EMI Restructures While Hands Meets Citi

Newly appointed EMI Group chief exec Roger Faxon sent staff a six-page memo on Sept. 7 detailing the company’s latest round of restructuring, just as owner Guy Hands was to meet with Citibank officials in a last-ditch effort to resolve their legal tussle.

Faxon will take personal command of the North American region, where Colin Finkelstein becomes chief operating officer, while Europe and the rest of the world will be overseen by David Kassler. Nestor Casonu will be chief exec for Latin America.

EMI Music Publishing chief ops officer Leo Corbett has been promoted to hold the same position for the EMI Group, and former IT exec Jim Brady will head up a new office of strategy management.

Ronn Werre, chief ops officer for North America and Mexico, North American president for new music Nick Gatfield, and Billy Mann, president of new music-international and global artist management at EMI Music, are all on the way out.

As for Hands’ meeting with the bankers, Britain’s business writers weren’t expecting the meeting to be a long one, largely because the UK private equity firm that bought EMI and the banker that lent it most of the money to do so are an ocean apart in their views on the lead up to the sale.

The court papers filed by Terra Firma, Hands’ private equity firm, claim Citigroup misled the company by claiming another buyer was interested, forcing up the price.

The submission also said Citigroup gained financially from both sides by working for EMI as well as Terra Firma. It claims that once the sale was completed, Citigroup forced EMI to breach its lending agreements in a bid to get control of the company.

Terra Firma claimed Citigroup executive Chad Leat went as far as to say “Guy stepped into one of the highest-profile piles of doo-doo out there.”

Citi, which lent Hands’ Terra Firma £3 billion of the £4.2 billion it needed to do the EMI deal, denies any wrongdoing. In its own submission, also filed Sept. 7, Citigroup argues there is no case to answer.

It believes a trial scheduled to start next month should not proceed because there is no evidence worthy of being tested in court. Hands is seeking billions in compensation from Citigroup. EMI’s current debt to Citi is around £3billion.

A court defeat for the bank could do untold damage to its reputation, while a defeat for Hands may well see him lose control of the UK’s only remaining major music company.

Even with the stakes being that high, UK business analysts don’t expect the mediation process will see either side give an inch.