Reports: Morgan Stanley Taking Big Stake In V2

Investment bank Morgan Stanley is taking a 47.5% stake in V2 Records, in a deal that values the label at about £200 million ($288 million), according to reports. Morgan Stanley and V2 founder Richard Branson, chairman of Virgin Group, are also said to be injecting £15 million-£20 million ($22 million-$29 million) into the label. Morgan Stanley did not return calls for comment; V2 executives in London could not be reached.

Morgan Stanley, which has helped finance V2 since 1998, is believed to be exercising an option to convert company debt into equity. The arrangement, which will cut the label's debt payments, is another in a series of deals by Branson to trade stakes in his various companies for financing.

V2, whose roster includes the Stereophonics and Moby--the latter licensed for the U.S. from Mute Records--underwent an executive overhaul in December, when CEO Jeremy Pearce was replaced by a seven-member management team (Bulletin, Dec. 7). Earlier this year, Branson told Bulletin the label was not for sale, reiterating that he wants "to make V2 the principal global independent record company" (Bulletin, Jan. 21).

According to the U.K. Record Industry Annual Survey 2001, V2 had operating losses for the three years to June 2000 of more than £92 million ($130 million), with pre-tax losses in excess of £124 million ($175.63 million).