Last week's $24.7 million royalty-backed asset-backed deal for designer Bill Blass, and the SESAC performing rights-backed deal that closed last month, are likely to be the start of a steady stream of royalty-backed deals from CAK Universal Credit Corp., said company President Robert D'Loren.
"SESAC was the template for it, Bill Blass is the transaction that refined it, and the rest will sort of follow the template," said D'Loren. "We are and have been engaged to do a major sneaker company. And we are about to be engaged by another apparel company."
However, these deals are appetizers for the main course, D'Loren said.
"The big deal that we're focused on - what we've been saying for a while that we're going to do, the first pooled deal - it's really happening," said D'Loren.
The transaction, backed mostly by music assets, packages a mixture of loans, and moves the deal into the $80 million to $100 million range.
Though D'Loren would like to bring the pooled asset deal to market by the end of the year, he predicts a first quarter showing, due to Y2K concerns.
"I think the next step is that we'll see a 144A coming out of the shop," said D'Loren. "And then if we get to the point where we're aggregating enough, then we would consider a public deal."
Bill Blass, Leonard Cohen And Calvin Klein
At press time, the 4.5-year Bill Blass transaction was set to price at 350 basis points over Treasurys. Fitch IBCA gave its BBB-plus rating to the bonds, which transfer the rights of the Bill Blass label from the company, and then tap the revenue streams, allowing the investors to license back to the operating company the rights to use the trademarks.
"Then the income goes through a waterfall to the bond investors," he said. "So, in essence, if you take the marks and you take the licensing, you're really controlling the company."
Possibly in the works is a similar deal from Calvin Klein. Recently, Calvin Klein announced a he was looking to sell his company for $2.5 billion, and was in search of investors. "We've made overtures over there," said D'Loren.
A spokesman for Calvin Klein said, "Obviously the company announced it's considering a review of strategic alternatives, and it's very open ended. In other words, we're looking at all sorts of different options and really at this point haven't ruled anything out."
A music royalty deal backed by the library of Leonard Cohen was set to price last week. "As odd as this sounds, music in our shop is almost a commodity - we have standard loan documents, standard time to close the deals, it just goes through the process," D'Loren said.
He added that CAK is working on a $34 million record label backed-deal in the United Kingdom. The Sterling-denominated transaction should close by the end of the month.
"What we're doing is really cutting edge corporate finance," he said.