MICHAEL JACKSON’S 2006 REFINANCING ASSETS: GIVE US ALL YOU OWN

This blog is a continuation of MJ 2006 refinancing assets: the Sony- Fortress-obstacles. I want to highlight that the clause Citigroup imposed on Sony clearly must have come following the examination in detail of Michael Jackson’s Bank of America accounts statements, which had highlighted payments shortcomings of royalties and revenues of MJ 50% partnership Sony ATV. So, contrary to what the press kept writing, it’s not hard to deduce that when Michael Jackson screamed at the world, his record label was screwing him about royalties accounts and not crediting him the money from his Sony / ATV stake, was right.
The new agreement that Fortress had to embrace contained explicit instruction for the Sony group: Michael Jackson Sony ATV revenues had to be paid in due time, and third-party offers were acceptable in case of the assets sale. Also, MJ companies would not be penalized to pay additional interests if no payment would have been caused or neglected by the Sony Companies, which was the main problem he had for ten years during the financial relationship with Bank of America.

The structure of MJ Group entities changed as per these below tables:

After Fortress confirmed the intention to exercise its first right offer by matching the Citibank project, it started the complex procedure to establishing the clearance of all the titles of MJ assets being used as security, including the creditors’ identifications.

Mr. Branca UCCs

During its due diligence process for the refinancing, Fortress was already aware that on September 27, 2005, John Branca, former MJ attorney, had filed UCC Financing Statements against the MJ Trusts claiming an interest in the assets. Given that Branca appeared as a secured creditor of MJPublishing Trust, Fortress and Sony were apparently uncomfortable completing the refinancing and restructuring of the Jackson Entities’ debt. Settling the Branca claim was an essential precondition for the refinancing to close because it directly affected the collaterals being used as security.

• A UCC-1 financing statement (abbreviation for Uniform Commercial Code) is a legal form that creditor files to notice that it has or may have an interest in the personal property. This form is filed to “perfect” a creditor’s security interest by giving public notice that there is a right to take possession of and sell certain assets to repay a specific debt with a particular priority. Such notices of sale are often found in the local newspapers. Once the form has been filed, the creditor establishes a relative priority with the debtor’s other creditors.

For some reason, Mr. Branca decided to join the “MJ bankruptcy fansite club,” and asserted to possess a membership interest in Sony/ATV and MIJAC Catalog for about 50 million.
Here below the detail of the figures requested by Branca’s to MJ.

  • 16’121.943.73 principal capital. 
    14’089,984.33 and additional amounts for the following reasons:
    1’621,943.73 representing his percentage on the 300 million Fortress loan then discounted to 589’,894.33
    1’032,049.40 representing attorneys fee
    13’500,00.00 being the principal balance

All items were contested by Michael lawyers except the principal balance amount of 13’500,00.00 that was accepted and paid.
In case of foreclosure or bankrupt of MJ during the refinance Fortress period, John Branca’s request included an amount of 4.5 million-plus interests payable by Sony Corp. Mr. Branca’s document specified that – if the amount collected in the bankruptcy proceedings had not had enough balance to pay his allegedly 4.5M – he would get the money in installments from Michael Jackson’s royalties up to March 2008.

Actually, Mr. Branca had an agreement as an agent since 1993, allowing him to take an overall 5% over Michael Jackson’s whole business. In addition to it, he was one trustee on MJPT trust.
Strange that he still had a signature over the trust in 2006; when MJ had him fired in 2003, he was asked to resign from all the trusts and return all the legal documents. He left the MJ/ATV trust, but nobody cared to check if he was out from all the other entities. Here Michael Jackson answers concerning his the trustees in connection with his trust entities:


White and Case law firm followed the matter. The unpleasant story was liquidated and closed for good on April 13, 2006, with 13.5 million representing some unpaid legal services to his law firm and the official mutual release agreement to give back all Michael Jackson legal documents.

However,  Mr. Branca’s disappearance from the creditor’s line meant to mortgage Neverland once again because Fortress refused to add amount the principal loan that was enough overcollateralized to be enlarged by a 20 million. Instead, they opened a separate mortgage procedure on Neverland property.

Before approaching the specific issue, let’s face for good, how misleading the media were towards MJ. Fabricated headlines that became a relentless smear campaign that wanted him ruined and on the verge of bankruptcy since 1995.

To confirm the above,  read what happened on the morning of April 13, 2006. Fortress had not even made the loan disbursement – the closing of the transaction occurred in the afternoon of the same day – but somehow, the press spread the news that Michael Jackson to have the new loan done and had to agree with Sony the sale of part of his 50% stake in Sony/ATV. The Prescient litigation lawyers were astonished after reading in the press. Nobody knew nothing about the turn of events: they had to interrupt the deposition because there was no such document within the court papers.

The testimony of Mr. Daniel Groppel – then Managing Director of Fortress Corporation –  reviewing an exhibit related to the Prescient lawsuit, was an enlightening reading.

It must be clear that Fortress, though purchased in May 2005 the Bank of America loans, had not yet refinanced the loan itself, so to give an extension, all conditions had to match with the Bank of America package of collaterals.

The document was nothing less than the negotiation that took place toward the end of December 2005 when MJ’s team asked for an extension of time to stop the payment due to Bank of America then purchased by Fortress Investment.

Below  “Put Option” clause as per Sony/ATV Operating Agreement on December 20, 2005.

The media divulged messy and selective news. In this respect, one wonders what kind of document was delivered to reporters – and above all, who instructed to give away these crappy masterpieces worthy of winning the Pulitzer for the trashiest journalism of the decade? If ever there was one.

As I said before, the refinancing with Fortress was already agreed upon but not concluded. But somehow, the lawyers and all the people involved found the below headlines all over the international media.

Everybody can remember headlines such as 

(published on Fox News and signed by R. Friedman) trumpeting that Michael Jackson will give up a part of his most prized asset for 200 million to Sony Corp.

This lawsuit’s documents show that what the media have been reporting since 2002 about MJ’s investments -from Bank of America to Fortress – are lies that have been deliberately released to mislead the public about MJ as a person. All the narrative about this cause is approximative and manipulated and has been set-up since the beginning.

The executed copy of the Credit and Security Agreement between Fortress Credit Corp and Michael Jackson Entities was a 35-page document consisting of five main articles and 20 sub-sections. The first article describes the definition and interpretation of the form.  Here the Sony Purchase Option:

The so-called purchase Option is nothing else than the Put option.
The put option was inserted at the beginning of Sony/ATV full administration of the ATV catalog.

It has been inserted in the third amendment of the Operating Agreement on December 23, 1998. The date coincided with the end of the ATV administration contract MJ had with Emi.

During the Fortress refinancing, the put option came into force three months after the loan disbursement date and remained in place until the end of the loan. The reason was that from May 2 up to July 30, 2006, the option to purchase the Sony shares in Sony/ATV was on Michael Jackson’s side, as per the dates agreed in the previous forbearance agreement. In jargon, it is called the baseball arbitration.

The put option was exercised by both parties for a limited period and was there to protect all parties’ interests. The purpose of keeping up the undertaking to the end of the loan was additional collateral representing the face value of the outstanding principal amount of the loan. The cost of this other collateral guarantee was for the MJ account.

The clause was a sort of first auction price, and in case of opening of the proceeding – subsequent rules had to be applied to get the real and commercial value of the asset.

Mr. Groppel, in fact, said:

And he was talking about the company corporate debt, not of Michael Jackson supposed debt with his record label.

On top of all, the put option amount represented a collateral guarantee to the principal amount of Michael Jackson loan and not a pledge over his 25% as the media insistently reported.

The 1995 Operating Agreement and its relevant amendments show the deal’s details and confirm that Sony never had a purchase option that they could exercise no matter what. It was always for a restricted time, and in case of no execution, the same option turned automatically to MJ and vice versa (in the context of the operating agreement).

It’s also understandable why both parties never purchased each other at that time. In fact, during the ten-year partnership, the company’s value grew starkly – and neither Sony nor MJ had the chance to pay each other such significant amounts. MJ suffered big losses due to bad managers, who stole and invested in questionable business endeavors (Not to mention the 2005 criminal trial that exhausted his vital energy and personal money. On the other hand, Sony was in financial distress since 2002 and had another deep crisis in 2008, and still today, some of its divisions are in bad shape.

As you can see, MJ’s financial transactions are referred to as investments – not loans, which is what this was. When Robert Holmes à Court sold ATV Music to Michael Jackson, documents show that MJ arranged a 30 million loan with Chemical Bank to facilitate the purchase, before transferring the ownership of Northern Songs to Nassau in the Bahamas – and appoint two local bankers to the board.  

The whole ATV group was acquired (including Bruton Music Ltd., ITC Filmscores Ltd., Marble Arch Music Ltd., and the long-established publishers, Lawrence Wright Music Co. Ltd.). There is no clear documentation of the total price paid, although press reports indicate Usd. 47 million.

The money of these transactions was used to make investments, pay corporate bills, lawyers, employees, offices, and business expansions – not to buy personal cars or shopping antiques, as MEDIA and some so-called friend claim.

But Sony/ATV structure was harmful to his finances from all points of view, and his money somehow kept disappearing, and the Citicorp dedicated chapter related Sony payments confirm so.

This Michael Jackson financial lawsuit –forgotten in the court archives’ depths confirms that investigative journalism no longer exists that MEDIA lives on financial connivances with the corporations and doesn’t check the sources. Inside these documents, there is enough material to overturn the news on Jackson’s economic problems.

It is also the key to believe Michael Jackson’s words when he was telling: “They want my catalog…. there is a big fight for it”. He frequently addressed these issues. And when he passed away, music producer Mr. David Zard and Michael Jackson’s former manager for the History tour, Tarak Ben Ammar, mentioned how Sony mismanaged his finances. The last one was Dieter Wiesner in his book Michael Jackson: The Real Story: An Intimate Look Into Michael Jackson’s Visionary Business and Human Side.

What the reader sees on this blog is public material and available to the press since then. The sealed records of this lawsuit had been destroyed on 13/10/2011. But almost nothing was divulged by the media. After the closing of the case, few headlines reported Michael Jackson press release through his PR people.

The point is that Michael Jackson was a target, and Sony, an influential group not in the business of exclusive gossip headlines. Michael Jackson was the biggest victim in the history of that type of journalism.

After twenty-four months, Fortress refinancing was in place and disbursed as well on April 13, 2006, although it didn’t solve Michael Jackson’s problems. The MIJAC catalog was still linked to the whole loan package and potentially at the mercy of Sony.

Stay with me…

Sources:

https://en.wikipedia.org/wiki/UCC-1_financing_statement

Rockmine.com

pacermonitor.com/case/16787632/Prescient_Acquisition__Group,_Inc_v_MJ_Publsihing_Trust_et_al  2005/2007

1987: BAD AND MICHAEL JACKSON ALONE AT THE TOP

Jorge Luis Borges emphasized that in Spanish, to say that something is outstanding, it is said that “it is enviable.” However, envy is one of the worst feelings that exist. It harms who feed it and those who are its object, because often this person is forced to overcome all kinds of obstacles that the envious put in his way. Envy is a corrosive feeling that can ruin a life. Carrie Fischer and Nelson Mandela brilliantly described it with these words: “Resentment is like drinking poison and waiting for the other person to die. ”

While MEDIA acclaim the BAD album today, I remember very well that it wasn’t like that in 1987. The process to debased and minimize Michael Jackson’s geniality and art started long before the so-called “allegations.” He always had to fight to earn respect releasing fantastic products that went beyond any impossible reproach. 

Since January 1984, the world had awaited the successor of “Thriller.” But months became years, and that damn album was pushed back to a “TBN” date. Moreover, Michael loquacity matched to the one of a Neanderthal man, and since he didn’t give interviews, Media had to scribble soap opera stuff and malicious gossip.

It was the usual unctuous stream of nonsense: the oxygen tank, the llama, the boa, Liz Taylor, the mask, the aesthetic surgery, the Elephant Man bones he wanted to buy at the London Museum.

Editorialists of that time printed the same rumors“This guy is clearly a nutcase! He has animals at home and a boa under his buffalo skin bed and a chimpanzee flipping over the kitchen’s fridge. Is he mad? Is he not?” What else’s…ah, yes! “The weirdo prefers to be in Liz Taylor’s company rather than socialize with others of his age. And to complete the picture, he decided not to release any album before having an excellent product to offer to his public… Pfft… A sort of toddler (black…) who does what he pleases…” And then what else? “He has no girlfriend. And WOW! He believes in God!” All MEDIA stigmatized these as “abominations”… But what was so awful and dreadful?

Tabloids criticized him for refusing to license a Beatles song to the Beastie Boys and accused of exploiting another Beatles song licensed to Nike.  

During an interview immediately after Thriller, a journalist asked Quincy Jones how long it would have taken to release a new album, he answered: “Twenty years if necessary.  It will be the end of a trilogy, and for me, the trilogy is a fundamental thing. The third step must always be very different from the previous two. Therefore, it will create a surprise by changing style, and we had already planned it”. And nobody would have ever repro to his producer Quincy Jones.

When the Victory drama tour ended – Michael Jackson and Quincy Jones got into the studio to start preparing the world the successor of Thriller. The music industry’s hectic events in those days might help to understand why the release of Bad suffered many delays.

I can’t help but emphasize to those who think of the ’80s as a great music decade, how wrong they are. There were a thousand crappy sounds for one great song, and it’s good that most of them have not been uploaded on the internet. At that time, pop music was still a profitable business. But audience tastes were rapidly changing due to the emergence of new music genres in the international stage, creating a healthy competition in terms of the global ranking.

New bands like Guns n’ Roses, R.E.M, Bon Jovi, U 2, and many others were defining the end of the 80s, launching a new music scene that exploded in the 90s. And it’s hard to believe now, but MTV was awesome back then. Its rock shows and “alternative” shows were simply gorgeous. A band like Nirvana appeared on Top of the Pops and attracted a legion of teen fans.

Pop artists such as Madonna, Whitney Huston, Prince, George Michael, and Janet Jackson were experimenting with new sounds to keep up with the times. And Michael Jackson with them.

In 1985 Michael composed and recorded with Lionel Richie We Are The World at the Westlake Studio, West Hollywood. Meanwhile, CBS begin to inquire, push and pressure for a new album. MJ was a busy guy and was spending his time between recording studio and movie set. In fact, in 1986, the 3D science fiction film Captain EO  directed by Francis Ford Coppola (who came up with the name “Captain EO” from EOS, the Greek goddess of dawn), reached the public.

Two new MJ songs appeared in the film. The first was an early version of “Another Part of Me” and “We are Here to Change the World,” then officially released in 2004 as part of  Michael Jackson: The Ultimate Collection.

In September 1986, Quincy Jones contacted the Run-DMC, who were on tour in Paris, because Michael wanted to work with them. They had “Walk This Way” number one in the US for fifteen weeks. The official group comment was: ” We hesitated.” Actually, they didn’t hesitate at all. They ran to Westlake Studios and met with Michael and Quincy, but they could not get in tune with their rap – something, according to Quincy Jones  – was missing from their lyrics. He told them to try to rap with more sophistication on it but again could get anything together, and then they left.

In November 1986, Michael Jackson shot with Martin Scorsese the short film for Bad. It was filmed in Brooklyn’s Hoyt Schermerhorn station.

Modern legends tell us that the album delay was due to MJ perfectionist and his production. However, also this one is one of the many misleading information. News of those years gives a different approach reporting the release’s delay due to the Musical Industry intrigues. Power and marketing were the driven delay force and was mainly due to external problems that kept coming up against the release.

In an article on Rock This Town (September 1986), Philippe Manoeuvre describes in a semi-serious form an anecdote that took place in 1986 and early 1987. Here an excerpt:

“December 1986 CBS called “Strike” on Michael Jackson: the album was finished and ready, but CBS did not want it! What happened? It happened that Bruce Springsteen – against all odd – authorized the publication of a box with five discs and other amenities of his live concert recording. If CBS were going to release during the same month Bruce and Michael, it would have placed a big dilemma”.

Here you can read few old Billboard screenshots related to music recording industry games in November / December 1986.

Below Walter Yetnikoff lame statement in a 1988 interview to Rolling Stone magazine.

Taking these facts into account, a change in perspective is due to many episodes, including Michael Jackson’s pissy mood at the 1988 Grammy. Apart from the Grammy award-winning technicalities rules, MJ was aware that it was almost impossible to win a Grammy in 1988 with an album released at the end of the summer ’87, with just a few months of sales and four singles published.

It might be the reason why the Dangerous album was released on November 26, 1991, bringing “home” three American Music Awards in 1993, without counting Billboard, Soul Train Music Awards, and others worldwide.

In February 1987, Springsteen’s live box beat all the unsold records, as consequences of CBS and the American store’s greediness. As in the United States, the record stores could send the unsold units to the record companies, CBS got back home about 700,000 and in March 1987, while a terrified Yetnikoff discovered that Michael and Quincy Jones returned to the West Lake West Hollywood studio.

It seems they wanted to redo everything again. But considering that four months before the release of Thriller, Michael returned to the studio to add to the album two tracks such as Billy Jean and Beat It, everyone shut their mouth. Finally, in May 1987, Michael Jackson and Quincy Jones gave CBS the master recording of the Bad album.

To top it off, someone realized that rapper LL Cool J. was also releasing an untitled album Bad. Clearly, L L. Cool was asked to stop his bullshit. His album came out with a “bad” print on the cover, but in the catalog, it was named in extremis “Bigger and Deffer.” (Once a thief, always a thief…)

Now, have you ever waited for a release like that? The answer is: NO. To find mediatic traces of a similar frenzy, it is necessary to go back to the Stars Wars saga’s third episode. And the deliriant expectation that separated Bad from Thriller became increasingly wide.

Also, the delay in releasing Bad had Michael financially tied up: long leagues away from imagining that CBS would push back “Bad,” Michael had planned to flood the market with a branded clothing and doll lines, ballpoint pens, “love necklaces,” and perfumes which he financed for about 20 million of dollars, plus a 10 million dollars “standby” deal with Pepsi that consequently had to cancel its advertising campaign. 

When just invested 47 million dollars in ATV, these kinds of delays could seriously upset anyone. So it was evident that when the album finally hits the shelves, Michael rode the international scene cravings for murder…

Then finally, on July 22, 1987, the single teaser “I just cannot stop loving you” was released. It was a paradisiacal slow. The track starts with a monologue whispering and continues likewise. Charming, subtle, but in no way vulnerable.

“People do not understand me / That’s because they do not know me at all / I just want to touch! Hold you / I need you. I love you so much …” The irruption of the chorus drives the listeners in the sonic master and great rolls of timbales. In two listening, no more, the melody is inscribed in our subconscious.

But the album starts with Bad, and immediately, we are killed on the spot. Huge, devastating, meticulous mime, urban, the single is a rhythmic bomb, with a sound that wakes up the dead. Not Run DMC, as the story suggested, but a splendid organ solo by jazzman Jimmy Smith.

The words I’m Bad carrying the track like an avalanche. This exceptional sound, which will transfigure the songs throughout the album, is really worthy of another dimension. One must approach perfection in the matter; the blend’s art is not an accumulation or a breathtaking sum of ingredients, but rather a science.

Dirty Diana starts with an intro worthy of a horror movie, the false live atmosphere, the public shouting that this Diana bitch is going to get what she deserves. This is the track that will cause the following question forever: this Diana, whose does every musician, this first-class bitch is it, or is it not the famous Ross who fans fantasize be the sentimental and sexual life of the recluse MJ? Anyway, the song beats hard, is the Beat it of Bad within a guitar chorus without pity, in which one recognizes Steve Stevens hands, lead guitarist of Billy Idol.

“Smooth Criminal” with a fantastic intro (the intros are  Michael Jackson’s own genius), and other swings in the gums confirm MJ is BAD!

The “Way You Make Me Feel,” remember the Jackson 5,  the fleshy, melodic rhythm & blues filled with female chats, Michael forgets his barking at the beginning of the sentences, and his voice goes up to vertiginous heights.

“Speed Demon,” it’s like a punch from Mike Tyson.

As soon as the Bad World Tour started, the MEDIA tune changed; they had no choice. Why? Because numbers never lie. Michael Jackson’s first World Tour was the biggest grossing tour ever. It was a two-leg tour in which Michael performed 123 concerts to an estimated 4.4 million fans.

[Read what EBONY MAGAZINE  – April 1989 – had to say about the legendary Bad Tour]:

Megastar entertainer drew 4.4 million fans, earned $125 million on Bad tour, and now says he will retire from the stage to market records and films. It had been announced as the “farewell concert,” and the crowd that jammed the Los Angeles Sports Arena showed its love: “Michael! Michael!” the thousands chanted as the stage smoke cleared, the lights and lasers dimmed, and Michael Jackson, exhausted after two hours of nonstop singing and dancing, made his way to his dressing room. The man now called “the greatest entertainer in the world” had just sung the last note dazzled with the final “moonwalk” of a grueling, 16-month tour that had taken him almost around the world with 123 concerts in 15 countries and drew 4.4 million fans. It grossed $ 125 million and more than any other entertainer has ever grossed on a single tour.  After some kind words and embraces for the family and friends he had invited backstage, Michael said his thanks and goodbyes to the crew of his “Bad” tour, then sped off into the night to rest before beginning work on new album and movie projects. The tour, Michael’s first without his brother — Jackie, Tito, Marlon, and Randy of The Jacksons — began in Japan in the fall of 1987 and moved to Australia, the US and Europe, then back to Japan before ending in January in Los Angeles. The Japanese, who turned out 450,000 strong to see him, was as affected by “Michaelmania” as the other four million who jammed stadiums on several continents, sometimes paying “scalpers” as much as $1,000 ticket, many of which had been forged. The concert frenzy boosted sales of Michael’s Bad album to more than 20 million. His Thriller album sold some 40 million worldwide and is still the biggest-selling album in history. Bad has spawning unprecedented five No. 1 singles: “I Can’t Stop Loving You,” “The Way You Make Me Feel,” “Bad,” “Man in the Mirror” and “Dirty Diana,” and helped sales of his autobiography, Moonwalk [some 450,000 copies have been sold in 14 countries], and videos Moonwalker, which sold over 500,000 copies in the US alone. Wherever he appeared, Michael drew celebrities in droves: Prince Charles and Princess Diana, Ava Gardner, Joan Collins and Harrison Ford in London; Sophia Loren and Gina Lollobrigida [who had not spoken to each other in years until Michael brought them together for a photo] in Rome; Elizabeth Taylor and Bob Dylan in Geneva; Grace Jones and designer Patrick Kelly in Paris; opera star Placido Domingo in Hamburg; Altovise Davis and Roger Moore in Nice, and Gregory Peck, Barbara Streisand, Sylvester Stallone and Sidney Poitier in Los Angeles. At most stops, Michael showed his concern for underprivileged children by inviting them to concerts as his personal guests and contributing to hospitals, orphanages, and other charities. In New York, he donated $600,000 to the United Negro College Fund, boosting the UNCF/Michael Jackson Scholars program that now funds the education of 78 students at Black colleges. It is no exaggeration to say that much of the entire world waits to see if, at age 30, after 25 years in the spotlight, Michael will indeed “retire.” Or, as with Muhammad Ali, Sugar Ray Leonard, Frank Sinatra, and others, the familiar roar of the crowd brings him back on stage for at least one more encore“.

Leave Me Alone was released in February 1989, as the eighth single from the album, though only outside of the United States and Canada. The song was recorded during the original album sessions but only appeared on the CD editions of Bad as a bonus track and the 2001 cassette edition. Internationally, the song peaked at No. 1 and two in Ireland and the United Kingdom, respectively, and reaching the top 10 in Belgium, New Zealand, and Spain.

The short film – which is a masterpiece – was the recipient of a Grammy Award in 1990 for Best Music Video.  Despite the success of the single, the song never appeared on Jackson’s world concert tours.

That’s how this so much-awaited, mocked, celebrated, and feared album came to life. The album BAD was released on August 31, 1987.

 Sources:

  • “Michael Jackson”  Biographie  – P. Manoeuvre (1988)
  • “MICHAEL JACKSON” de Tom Lamotta (1988)
  • “Sequins & Shades “The Michael Jackson reference Guide” De Carol D. Terry  (1987)
  • Les Enfants du rock (1986)
  • https://disney.fandom.com/wiki/Captain_EO