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Guy Hands reportedly gets investor clearance to bail out EMI
By CMU Editorial | Published on Wednesday 12 May 2010
According to the Wall Street Journal, Terra Firma top man Gary ‘the Guy’ Hands has got the all-clear from enough of his investors to bail out EMI once again, meaning Citigroup are not now likely to seize ownership of the major next month and put it up for sale.
As much previously reported, EMI must pay over £100 million in loan fees to the US bank next month, and must demonstrate how it will do so this week. As EMI has no money, that required owners Terra Firma to find the cash. Management there also needed to get 75% of their investors to OK them transferring yet more money over to the music firm, even though that means pumping yet more cash into the equity group’s most disastrous of acquisitions.
As of last week it was reported that Hands had secured commitments from his financial backers to the tune of £105 million, which is apparently enough, even though it was widely reported EMI must pay Citigroup £120 million. However, he still needed the OK from enough of those investors who were not actively contributing this time round to continue supporting the music firm.
The deadline for votes was reportedly Monday and, according to the WSJ, enough votes went in Hands’ favour. Presumably enough Terra Firma investors believe there is a good enough chance that they can still make good on their original EMI investment, eventually, that now is not the right time to cut their losses and let Citigroup take control.
Of course, Hands had wanted to raise £360 million, so that EMI had next year’s loan fee payment already covered, and so a mooted hole in the pension fund could be plugged. Terra Firma chiefs had told their investors that EMI needed to be able to demonstrate two to three years of relative financial security in order to sell a multi-million dollar licence-come-distribution deal for the major’s recordings catalogue in North America. It’s thought that, providing EMI bosses can show they won’t go out of business this time next year, there is still some interest for such a deal at both Sony and Universal.
