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Warner to Pay Back Investors

Times Staff Writer

Warner Music Group, the giant music company bought this year by a group led by Edgar Bronfman Jr., said Monday that it would return $350 million to its shareholders.

Warner, whose artists include Green Day, Madonna and Linkin Park, said it had extra cash to return to investors as a result of the company’s improved balance sheet and lower-than-expected restructuring costs.

“Our profitability and cost saving initiatives are running ahead of plan,” Bronfman, chairman and chief executive of Warner Music Group, said in a statement. “The company has significant extra cash on hand.”

The privately held company reported a cash balance of $519 million as of Aug. 31, up from $421 million on May 31.

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Bronfman bought the music company in March for $2.6 billion from Time Warner Inc., which has an option to buy as much as 15% of the company for three years after the deal closed.

The announcement comes as Warner weighs whether to launch an initial public stock offering early next year, raising as much as $5 billion to cash out the investors that financed the acquisition.

Under terms of a previous agreement, the $350 million will go toward paying off some of the money put up by private equity backers that include Thomas H. Lee Partners and Providence Equity Partners.

Warner Music officials declined to comment beyond the statement. Giving the private equity firms some of their money back before a public offering could give them a higher rate of return, industry insiders said.

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“This is standard private equity practice,” said one industry expert who asked not to be identified.


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