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Reservoir Going Public by SPAC to Buy More Catalogs

Ross CH Acquisition II is bringing $115 million to Reservoir’s public providing as a part of the deal. Some institutional buyers together with Caledonia have been lined up as anchor shareholders, which is able to herald $150 million in gross proceeds.

In the long run, after funding banking, authorized charges and different bills, Reservoir shall be left with $246 million in gross proceeds from the transaction. The corporate’s present shareholders, together with the Khosrowshahi household, will roll over all their Reservoir fairness into the brand new firm, giving it an enterprise worth of $788 million.

That implies that the Reservoir shareholders will probably have a lock-up interval — perhaps 180 days — earlier than they will money in any of their shares. Within the meantime, the corporate has an implied pro-forma fairness worth of $740 million at $10 a share, in keeping with the announcement, which additional implies it additionally has $48 million in internet debt.

This deal will present Reservoir with a decrease price of capital within the fast-paced, high-stakes music asset buying and selling world, permitting it to observe the Hipgnosis business strategy of discovering music property for acquisition after which tapping the general public markets to fund the offers. It additionally offers a means for present Reservoir shareholders to ultimately understand among the worth they’ve created by shares they’ll personal within the new car.

“As we speak we’ve taken an necessary step ahead in Reservoir’s evolution to totally understand that imaginative and prescient via our partnership with Roth CH II,” Khosrowshahi mentioned in an announcement. “Our dedication to our songwriters and artists and their music is on the coronary heart of every thing that we do, and this path to development helps our promise to service our purchasers, improve worth, and construct a top quality catalog. I’m immensely pleased with what we’ve constructed alongside President & COO Rell Lafargue, and our unbelievable workforce whose wonderful expertise, high-touch consumer service, and excellent monitor file is unmatched.”

Reservoir’s catalog consists of music by 2 Chains, A Boogie Wit Da Hoodie, A-Ha, Ben Harper, Huge & Wealthy, Bob Crewe, David Guetta, Evanescence, Hoagy Carmichael, Ja Rule, John Denver, Kurt Elling, Leon Ware, Lil Jon, Migos, Molly Hatchett, Rickie Lee Jones, Scott Storch, Scott Stapp, Seether, Sheryl Crow, Stewart Copeland and Willie Mitchell.

The corporate says it has deployed over $400 million in catalog acquisitions — together with just lately buying the catalog of indie music publishers Shapiro Bernstein — since its inception, and spent one other $100 million in frontline artistic signings. The corporate says it additionally owns 26,000 sound recordings, and its administration enterprise handles over 60 purchasers.

“We’re thrilled to be partnering with Reservoir and its distinctive management workforce,” in keeping with an announcement issued by Roth Capital and Craig-Hallum, the sponsors of the Roth CH II. “Reservoir has constructed an excellent assortment of hit songs and soundtracks in each its music publishing and masters companies, and has a novel and differentiated worth enhancement mannequin that drives extremely engaging returns. We’re enthusiastic about Reservoir’s robust money circulation producing capabilities in a rising trade with important tailwinds. The portfolio is absolutely diversified in all genres of music with among the most iconic hits of the previous hundred years. We sit up for Reservoir pursuing future natural development and acquisitions on this thrilling sector underneath consolidation.”

The board of administrators of Reservoir and ROCC have unanimously accepted the transaction. The transaction would require the approval of the stockholders of ROCC and is topic to different customary closing situations.

Roth Capital Companions, LLC and Craig-Hallum Capital Group LLC are performing as placement brokers for the PIPE transaction with the anchor share holders whereas Goldman Sachs is performing as monetary advisor to Reservoir. Authorized respresentation for the music publishing agency was dealt with by Paul, Weiss, Rifkind, Wharton & Garrison LLP whereas Loeb & Loeb LLP is serving as authorized advisor to Roth CH II.

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