WMG Restructures Debt -- Ahead Of Big Buy?

Improving Debt Terms

WARNER MUSIC GROUP is asking its lenders to agree to a deal that will likely raise its interest payments next year but improve its debt terms as it seeks financial flexibility to cope with shrinking profits, reports REUTERS. WMG is asking lenders to extend the maturity of some loans and to amend agreements which will give WARNER "greater flexibility" to incur additional debt, according to a regulatory filing on TUESDAY.

PALI RESEARCH analyst RICHARD GREENFIELD said the full debt document WARNER MUSIC specified that the new notes can be redeemed before 2013 at a to-be-specified value if a major music transaction occurs. He said the most obvious target would be EMI.

"We take this to mean that WARNER MUSIC GROUP is looking to give itself more flexibility should a merger with EMI present itself over the next couple of years," said GREENFIELD in his note to clients.

Shares of WARNER MUSIC closed up 9.6%, or 52 cents higher, at $5.92 on the NEW YORK STOCK EXCHANGE.

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