Chris Whittle/Splash News
04/14/2006 at 08:00 AM EDT
Michael Jackson, who has teetered on the brink of financial ruin for years, has signed an agreement with a Wall Street hedge fund to refinance hundreds of millions of dollars in loans that will save his troubled entertainment empire and his California Neverland estate – though the deal could also portend more money woes in the future.
"This is a done deal," said a source familiar with the negotiations between Jackson's representatives in Bahrain and New York-based Fortress Investment Group, which has refinanced Jackson's loans for $300 million. "It means cash is coming in."
The refinancing, according to the insider, would pay off a $272.5 million loan to Fortress, a hedge fund that deals with distressed companies. The balance between the old loan and the new one would give Jackson "spending money," according to the source.
But there is a catch to all of this. As part of this deal, Sony Entertainment, which co-owns the Sony/ATV music catalog that includes the songs of the Beatles (which Jackson purchased in 1985), has an option to buy 25 percent of the catalog in the future. Sony and Jackson share the rights to the lucrative catalog.
In 1998, Sony paid Jackson $100 million for half of what has been called the Beatles Catalog, which is considered the crown jewel of the recording industry. The source said the value of the Sony/ATV catalog is now worth between $2.5 and $3 billion with an annual growth rate of 12 to 15 percent.
Jackson, 47, signed the deal in Bahrain, where he has been residing with his children as guests of the royal family. He was assisted in the deal by Ahmed al Khan, an attorney for Sheik Abdullah, the son of the ruler of Bahrain.