Here Today... Gone To Hell!

LONDON (Reuters) - Struggling music group Sanctuary (SGP.L: Quote, Profile, Research), home to Elton John and Axl Rose, said on Monday its year losses had more than quadrupled, but it had agreed a rescue package with investors.

Sanctuary, the world's biggest independent music label, has been cutting jobs and non-core businesses after a string of profit warnings.

It said on Monday that troubles at its Urban Records division had led to a string of problems that resulted in a pretax loss of 143 million pounds in the year to September 30, 2005.

It added that it had received indications of support from institutional investors for an equity fund-raising of about 110 million pounds, but at a substantial discount to its current share price.

Sanctuary shares fell 4.8 percent to 1 penny by 8:20 a.m., valuing the group at under 4 million pounds.

Sanctuary said in December it was in talks to sell its music publishing and studios businesses and would make write-downs and provisions of more than 130 million pounds.

In August, it announced the failure of buyout talks, which sources said had been held with EMI Group (EMI.L: Quote, Profile, Research), Warner Music Group (WMG.N: Quote, Profile, Research) and several private-equity groups.

Sanctuary said on Monday it had also reached an agreement in principle with its main lender, which would involve the cancellation of 35 million pounds of debt.

Part of the 110 million pounds fund-raising will be open to existing shareholders to mitigate the fact that their holdings will be significantly diluted, it added.

http://today.reuters.co.uk/news/newsArticle.aspx?type=businessNews&storyID=2006-01-30T085223Z_01_L30509024_RTRUKOC_0_UK-MEDIA-SANCTUARY.xml