Just as he finds himself sitting in a courtroom, pondering the possibility of prison and fighting the legal battle of his life, Michael Jackson is now also facing an urgent financial crisis that could cause him to lose part of his valuable music publishing business.
The onetime King of Pop, whose lavish spending and mounting legal bills have caused him to borrow heavily against his music publishing assets, is being asked to immediately sell part of his business to satisfy debt.
Jackson’s Mijac Music Publishing, which includes the performer’s own hit songs as well as songs from other top acts such as Elvis Presley and Sly and the Family Stone, is valued at about $150 million. But Jackson has borrowed $69 million using Mijac and his Neverland home as collateral. Neverland is valued at $55 million. To service the interest on that loan, which was made by Bank of America (nyse: BAC – news – people ), Jackson is required to maintain a pool of $3 million. However, he recently missed a $350,000 payment to the pool, prompting his lenders to threaten to call the loan, according to sources close to Jackson.
As a result, a group, including some of Jackson’s business and legal advisers, has crafted a proposal for him to sell Mijac and has given him until early next week to make a decision.
The singer, however, is said to be preparing to fight the move and instead is seeking to refinance the debt and pay off Bank of America. Also, at least one billionaire businessman has been in contact with Jackson in recent days, discussing a possible plan to salvage the singer’s finances.
Jackson, who has a total of $339 million in debt owed to Bank of America, has been facing a cash crisis for some time. In addition to the $69 million loan, he has received another loan of $270 million, secured by his 50% stake in Sony/ATV, a music publishing business that owns more than 300,000 songs, including 200 titles from the Beatles. Jackson’s stake in that business is valued at about $450 million. That loan, however, is due at the end of this year, meaning that Jackson’s crisis will mount if not addressed.