony ATV catalog. Being the visionary he always had been, he knew that times had changed quickly. With the right partners and at the right price, he was willing to sell part of his catalog to streamline his complicated financial situations. You have to keep in mind that being the owner of the 50% of Sony ATV meant for him to be also responsible for 250 million dollars of Sony/ATV corporate debts generated by stranger expenses and company management high fees.
However, the deal collapsed in the wake of Sony’s objections. Their refusal, clear out that Sony did not want any other partner, but MJ, waiting to put him in a corner and take the whole catalog at Black Friday discount price.

That’s the reason AQ’s initial endeavors to obtain finance before the date for repayment of the Fortress Loans failed. Sony didn’t help Michael Jackson to find a bank that would solve the problem. Actually, in the particular case of this refinancing, they had done their best to object and delay everything. By the documents I have read, I saw so much red tape to choke in.

Considering that part of his investments with Bank of America, were hedged, and Jackson activities generated royalties and right incomes wholly credited into the dedicated loan accounts, he had to support about $4.5 million monthly interest.

Which means Jackson had been paying more than 20 percent in monthly interest payments. That comes to about $50 million a year just in interest. That is familiar in the world of credit cards, subprime lending, and loan sharks and not commonly encountered by wealthy people with substantial assets. Michael Jackson had a first-class asset, and I could not believe he was paying the trailer-park credit card rates on $270 million worth of debt since I analyzed the BOA documents. What were they doing his financial advisers? What about Sony?

The financial calculation of these loans has a multitude of variabilities: there are managerial fees, compliance fees, and marketing expenses. All paid for by the guarantor. It means that 3-6% of funds are going out the window. And most of the time, these costs are not visible to borrowers entering these investments. It is also essential to understand how the mechanics of costs work. One of the things that can lead to increased costs of these funds are brokers, guilty of some degree of churning into their client’s account (and this is the Michael Jackson case), and it constitutes mismanagement. The industry sells performance and does not talk much about cost. And financial advisors are like any profession – there are good ones, and there are bad ones. But a competent advisor should alert you and explain what you are paying and whether there are better and cheaper alternatives out there. And Michael could not believe he didn’t have enough money to repay the loan. Here his testimony of 2006 June 12 and 13:

The Default on the Bank Of America Loans and the Forbearance Agreement

When it was clear that the MJ entities did not have sufficient funds to repay the loans, AQ representatives helped to negotiate an agreement under which Fortress agreed to forbearance any enforcement action based upon the existing loan defaults due in December 2005.

This agreement allowed MJ a forbearance period of 30 days, including January 16, 2006, extendable of additional 30 days that cost him a 1% the total due amount as fee.
Another condition included was a breakup fee of $2 million payable to Fortress if the refinances would have come from another party. Everything was nothing else than a copy/paste coming from the original Bank of America notes. The forbearance was that Fortress would stand down concerning their rights on loan.

The genesis of the forgiveness was the result of a negotiation that took place toward the end of December and involved AQ, as MJ representative, Sony, and Fortress.  Chief Financial Officer of Sony Corporation Rob Wiesenthal guided Fortress, due to the problematic comprehension of the “Put Extension Agreement” and the relevant amendment of Section 7.9 of the Sony/ATV Operating Agreement, which was part of the collateral package for the Bank of America loan. And part of the condition for extending to 60 days was the agreement by Sony to maintain their support under the put agreement for Fortress on the Sony/ATV loan of $200 million. What Sony had regarding the “put option” was an obligation, not a right. Fortress had the ability in loose terms to put the Sony/ATV interest to Sony and require Sony to buy the Sony/ATV interest for $200 million, and the “put option” was governed by a period that had an expiry. Since Fortress was giving forbearance on loan, they wanted to make sure that Sony’s credit support for the ATV loan would have the time associated with it extended as well.

  • December in USA Michael’s lawyer had to officially respond to tabloids reports of Tom Sneddon alleged investigating MJ for the use of illegal drugs. The law firm clarified that Michael prescription drug use is nothing illicit or illegally obtained.

  • MJ’s “Christmas gift,” that year, was a Court hearing in the Debbie Rowe’ s children visitation rights case in Los Angeles.

The year closed nibbling around the edges, and future perspective had obstacles premise to be solved. Meanwhile, media doodled and spread pictures of a careless Michael Jackson in disguises strolling around the Manama Malls with family and friends.

Sources:

Pacermonitor.com/case/16787632/Prescient Acquisition Group, Inc v MJ Publishing Trust.  

Hollywood, Interrupted: Insanity Chic in Babylon — The Case Against Celebrity by  Andrew Breitbart &‎ Mark C. Ebner 

https://www.eonline.com/news/52782/jackson-lawyer-plaintiff-had-no-right-to-charity-record.

 

 

 

 

 

 

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