Report: Terra Firma Close To Fundraising Goal
November 30, 2007 at 6:01 AM (PT)
TERRA FIRMA, the new owner of EMI, is close to completing a £250 million equity fundraising, after telling would-be investors that it can lift profits in recorded music from £61 million in 2007 to £528 million in 2012, writes THE TIMES OF LONDON. The venture capital group, run by GUY HANDS, is selling a stake of about 15% of EMI, at what is thought to be broadly the same £1.5 billion equity valuation it applied when it took over label this year.
TERRA FIRMA declined to comment and refused to name the investors, but the fundraising is a sign that others believe a recovery can be achieved in the company’s beleaguered recorded music division, which has slipped below WARNER to be ranked fourth in the world with a 13% share.
According to documents circulated to potential "co-investors" and seen by THE TIMES, TERRA FIRMA is forecasting it can increase EMI’s profits massively by cutting costs by £135 million annually and outgrowing the sluggish music market. The strategy to increase underlying income in EMI’s recorded music by more than eight times rests on making those savings, plus others identified by EMI’s previous management. Higher margins from Internet and mobile phone sales account for an extra £341 million of the uplift.