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Terra Firma write down EMI investment
By CMU Editorial | Published on Wednesday 18 November 2009
Following the news on Monday that US bank Citigroup had knocked back proposals by EMI owners Terra Firma to restructure the music major’s debts, news yesterday that the private equity group has seriously written down the value of its big music investment.
Terra Firma, whose boss Guy Hands has been increasingly candid about what a big mistake it was to buy EMI with a big Citigroup loan back in 2007, has written off about 90% of its investment in the music firm.
The value of Terra Firma’s overall investment portfolio has already taken a number of hits because of EMIs woes, and the slow (or non-existent) return resulting from the equity group’s radical restructuring of the music major’s recorded music division. The fact Citigroup have been unable to share the risk of its loans as a result of the credit crunch hasn’t helped, of course.
Terra Firma is also withdrawing its execs from EMI’s day-to-day operations. That might be because they feel their work has been done in revamping the EMI record labels. Or it might be because they now consider EMI to be a lost cause, and every hour of Terra Firma executive time spends there is just more wasted money. That said, insiders generally speak favourly of EMI Music big cheese Elio Leoni Sceti, and it’s possible the music company will fair better if he’s left to run it himself without Terra Firma interference.
All of this has led to more gossiping about EMI’s future. An increasing number of people expect Terra Firma to bail in the latter half of 2010, leading to renewed speculation of an EMI/Warner merger.
