UMG Re-enters Possible Deal With EMI
Report: Sony Exit Talks
March 30, 2010 at 11:36 AM (PT)
THE WALL STREET JOURNAL is reporting that UNIVERSAL MUSIC GROUP has re-entered talks with EMI regarding music distribution. The deal could raise as much as $300 million for the indebted British music company, people familiar with the matter said.
According to the report, the deal would involve "an upfront payment of about £200 million, or about $300 million, for a roughly five-year deal that would give UNIVERSAL the right to distribute EMI artists in the AMERICAS, including LATIN AMERICA, according to these people. UNIVERSAL had earlier ended talks with EMI over such a deal."
The two sides are looking to close this deal in the next 24 hours, one of the people said to THE JOURNAL.
Is Sony Out Of The Picture?
SONY is close to exiting talks to purchase rights to the music catalog of EMI, reports THE WALL STREET JOURNAL, citing people familiar with the matter. THE JOURNAL writes SONY is the last potential bidder after UNIVERSAL MUSIC GROUP ended negotiations last week. WARNER MUSIC GROUP was never part of the talks to buy a licensing agreement by MARCH 31st to meet the requirements of a loan agreement with CITIGROUP.
Last week, CITIGROUP lost a bid to move its lawsuit against EMI to the U.K. from NEW YORK (NET NEWS 3/25).
EMI has been seeking to raise funds by outsourcing its publishing catalog (NET NEWS 3/12). Its owner, TERRA FIRMA, has sought as much as 400 million pounds ($599 million) to help EMI’s recording unit to meet its debt ratios.
There have also been reports that KKR and BERTELSMANN, along with WARNER MUSIC have discussed making a joint bid to buy EMI (NET NEWS 3/17).
EMI last month posted a 1.5 billion-pound annual loss and said its liabilities exceeded assets by 408 million pounds as of MARCH 31st, 2009, reports BUSINESSWEEK.COM, writing "TERRA FIRMA has asked EMI for a new business plan and needs the approval of 75% of investors to put more capital in by the end of JUNE. GUY HANDS, whose firm bought EMI for 4 billion pounds in 2007, has until JUNE to raise 120 million pounds from investors to EMI meet its debt covenants. If he fails, CITIGROUP, the holders of EMI’s 2.5 billion pounds debt, may take control of the company."