After months of hot pursuit by his creditors, open revolt by his unpaid employees and speculation of his imminent financial ruin, Michael Jackson appears to be on the brink of a refinancing deal to stave off bankruptcy - at least for a while.
The New York Times reported yesterday that Fortress Investment, the finance company holding $270m (£154m) in outstanding loans to the eccentric pop idol, has agreed to extend him a new line of credit of $300m (£171m) and reduce his interest payments from more than 20 per cent to about 6 per cent.
The deal will provide some relief for Jackson, who was recently fined by California labour standards authorities for falling several months behind in salary payments to staff at his Neverland ranch in California, which has all but closed. Jackson now appears to have taken up semi-permanent residence in Bahrain.
The focus of the refinancing negotiations has been Jackson's 50 per cent stake in the Sony/ATV Music catalogue, including most of the Beatles' songs. Key to the new deal, according to the NYT, is Sony's determination to take over Jackson's share of the catalogue. If Jackson were to declare bankruptcy, the catalogue might well be auctioned off and elude Sony's grasp. It has been valued between $500m and $1bn.
Under this deal, Jackson gets some financial breathing space and Sony extracts a commitment that he will begin handing over his rights to the catalogue.
Jackson has been reluctant to part with the catalogue, because it forms the most significant source of income he has left.
His efforts to re-release his old hits have had a limited impact on the market, and a much-promised charity record to benefit victims of last autumn's Hurricane Katrina never materialised.Reuse content