2 Feb 2021 07:00
LEI: 213800752UO1CJTV8C39
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR TO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL.
2 February 2021
ROUND HILL MUSIC ROYALTY FUND LIMITED
("RHM" or the "Company")
Acquisition of Pipeline Investments
The Board of Round Hill Music Royalty Fund Limited is pleased to announce the Company's acquisition of identified Pipeline Investments as detailed in the prospectus published by the Company on 19 October 2020 (the "Prospectus").
Acquisition of Pipeline Investments
In the Prospectus, the Company identified a portfolio of Catalogues the acquisition of which would be consistent with the Company's Investment Policy and the achievement of its Investment Objective. The Pipeline Investments comprise the existing assets of Round Hill Fund One, a private fund whose investments are managed by Round Hill. The Pipeline Investments were independently valued with an aggregate valuation of US$363 million, and achieved a net publisher's share ("NPS") multiple of 16.2x, on US$22.4 million of NPS for the trailing twelve months ending 30 June 2020.
To ensure the capital raised at the end of 2020 is invested in a timely manner, the Board has resolved to acquire the Pipeline Investments by way of a two-step process.
First Investment
The first step comprises the acquisition of the assets of Round Hill Fund One excluding its shareholding in RH Carlin Holdings LLC ("Carlin") (the "First Investment") which was completed on 1 February 2021. The total cash consideration payable by the Company in respect of the First Investment is US$281,860,320 which represents 86 per cent. of the gross proceeds raised in the Company's IPO and subsequent placing. This consideration represents the independent valuation of the assets acquired as at 30 June 2020. Under the terms of the acquisition, the Company is entitled to receive all income generated by the assets with effect from 1 January 2021, regardless of when the income was earned. The First Investment includes iconic Copyrights from artists such as the Beatles, Marvin Gaye, Celine Dion, Rod Stewart, Phil Collins, James Brown, The Offspring, Kiss, Back Street Boys, Lady A and many more. The First Investment is extremely well diversified by genre and income type with a significant proportion of the Copyrights from the period between the 1960s and the 1990s. Further details of the Catalogues contained in the First Investment are set out in the table below.
Second Investment
The second step will involve the Company's acquisition of a 29.14 per cent. share in the Carlin Copyrights owned by Round Hill Fund One (the "Second Investment"). Carlin's underlying portfolio comprises over 100,000 Copyrights across multiple genres from jazz, country, pop, rock and dance, including classics made famous by artists such as Elvis Presley, Meatloaf, James Brown and Billie Holiday, including songs such as "What A Wonderful World", "Total Eclipse of The Heart", "Happy Together", "Under the Boardwalk", "Are You Lonesome Tonight" and many more. The Company is progressing due diligence into Carlin and its assets, and negotiating the terms of the acquisition documentation. Despite difficulties relating to COVID-19, including the closure of the Copyright Office of the Library of Congress in Washington D.C, and personnel within the legal firms advising the Company contracting the virus, it is currently anticipated that the acquisition of the Second Investment will complete no later than 31 March 2021. The consideration payable by the Company in connection with the acquisition of the Second Investment will reflect the underlying valuation of the Copyrights owned by Carlin as of 30 June 2020.
The Board is also pleased to announce that detailed heads of terms have been agreed with Truist Securities, Inc. ("Truist") under the terms of which Truist will act as lead arranger to provide, arrange or place a revolving facility for the Company (the "RCF") with a syndicate of banks and other institutional lenders. It is anticipated that the RCF will be utilised to part finance the Second Investment as well as to acquire future pipeline opportunities.
Following the completion of the Second Investment, the Company will have fully invested the capital raised in the IPO and subsequent placing. Round Hill continues to build an exciting and high-quality near term pipeline of Catalogues with an acquisition value of approximately US$500 million. The Board is exploring various options to facilitate the acquisition of these opportunities, including a potential equity raise.
Dividend
Following the completion of the Second Investment as described above, the Company anticipates paying to Shareholders the stated annualised dividend of 4.5 per cent. for the financial period to 31 December 2021. The first interim dividend is expected to be declared in March 2021 and paid in June 2021.
Commenting on the acquisition, Trevor Bowen, Chair of the Company said:
"I am delighted to announce the first acquisition of the Company since its IPO, which comprises exceptional songs and catalogues including classic tracks from some of the world's best-known songwriters and artists. With the acquisition now complete, the Company has deployed a significant proportion of the gross proceeds raised in its recent IPO and subsequent placing. The Board remains totally committed to completing the acquisition of the Second Investment by the end of the first quarter of this year, thereby continuing to deliver the Company's investment objective and policy. The Board is pleased that the initial acquisition has been completed well within the anticipated timeline as outlined in the Prospectus and looks forward to working with Round Hill to take advantage of the strong existing pipeline for the benefit of Shareholders."
Josh Gruss, CEO of Round Hill commented:
"All of the team at Round Hill are thrilled to have completed the maiden acquisition by the Company of Copyrights which are already well known to Round Hill in such a timely manner. We are working hard to complete the acquisition of the shareholding in Carlin in short order. Once this has been completed, we can turn our attention to our longer-term pipeline of investment opportunities, where we are witnessing a large amount of exciting and high-quality Catalogues for the fund."
Details of the Catalogues to be acquired as part of the First Investment
The Copyrights comprised in the First Investment have the following characteristics:
· US$282 million independent valuation as at 30 June 2020;
· over 18,000 musical compositions;
· 38 plus individual Catalogues;
· over 85 per cent. of the income generated by the portfolio were in respect of compositions written between 1950 and 2010;
· diversified in terms of genre (Rock (approximately 30 per cent.), Country (approximately
30 per cent.), Pop (approximately 19 per cent.), Classical R&B (approximately 8 per
cent.) and Various (approximately 13 per cent.));
· diversified in terms of income type (performance (approximately 37 per cent.), master
recordings (approximately 28 per cent.), synchronisation (approximately 19 per cent.), mechanical (approximately 12 per cent.) and other (approximately 3 per cent.)); and
· generated net royalty income in excess of US$83 million to date.
Catalogue | Songs in Catalogue | Primary Decade | Comment |
Adage V | 315 + 5,200 cues and themes | 1960s and 1970s | Contains classic songs from R&B and jazz songs from the 1960s and 1970s such as "Land of A Thousand Dances", "Mercy, Mercy, Mercy", "Birdland" and "I Can't Stand The Rain". Also, contains thousands of themes and cues from iconic children's TV programmes such as Pokemon, Yugioh and Sonic X, which earn steady performance income worldwide |
Gerald Marks | 333 | 1940s | Features jazz standard "All of Me," recorded by artists including Frank Sinatra, Ella Fitzgerald, Billie Holiday and Michael Bublé |
Charlie Midnight | 608 | 1980s | Contains hits by artists such as James Brown, Joni Mitchell, The Doobie Brothers, Britney Spears, Seal, Billy Joel, Christina Aguilera, Hilary Duff, Big Time Rush, Whiskey Falls, Paul Stanley and Dan Hartman. Key song "Livin' In America" |
GIL/GPS | 446 | 1960s | Artists such as The Rolling Stones, Otis Redding, Patti Page, The Del Vikings, John Lee Hooker, Gene McDaniels, Groove Armada, Pat Boone, Ricky Nelson and six famous Beatles songs: "She Loves You", "I Saw Her Standing There", "From Me To You", "Misery", "I Wanna Be Your Man" and "There's a Place" |
Arthouse | 176 | 2010s | Cultural anthems of this decade from artists including Bruno Mars, CeeLo Green, Carrie Underwood, Katy Perry and more |
Calvin Lewis | 3 | 1960s | Features rights to the hit song "When a Man Loves a Woman," recorded by artists including Percy Sledge, Michael Bolton, Marvin Gaye and Art Garfunkel, amongst others. The song was named the 54th most popular song of all time by Rolling Stone Magazine |
Kid Rock Writers | 28 | 1990s | Consists mainly of songs from Kid Rock's album Devil Without a Cause, which has sold over 11 million albums worldwide |
Marti Frederiksen | 330 | 2000s | Features compositions by iconic rock artists, including: Daughtry, Aerosmith, Def Leppard, Fuel, Mötley Crüe, Ozzy Osbourne, Gavin Rossdale, Foreigner, Buckcherry and more |
Spacehog | 45 | 1990s | Contains the entire repertoire of songs from the band Spacehog including publishing and master rights to "In The Meantime" |
Vinnie Vincent | 25 | 1980s | Represents hit songs from the worldwide legendary rock band Kiss including "Lick It Up" |
Stephan Chamberlain | 23 | 1980's | Represents hit songs from the iconic hard rock band Warrant |
Big Tractor | 3700 | 2000s | Represents classic country hits such as "I Saw God Today" by George Strait and "Amazed" by Lonestar and also represents newly released singles from country superstars Blake Shelton and Hunter Hayes |
Bush Masters | 57 | 1990s | Consists of master assets of hard rock music that includes post Nirvana '90s grunge hits such as "Glycerine", "Everything Zen", and "Machinehead" |
Monty Criswell | 192 | 2000s | Includes approximately 192 demoed songs, 28 of which have been cut. Many of the uncut but demoed compositions are street ready for continued exploitation in the marketplace |
Andreas Carlsson | 402 | 2000s | Includes hits by various artists including: N Sync, Backstreet Boys, Britney Spears, Celine Dion, Katy Perry, Carrie Underwood and Bon Jovi |
Tesla | 70 | 1990s | Contains all of Tesla's biggest hits over the last 30 years such as "Love Song," "Modern Day Cowboy," "Gettin' Better" and "Comin' Atcha Live" |
Bosshouse | 695 musical works; 827 masters; 132 compilations | 2000s | The iconic shows and films that the songs are for include: Dexter, True Blood, CSI, Shameless, Pretty Little Liars, Smallville, Frasier, Buffy The Vampire Slayer, ER, Lost, Diary of A Wimpy Kid, and American Idol |
Howie Day | 100 | 2000s | Includes the royalty income stream from publishing and master recordings of Howie Day's work, including the hit song "Collide" |
Root 49 | 635 | 2000s | Contains song catalogues of talented songwriters such as Bridgette Tatum, Danny Myrick, and Odie Blackmon and includes major hit by Jason Aldean "She's Country" |
Big Loud Shirt | 7000 | 2010s | Over 30 #1 hit Country singles including Grammy Awards for Country Song of The Year for "Blown Away", "Before He Cheats", and "Live Like You Were Dying" |
Wade Kirby | 80 | 2010s | Includes cuts and singles by George Strait, Blake Shelton, Jason Aldean, Faith Hill, Darius Rucker, Craig Morgan, Tate Stevens, Joe Nichols, Billy Currington, Gretchen Wilson and many others |
Eddie Schwartz | 1 | 1980s | One song catalogue. "Hit Me With Your Best Shot" by Pat Benatar has sold well over a million copies in the U.S., achieving a gold certification by the Recording Industry Association of America |
Josh Kear | 148 | 2000s | In 2007, he had his breakthrough number one song with Carrie Underwood's massive hit "Before He Cheats" which spent five weeks at the top of the charts. Also "Need You Now" by Lady A which was also a massive hit and covered by Adele. In November 2014, Josh celebrated his 10th number one song "Neon Light" by country superstar Blake Shelton |
Eddie Holland | 300 | 1960s | Catalogue contains 25 #1 hit singles, including: "(Love Is Like A) Heat Wave" by Martha & the Vandellas, "How Sweet It Is (To Be Loved By You)" and "Baby Love" by Marvin Gaye, and "Stop! In the Name of Love", "You Can't Hurry Love", and "You Keep Me Hangin' On" by The Supremes. In addition to the original Motown artists, artists such as Rod Stewart, James Taylor, and Phil Collins have recorded their versions of these songs |
Florida Georgia Line | 53 | 2010s | FGL's #1 hits include: "Cruise", "Get Your Shine On", "Round Here", "Stay", and "This Is How We Roll" and are some of the biggest all time Country hits |
The Offspring | 135 | 1990s | The Offspring is a band formed in Huntington Beach, CA in 1984. They have sold over 40 million albums worldwide and are considered one of the best-selling punk rock bands of all time |
Jimmy Robbins | 145 | 2010s | Jimmy has written songs for Luke Bryan, Kelly Clarkson, Lady A, Keith Urban and many others. His song "Gonna Want You Tonight" was the 10th most played song on Country radio in 2015 |
Toby Keith | 126 | 2000s | Included in the catalogue is the song "I Love This Bar" which reached #1 on the Country charts in the autumn of 2003 and stayed in that position for 5 weeks |
Suzy McNeil | 21 | 2010s | Suzy is a Canadian pop rock singer and songwriter who first garnered attention as a contestant on Rock Star: INXS in 2005 |
Bob DiPiero | 230 | 2010s | Bob DiPiero has written 15 U.S. #1 hits and countless top 20 hits for the likes of Tim McGraw, The Oak Ridge Boys, Reba McEntire, Vince Gill, Faith Hill, Shenandoah, Neal McCoy, Highway 101, Restless Heart, Ricochet, John Anderson and George Strait, among others |
Al Anderson | 1 | 2010s | "Loving You Easy" is a song recorded by American Country music group Zac Brown in 2015. The song achieved #1 on Billboard's U.S. Country Airplay in August 2015 |
Chris Tompkins | 156 | 2000s | Chris Tompkins has consistently been a top Country music writer and he started working with Big Loud Shirt in 2006. Hits include "Blown Away" by Carrie Underwood |
Triumph | 170 | 1980s | Masters of classic rock band from Canada who had commercial success in the 1980's with "Lay It On The Line" and others. Triumph is one of Canada's most important musical icons |
Eric Carmen | 152 | 1970s | Eric Carmen wrote 100% of "All By Myself" which was a major hit for himself as well as Celine Dion. Catalogue also includes hits such as "Hungry Eyes" from the Dirty Dancing soundtrack and "Make Me Lose Control" |
Jani Lane | 53 | 1980s | Jani Lane was the principal songwriter for the 1980s' rock band Warrant. Songs include "Cherry Pie", "Heaven" and "Down Boys" |
Ted Nugent | 154 | 1970s | Hits include "Stranglehold", "Cat Scratch Fever" and songs by Damn Yankees such as "High Enough" |
Louis Yoelin | 4500 | 2010s | TV cues and background music |
Pressman Film | 142 | 2010s | Soundtrack to the movie "The Man Who Knew Infinity" |
Co-Pub
| 5587 | 2010s | Main co-publishing songs are "Best Day of My Life" by American Authors |
Admin | 3409 | 1970s | Includes administration rights to Neil Sedaka and others |
Source: Round Hill Music
The Company is committed (subject to any confidentially obligations to which it might be subject) to provide full details in respect of the Catalogues it acquires. As such, more details on the Pipeline Investments, including key assumptions of the third-party valuation, royalty income history of each catalogue and more can be found at: www.roundhillmusicroyaltyfund.com.
Unless the context otherwise requires, capitalised terms used in this announcement have the meanings given to them in the Prospectus.
FOR FURTHER INFORMATION
Round Hill |
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Josh Gruss, Chairman and CEO | via Buchanan below |
Neil Gillis, President |
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Cenkos |
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Sales: |
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Justin Zawoda-Martin | +44 20 7397 1923 |
Daniel Balabanoff | +44 20 7397 1909 |
Andrew Worne | +44 20 7397 1912 |
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Corporate: |
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James King | +44 20 7397 1913 |
Will Talkington | +44 20 7397 1910 |
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Buchanan |
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Charles Ryland | +44 20 7466 5107 |
Henry Wilson | +44 20 7466 5111 |
Hannah Ratcliff | +44 20 7466 5102
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Notes:
The Company is a newly incorporated non-cellular Guernsey company. The Company's Investment Objective is to provide investors with an attractive level of regular and growing income and capital returns from investment primarily in high quality, music intellectual property. In order to achieve its Investment Objective the Company will invest in a songwriter's copyright interest in a musical composition or song (being their writer's share, their publisher's share and their performance rights) together with the rights in the recording of the musical composition or song (known as the master recording rights) together with all such rights and assets considered by its investment manager, Round Hill Music LP ("Round Hill") to be ancillary thereto.
Founded in 2010, Round Hill is a fully integrated owner and operator of music copyright properties and the seventh largest music publishing company in the US. Headquartered in New York with additional offices in Nashville, Los Angeles and London, Round Hill has an experienced management and investment team with an established reputation and extensive experience in the music and finance industries.