NY Post: Terra Firma Injects More Cash Into EMI
May 29, 2009 at 5:21 AM (PT)
"Private-equity firm TERRA FIRMA plowed more cash into debt-laden record label EMI as the struggling recording giant treads dangerously close to violating the terms on billions in loans used to buy the company two years ago," reports THE NEW YORK POST.
"According to sources, LONDON-based TERRA FIRMA injected approximately $45 million into EMI -- the second time in less than a year that the private-equity firm has had to pump cash into the label. TERRA FIRMA, run by GUY HANDS, was forced to lend $23 million to EMI last SEPTEMBER.
"Industry sources believe that EMI is buckling under the $4.7 billion in debt that HANDS and TERRA FIRMA borrowed from CITIGROUP two years ago to finance the buyout of the label.
"A person close to TERRA FIRMA argued that EMI has plenty of cash reserves to keep itself afloat and that it pays a manageable 7% interest rate on its CITI debt.
"However, EMI's more pressing problem may be declining cash flow as a result of stiff competition from bigger rivals. Earlier this month the label disclosed cash flow of $286 million, though that figure was not verified by an auditing firm.
"Both a TERRA FIRMA spokesman and a CITIGROUP spokeswoman declined to comment.
"ELIO LEONI-SCETI, EMI's music-division CEO, has said that cost-cutting efforts are working and that the outlook for the music outfit is strong."