Universal Music Group opens an $800 million bond offering for refinancing existing debt and paying transaction fees and expenses.
Universal Music Group announced its 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 listed on Euronext Amsterdam, sold to investors outside the U.S. in reliance on Regulation S under the U.S. Securities Act of 1933. The proceeds from the issuance are going toward the refinancing of existing debt and paying transaction fees and expenses. UMG expects the offering to close on June 13.
According to the company’s financial statements, UMG had a 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 bonds in June 2022, with half of that being 3.000% senior unsecured notes due 2027. The other half was 3.750% senior unsecured notes due in 2032.
BNP Paribas and BofA Securities acted as Global Coordinators, and together with Crédit Agricole CIB, Goldman Sachs Bank Europe SE, ING, and Mizuho as Active Bookrunners on this issuance. Citigroup Global Markets Europe AG, Intesa, Mediobanca, Morgan Stanley Europe SE, MUFG Securities (Europe) NV, Natixis, Santander, and Société Générale acted as co-managers.
Ratings agency Moody’s gave an outlook of “stable” for UMG’s notes issued in 2022, citing UMG’s “best-in-class music catalog,” “experienced management team,” and “solid financial profile” in addition to the assistance it receives from “secular tailwinds” for the global music industry.
Moody’s rating also reflected challenges such as UMG’s “continued need for investments to secure new hits,” “increased competition from the emergence of financial players” in the catalog acquisition space, and unforeseen “risks related to evolving technologies” that in the past have hurt music companies’ revenues. UMG recently kept Colombian superstar Karol G’s catalog under its umbrella as she moves over to Interscope Records.