Patrick Drahi to pay high salary for Sotheby’s $ 300 million bond deal
Sotheby’s is lending to lenders to finance a $ 300 million dividend for homeowners, led by businessman Patrick Drahi, after returning to profitability thanks to pandemic cost reductions and layoffs.
Drahi agreed to buy the auction house for $ 3.7 billion in 2019, with Goldman Sachs planning to raise money from a sale of debt organized by internal banks, according to documents analyzed by the Financial Times.
The dividend is the second in six months, coming on top of another $ 165 million debt-financed distribution in November. Drahi’s BidFair USA owns 94 percent of Sotheby’s.
Due to the low borrowing costs of the US Federal Reserve, there has been an increase in recoveries of dividends from private equity groups and other owners who borrow to finance. bumper payments from the companies they have acquired.
Sotheby’s has taken advantage of its recent rebound in the global art market and told potential creditors on Wednesday that it would report adjusted profits of $ 13 million to $ 15 million in the three months to the end of March, compared to a loss in the same quarter. in the first year.
The auction house had a profit of $ 39.1 million for 2020 as a whole, compared to a loss of $ 71.2 million in 2019, a year that included significant costs associated with the sale of Drahi. The company revealed that it aggressively reduced costs during the pandemic, reporting savings of $ 98 million in its annual report due to lower compensation and layoffs.
Sotheby’s did not immediately respond to the request for comment.
Global sale of art it fell 22 percent in 2020 to $ 50.1 billion, according to Art Basel and UBS. The strength of the recovery will be tested this week, when rivals Sotheby’s and Christie’s make sales of impressionist art and modern art every two years.
Auctions offer one of the best measures of demand for trophy works and are one of the only sales on display for the public.
Among Sotheby’s Wednesday’s sales stars is a painting by Claude Monet “Ur Lily Pond”, which the artist worked on between 1917 and 1919 and which has changed hands several times, including in 2004 at Sotheby’s. The auction house expects work to raise $ 40 million or more.
Drahi, a Moroccan-born telecommunications trader with French, Israeli and Portuguese citizenship, is known for structuring complex agreements over the use of debt, including the purchase of Sotheby’s.
Analysts at the S&P Global rating agency have cited Sotheby’s as an example of an “aggressive financial policy” that operates the November dividend.
It was still unclear what interest rate the company had projected on the $ 300 million bond. They were making calls with potential lenders on Wednesday evening to gauge demand.