Terra Firma Stumps Up

Terra Firma has stumped up the £105 million needed to keep EMI out of Citigroup’s hands for another year.

Guy Hands’ private equity firm raised the cash in the middle of May and had until June 14 to hand it over to its U.S. bankers.

Hands originally tried to raise a further £255 million, enough to help EMI meet its bank covenants through to March 2015, but difficulty persuading investors meant the bar had to be set lower.

He needed 75 percent of Terra Firma investors to approve putting a further £360 million cash into the company. He reported secured 80 percent support for putting in £105 million.

Raising the amount it needed to avoid immediately defaulting on its debt to Citigroup, Hands has at least created a breathing space in which to sort out EMI’s longer-term future.

Terra Firma bought the UK music company for £4.2 billion in 2007 but the bursting of the credit bubble has meant it’s struggled to repay the £3 billion-plus it borrowed to complete the deal.

The situation is made worse by the fact Hands is taking legal action against Citigroup, claiming it misled him into paying too much for EMI in the first place. The case is expected to go to trial in New York Oct. 18.

German media giant Bertelsmann and U.S. private equity house Kohlberg Kravis Roberts are both reportedly interested in EMI’s publishing business.