EMI R.I.P.?

U.S. banker Citigroup may not have the formal right to take ownership of EMI until the company fails to meet its bank covenants at the end of March, but there’s a growing feeling that the British music company’s parent company is close to throwing in the towel.

Having lost a New York court case in which he tried to get compensation from Citi for allegedly tricking him into overpaying for EMI, more of the UK’s papers are now predicting Terra Firma chief Guy Hands will step aside with the minimum of fuss and let the bank control.

In October he told the New York court he’d put two-thirds of his personal wealth – around $100 million – into EMI. The feeling among the business media is that he – let alone his fellow investors – are ready to curb their already substantial losses and walk away.

The Observer reckons Hands and Citi are on the verge of agreeing to a restructuring that would see the bank write off about half the company’s debts. In return, Citi would seize most of the equity in EMI, giving it management control.

It also says Citi would sell the recorded music division to Warner Music for £400 million ($623 million) and the music publishing division to the U.S. private equity group KKR for £1.1billion ($1.7 billion).

The Daily Telegraph suggests BMG Rights Management, a joint venture between German media giant Bertelsmann and KKR, which is currently buying music publisher Chrysalis, may be interested in the recorded music back catalogue as well as the music publishing arm.

It was previously reported as only being interested in the music publishing division.

Apart from reporting that last year Hands took a £12 million dividend from Terra Firma, five times the firm’s after-tax profits, Financial Times and the Daily Mail name the same predators.

All the papers agree that Citigroup has been already been told EMI is in the point of surrender and has already begun negotiations to hive off the pieces.