Sony Re-enters The Battle Over EMI
April 5, 2010 at 4:50 AM (PT)
SONY MUSIC is close to striking a deal with EMI to win the distribution rights to the company's back catalogue in NORTH AND SOUTH AMERICA, reports U.K.'s THE GUARDIAN, citing "industry executives." The papers writes, "Talks between SONY's finance director, KEVIN KELLEHER, and EMI's executive chairman, CHARLES ALLEN, could begin in MAY if advisers working for the two firms can stitch together an outline agreement over the next few weeks."
ALL ACCESS reported last week (NET NEWS 4/1), that EMI was on the verge of defaulting on their debt to CITIGROUP, because a distribution deal could not be made with several other major labels.
One of those was UNIVERSAL MUSIC, who pulled out of talks with EMI last WEDNESDAY (NET NEWS 3/31).
ALLEN must now present TERRA FIRMA CEO GUY HANDS with a plan about how EMI can raise additional funds from outsourcing agreements such as the one suggested to SONY, and from cost-cutting and asset sales, well before JUNE 14th. That is the date by which HANDS must have raised £120m from investors to make good the terms of covenants on its debt obligations to CITIGROUP.
"Relations between TERRA FIRMA and CITIGROUP are poor after the two sides fell out over the terms of a debt-for-equity swap last year and since HANDS announced that he was taking the bank to court in NEW YORK, alleging it made him pay an artificially inflated price for EMI (£4bn) because its bankers failed to tell him that a rival bidder had pulled out," writes THE GUARDIAN." CITIGROUP denies the claims and intends to fight the allegations.