Bailout

Annie Leibovitz is now $30 million in debt

By Felix Salmon

Allen Salkin has some new facts in the continuing saga of Annie Leibovitz and Art Capital Group: the amount that Leibovitz owes Art Capital has now ballooned to $30 million (the original loan, taken out in September 2008, was for $24 million); and the maturity date on the loan has now been extended only to “next summer”:

A mortgage filed with New York City in October notes, partially in capital letters, the urgency and complexity of the agreements between Ms. Leibovitz and Art Capital: ?TIME IS OF THE ESSENCE with respect to each and every covenant, agreement, and obligation of mortgagors under this mortgage, the secured loan agreement and any and all of the other loan documents.?

Leibovitz does seem to be making good-faith efforts to make as much money as she can: she’s reportedly sold two “Master Sets” of 157 prints at $2.5 million apiece (she’s using Lawrence Schiller to broker those deals, which worries Marion Maneker), and she’s talking to Benedikt Taschen about a book deal. But it seems unlikely that she’s going to be able to raise $30 million in less than a year — and it seems even less likely that she’s going to be able to refinance into the bond market.

Salkin reports:

As she tries to increase her earnings, Ms. Leibovitz is also seeking to restructure her debt. She has met with the Pullman Group, the company that issued bonds based on the catalogs of Mr. Bowie, James Brown, the Isley Brothers and others, according to the source who consulted with Ms. Leibovitz but is bound by confidentiality. But Ms. Leibovitz would have to demonstrate that her future earnings would arrive in a dependable and clearly accountable fashion before any bonds could be sold, the source said.

Bonds are good ways of securitizing an income stream — but Leibovitz just has intellectual property, as opposed to anything which looks like a predictable income stream. And to make matters worse, that intellectual property is encumbered by a whopping great lien.

At some point next year, then, Leibovitz is going to find herself back where she was in August: with a huge loan maturity looming, no cash to pay it back, and no ability to refinance except for on Art Capital’s terms, since they hold all the relevant liens. Salkin makes no mention of Leibovitz trying to sell the rights to her art, which means that her only hope of avoiding a replay of this summer’s nightmare is to try to cobble together $30 million between art sales and real-estate sales. It’s not impossible, but it’s definitely unlikely, and of course it would mean Leibovitz losing her beloved custom-built Manhattan studio, along with her home in Rheinbeck.

So the chances of a happy ending here, for anybody concerned, are still very slim. And I suspect that Art Capital Group will think long and hard before ever again advancing a loan against intellectual property, as opposed to real physical art.

Full post as published by Macroprudential on December 11, 2009 (boomark / email).