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Terra Firma predict good return for EMI rescuers

By | Published on Wednesday 5 May 2010

Terra Firma’s fat controller Gary ‘The Guy’ Hands has reportedly told investors in his equity outfit that they could make a 58% rate of return on any money they put into the Save EMI pot, which is quite a bold promise.
 
As you all know, Terra Firma must find £120 million to pay to the suits at Citigroup by the end of the month, otherwise the bankers are likely to step in and seize ownership of EMI, probably to split it up and sell it off. Gary wants £360 million, enough to cover next year’s loan fees too and to plug a hole in the EMI pension fund. Even if he can raise that much (word has it he only has commitments for £105 million so far) he’ll need the OK from 75% of Terra Firma’s investors to continue to subsidise the flagging music giant.
 
A report shared with those investors last week, and obtained by Bloomberg, makes the 58% rate return claim. It also updates investors on previously reported plans to do one big licensing or distribution deal with another major for the whole EMI catalogue in North America, reducing US overheads and bringing in a large annual cheque. As previously reported, EMI bosses considered such a deal to bring in the £120 million that needs to be paid to Citigroup next month. However, talks with both Sony and Universal fell through.
 
The Terra Firma report says a key problem with those talks was concerns on Sony and Universal’s part of what would happen to their licence if Citigroup stepped in and took over. One of the reasons Hands is keen to get £360 million, it seems, is to reassure possible licensees the major has a secure-ish future. Then, the report seems to suggest, a mega-licensing deal might be possible.



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