Sanctuary Talks To Asian Investors

The beleaguered Sanctuary Music Group is holding talks with Asian investors, according to the U.K.’s Sunday Telegraph.

The company has not named the interested party but earlier reports had Crosby Capital Partners, an AIM-listed, Hong Kong-based investment and asset management group among the possible bidders.

London-based, stock-listed Sanctuary announced it received "a number of takeover approaches" earlier in the month, with Warner Music and Universal Music Group reportedly among the interested parties.

Sanctuary’s share price has benefited from the takeover talk but – certainly in the short term – it looks to have stalled The Agency Group’s bid to buy its Helter Skelter booking agency.

Agency Group chief Neil Warnock is known to have had one offer knocked back because the price wasn’t right, but Helter Skelter could be running out of shelf life.

Although it has an impressive international roster that includes Amy Winehouse, Corinne Bailey Rae, Dido, Dixie Chicks, James Morrison and Kaiser Chiefs, many of the senior agents – Pete Nash, Paul Franklin, Paul Bolton, Adam Saunders and Nigel Hassler – have only a few years left on their work contracts.

Over the last two years, former agents including Ian Huffam, Jeff Craft, Steve Strange, Emma Banks and Mike Greek opted not to renew at the end of their contract terms.

Huffam, Craft and Strange split at the beginning of 2005 and set up X-Ray Touring, which is now arguably London’s biggest agency in terms of the number of shows it books.

Banks and Greek left to join Creative Artists Agency’s new London operation.

The moves cut Helter Skelter’s senior agent count and the strength of its roster by at least a half. The remaining half has a shelf life of about two years, as far as agent contracts are concerned.

Warnock hasn’t commented on his Helter Skelter offer, although Sanctuary’s PR company has confirmed he made one. He is on record saying he has a high opinion of all the agents there.

Whatever the eventual outcome, Sanctuary chairman Bob Ayling has been forced to exclude Evolution Securities – the company’s brokers – from any discussions on what some sections of the U.K. business pages are describing as an auction.

Although Evolution is Sanctuary’s broker, a little-needed set of Financial Services Authority rules bars it from advising the board on any approaches because of its involvement in an emergency rights issue last year.

Last year, Evolution pulled Sanctuary back from the brink of the abyss by raising £110 million (US$217 million) with a 50 pence per share rights issue.

The discrepancy between the fund-raising price (Sanctuary shares have lost two-thirds since then) and any new offer price means Evolution’s involvement in the talks has to be restricted.

The Sanctuary board has appointed Deloitte to provide an independent view on any offers being tabled.

Sanctuary stock is now trading at 16.5 pence per share, although Ayling and company chief exec Frank Presland reportedly hope to pull in bids of 25 pence per share.

The company, which has an extensive management roster including Elton John, The Who and James Morrison, has been in and out of takeover talks for years.

Ayling, formerly head of British Airways, was drafted in as chairman a year ago.

Since then, he’s seen the departure of company founders Andy Taylor and Rod Smallwood, the former somewhat controversially and due to irregularities in Sanctuary’s accounting practices.