Michael Jackson settles breach-of-contract claim

Michael Jackson waves to fans at a U.S. military facility in Tokyo, as he walks to board a helicopter bound for Camp Zama, a U.S. military base west of Tokyo, to join a fan appreciation event, in this file photo from March 10, 2007. Jackson reached a settlement on Monday over a breach of contract claim by New Jersey-based finance house Prescient Capital.

NEW YORK (Reuters) - Pop star Michael Jackson on Monday settled a breach-of-contract suit brought by a financial firm that claimed to have brokered the deal that allowed him to avoid default on more than $270 million (136 million pounds) in loans last year.

New Jersey-based Prescient Acquisitions Group claimed Jackson owed the firm $48 million (24 million pounds) for its role in securing the financing he needed to pay off the debt, which was secured by his prized stake in the Beatles song catalogue.

Terms of Prescient's agreement with Jackson and his MJ Publishing Trust were not disclosed. The lawsuit, filed in July 2005, was settled as the case was about to go to trial in U.S. District Court in Manhattan.

In its suit, Prescient said it had arranged to secure the financing Jackson needed to pay off $272.5 million in debt originally provided by Bank of America and later sold to the New York-based hedge fund Fortress Investment Group.

The refinancing deal ultimately was reached in April 2006 with help from Sony Corp., which jointly owns rights to more than 200 Beatles songs -- and thousands of songs by other artists -- with Jackson through Sony/ATV Music Publishing.

Sources with knowledge of the refinancing package said at the time that Jackson had negotiated a lower interest rate on his debt and agreed to provide Sony with an option to buy about half of his 50 percent stake in the music catalogue.

Jackson, whose music career has long been overshadowed by accusations of sex abuse and by media attention on his eccentric lifestyle, was acquitted in June 2005 of all charges in a child molestation trial. But according to testimony during the sensational case, years of extravagant spending had left Jackson mired in debt.

A default last year by Jackson would have allowed Fortress to seize his interest in the Beatles catalogue, valued at some $500 million.

A spokesman for Jackson told Reuters the settlement with Prescient means that the archive of music publishing rights would remain "safe and sound."

The settlement with Prescient -- whose owner, Darien Dash, is a cousin of hip-hop mogul Damon Dash -- removes one of numerous civil court actions that have entangled the self-styled king of pop in recent years.

Remaining litigation includes a lawsuit filed by Jackson's former lawyer, Brent Ayscough, who claims Jackson owes him about $200,000 in unpaid legal fees, and a court battle with the singer's former accountants.

(Additional reporting by Steve Gorman in Los Angeles)

Reuters/Nielsen