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Could Citigroup own EMI by Christmas?
By CMU Editorial | Published on Monday 13 December 2010
You know how the New York Post was last week predicting that this time Terra Firma’s Guy Hands really won’t be able to convince his investors to provide the £100 million EMI will likely need to meet its loan covenants with Citigroup next spring? Well, continuing on that theme, now both The Post and the Sunday Times here in the UK are saying the equity group could lose or give up control of the music company before the end of the year, so really rather soon.
As previously reported, earlier this year there was much speculation that Hands would not be able to raise the £100 million EMI needed by June to stay within the strict financial parameters set by the Citigroup loan, or if he did that Terra Firma’s investors would not allow him to hand the money over to the flagging music firm. In the end Hands did raise both the money and win the vote to inject it into EMI, though reports suggested it was a very close run thing.
Last week The Post said that, following last month’s embarrassing defeat in the US Courts when Terra Firma unsuccessfully tried to prove Citigroup had tricked it into buying EMI in 2007, Hands’ backers are in no mood to provide further help to the music major.
Now the paper cites sources as saying Hands has been telling some of his backers that he will have to hand over control of the music firm to bankers Citigroup sooner rather than later. Of course, that may just be tough talking to try to force Terra Firma investors to recommit to EMI, but if that is the case many seem likely to call his bluff.
It is thought that Terra Firma might be able to negotiate a deal with Citigroup whereby the bank takes a majority stake in EMI, leaving the equity group as a minority shareholder. Though it seems unlikely, given recent court shenanigans, Citigroup would allow Hands to be anything other than a silent partner. And many still reckon that, once in charge, the bank would look to sell EMI asap, splitting it up if necessary.
Terra Firma has not commented on the latest speculation, though it rarely does. To be fair, commenting on EMI speculation could be a full time job.
