The initial public offering for Warner Music Group has officially launched.

Here is a breakdown of what it entails.
  • 70,000 shares of Class A Common stock will be available, between $23-26/share
  • Gives the company equity valuation of about $12.5 billion, with net debt of $2.5 billion for the second fiscal quarter (March 31)
  • Two types of common stock: Class A and Class B; Trade on Nasdaq under “WMG”
  • Parent company, Access Industries, holds Class B stocks, which means they represent 99.2% of total combined voting power of outstanding common stock
  • Their enterprise valuation is about $15 billion. WMG will be a controlled company and may not elect to comply with certain governance standards under Nasdaq rules

What this means is WMG will not receive any proceeds from sale of shares being sold from stockholders. Underwriters have 30 days to purchase up to an additional 10,500,000 shares of Class A common stock.

So, What Else Is There?

Billboard reported that this time is a partially good time for WMG to come to market. Why? Because the stock market is recovering slowly and before there is a presumed second wave of the pandemic. It could be time to make moves. Class B shares currently value at $2.21. Morgan Stanley, Credit Suisse Securities, and Goldman Sachs act as underwriting representatives for this offering.

Since March, the pandemic placed this IPO on hold but it is now out in the open. The company states that certain points in their balance sheet have improved since the economy shut down. Total revenue plummeted in April, but streaming revenue became their saving grace. Growing 12% to $183 million, publishing digital revenue also grew to $22 million.

Physical goods revenue is declining, but digital revenue is projected to grow year by year. Licensing and ad-supported streaming revenue have also declined due to reduced ad spending.

“The severity and the duration of the pandemic is difficult to predict but it is expected that the pandemic will materially and adversely affect the global economy, creating risk around the timing and collectability of our accounts receivable and leading to a decline in consumer discretionary spending which, in turn, could have a negative impact on our results of operations, cash flows and financial condition” – WMG

Remember to read the fine print and do your research. Music will make its comeback and we are ready for it. Welcome to the public, WMG.