Sanctuary outlines rescue plans

Sanctuary is to close the firm it bought off Beyonce Knowles' father

UK music group Sanctuary has unveiled a £110m rescue deal after revealing a fivefold increase in annual losses.

Sanctuary said it would raise the cash through a shares issue after revealing losses had surged to £142.6m from £26.7m a year earlier.

It blamed the loss on an "awful" year in which it was hit by record release delays and a string of profit warnings.

Many of the losses stemmed from Urban Records, a firm it bought from singer Beyonce Knowles' father, it added.

Following a number of delays, cancellations and rescheduled releases from the label, Sanctuary said it had decided to shut down Urban Records.

Share deal

Meanwhile, Sanctuary set out its proposals for its £110m share issue.

The past 12 months have been the most difficult and challenging period that Sanctuary has ever had Andy Taylor, Sanctuary Check Sanctuary's shares

It warned the move will significantly dilute the value of its existing shares, as new shares will be offered at a "substantial discount" to its current share price.

Despite this, the proposal has won the backing of institutional investors, Sanctuary added.

Meanwhile, the world's biggest independent record label also said it had agreed a deal with its major lender that would see it cancel £35m of its debt.

The announcement follows a rocky year for the firm which has cut jobs and seen failed takeover talks - rumoured to involve EMI and Warner Music.

"The past 12 months have been the most difficult and challenging period that Sanctuary has ever had," chairman Andy Taylor said.

Sanctuary prides itself as the worlds "only 360-degree international music group" encompassing publishing, record labels, merchandising, music management, DVDs and live events.

Sanctuary's stable of artists include Sir Elton John, the Manic Street Preachers, Morrissey, Beyonce and Destiny's Child.

Shares in the group closed 26%, or 0.3 pence, lower at 0.78p.