All Quiet On The EMI Front

Any business analysts that believed EMI would go into instant financial meltdown after Terra Firma – the UK private equity firm that owns it – lost its high-profile court case against U.S. banker Citigroup may have to be patient for a while.

Despite stories of Citi stepping in to recoup at least some of the £3.2 billion it lent Terra Firma to complete the purchase of EMI in 2007, there are reasons to believe it’s not likely to happen for a few months.

While various papers have speculated that Warner Music Group might be interested in at least part of EMI’s recorded music business and Universal and BMG Rights Management are favourites to pick over the publishing side, the truth is Terra Firma isn’t likely to breach the covenants on its EMI loan until March.

Some UK paper reports, particularly in the Daily Telegraph, suggest Terra Firma chief Guy Hands appears in no hurry to offload his Odeon cinema chain, which would have raised enough cash to cover any shortfall on those covenants.
It will likely remain all quiet on the EMI front until March.

A Dec. 8 report in Financial Times says Terra Firma is thought to have concluded that investors will not back the £100 million-plus infusion it needs to keep control of EMI beyond the next round of covenants.

Predators will likely be expecting the EMI fire sale to begin early April.