CAK Universal Credit Corp. has the mandate on the first-ever securitization of royalty rights associated with a magazine.
The proposed deal, which looks to be $65 million in size, would be structured similarly to other "controlled rights" intellectual property securitizations structured by CAK.
"I don't know whether we're going to get there," said Robert D'Loren, president and chief operating officer at CAK. "We're trying to determine whether it's doable or not."
As a departure from true royalty-backed deals, in a media deal, the revenue is tied to a contractually obligated income stream. The challenges arise in legally and mechanically trapping and securing that stream.
Other challenges for a media deal include being able to predict future subscription levels, which is essentially gauging the future popularity of the magazine, said Jay Eisbruck, analyst at Moody's Investors Service.
"Clearly you have the risk of bankruptcy or the shutdown of the magazine," Eisbruck added. "If it's a future subscriptions deal, and the magazine gets shut down, you're not going to have any future subscriptions."
CAK is still working on a trademark deal associated with a shoe company, an apparel deal, and a retail franchise royalty-backed deal. D'Loren anticipates launching at least two of these at or near quarter-end. The deals range between $40 million and $50 million in size.
CAK is also the mergers-and-acquisitions (M&A) advisor for Converse Inc., which filed for bankruptcy in January. There were attempts by various firms last year to securitize the Converse brand, but a deal never came to market.
"We got it to the double-B level, we just didn't pull the trigger on it," D'Loren said.