Eggs Mayonnaise
All In With The Nuts
Not to be a downer for you my friend, but I thought it was newsworthy...although I doubt he's used up all his chances just yet...
Jacko: Financial Wipeout Imminent
Michael Jackson is in his 11th hour of financial peril.
On Tuesday, Dec. 20, he will be declared officially in default by Fortress Investment Group on loans of $270 million. Jackson, knowing this day has been drawing near for the last year, has done nothing whatsoever to ameliorate the situation, sources tell me.
On the 20th, Fortress will have the ability to foreclose on the loans and take possession of Jackson's half-interest in the $1 billion Sony/ATV Music Publishing company, as well as the entire MiJac Music Publishing company.
Fortress also holds an $18 million lien on the Neverland Valley Ranch.
That lien, concerning what's about to happen to Neverland, is significant.
Sources there tell me that the biweekly payroll, due last Thursday, was missed entirely. As of yesterday, the 100 or so employees at the Los Olivos, Calif., ranch were seven days past due on their two-week paychecks and a week into the next one.
I am also told that the situation at Neverland is dire. While Jackson is in Bahrain with his kids and their nanny, some of the electricity at the ranch was recently shut off by Pacific Gas and Electric.
Also, there are real fears now for the animals in Jackson's home zoo. Last week, the ranch was down to almost no food for the animals. At the last minute, sources say, a delivery was made, but it won't last long.
Fortress, which owned by New Yorker Peter Briger, is a specialty firm that buys debt. On Tuesday it will have two immediate options. One would be to exercise a "put" built into the loan agreement by which it could foreclose on Jackson and ask Sony to purchase the loans outright.
The second option, and the one Fortress will likely choose, is to foreclose and inform Jackson it will sell his assets at market prices.
If Jackson's half of Sony/ATV is really worth $500 million, as estimated in the past, Fortress could clear $300 million on the $200 million secured by the Sony catalogue. The MiJac-backed loan, which comes to $70 million including Neverland, would be sold separately.
Unclear in all this is how Jackson's minor partner, John Branca, his sometime attorney, would fare.
Branca — who was the architect of Jackson's Beatles purchase in the 1980s — has a 5 percent stake in the Sony catalog. Experts tell me that his percentage is tied to Jackson's, whatever happens.
The interesting thing here is that Jackson has known for a long time that this day was coming. He's been warned about it by his closest advisers and family members, and if he chose to, he could have read it about in a number of places, including this column.
But insiders tell me Jackson has not done anything to contact or work with Fortress. He's simply opted to ignore the situation, sources say, rather than face reality.
Last April he was offered a chance to sell half of his interest in the Sony catalogue, which would have freed up enough cash to pay all his bills and debts. That deal would have left him with a 25 percent interest in Sony/ATV Music Publishing as well.
But Jackson never answered that offer because he'd become paranoid, as usual, that somehow he was being ripped off. The deal, in fact, had been constructed by bankers at Goldman Sachs with two of his advisers, Alvin Malnik and Charles Koppelman.
The Fortress loans were purchased by Briger last May from Bank of America, which had maintained them and refinanced them for several years under the guidance of Jane Heller, a personal banker with BofA.
But Heller acquiesced to Fortress' offer after Jackson, refusing to acknowledge his dire situation, allowed grocery chain magnate Ron Burkle and the Rev. Jesse Jackson to go over Heller's head to the head of Bank of America.
Their calls were rebuffed, and Heller — now embarrassed and feeling slighted — gave up trying to help Jackson out of his self-created mess.
And there's more, including shocking revelations about how much Jackson understood from sitting in court and listening to five months of testimony about his own business earlier this year.
Next week, as we head toward the breaking point in what has been a very weird year in the final chapter of Jackson's career, I will tell you more about that.
For now, though, Jackson has one working day left — Monday — to contact Fortress and make arrangements to repay his loans.
