Citi Looks At EMI Options

The global music industry and business media may have been anticipating the imminent sale of EMI, but it seems its owners are looking at other options.

Citigroup, which took control of the English music firm because it couldn’t repay nearly $5 billion worth of debt, is looking at pumping in even more money or floating it on the market.

The U.S. bank issued a statement saying it’s launched a strategic review of its options, but a sale still looks to be the most likely outcome.
A recapitalisation or a public offering would mean Citi having to continue running the music company or risk floating it on a choppy market.

Citi’s continued involvement is made to look even less likely as a June 20 staff memo from EMI chief exec Roger Faxon acknowledged the bank’s “custodianship of this great company was always only going to be temporary.”

At the beginning of the month UK papers claimed the bank considered EMI to be “a soiled asset” and couldn’t wait to dump it.

At the same time, a Citi insider was reported as saying “lots of folks are interested” and “we’ve been letting the troops line up.” The decision to check other options may mean the troops aren’t exactly kicking the door in.

The analysts reckoned the most likely buyer would be Russian-born industrialist Len Blavatnik, who just paid $3.3 billion for Warner Music Group, but it’s a deal that would almost certainly be slowed by regulatory issues.

It would enable Citi to fulfil its expressed wish of shifting EMI as one entity, while the failed bidders for WMG – said to include BMG Rights Management, the Gores brothers, Universal Music Group and Sony/ATV – may be hanging back and waiting until Blavatnik is forced to jettison some of his assets.