Will Investors Give EMI The Funding To Survive?
Report: Sony Music Set To Move On EMI
May 10, 2010 at 4:19 AM (PT)
The future of EMI continues to hang in the balance as its owner, TERRA FIRMA, struggles to persuade investors to come up with funds to make good on a funding shortfall after the company breached the terms of covenants agreed with CITIBANK. TERRA FIRMA needs the support of approximately 75% of its fund’s 200 investors by FRIDAY, MAY 14th, which is when they must present a compliance certificate to CITIGROUP, showing that EMI can meet its current obligations.
PREMIER-FINANCE.COM reports EMI "borrowed £3.2bn from CITI and lost £1.8bn last year after being hammered by interest payments, although at the operating level it is profitable." The report describes RETTA FIRMA Chairman GUY HANDS "at war with CITIGROUP ... taking the bank to court in the U.S., claiming it was tricked into offering too much for EMI because CITIGROUP failed to inform it that other potential buyers had pulled out. CITIGROUP is contesting the allegations."
Reports says EMI's investors are divided over whether to back HANDS after writing off the bulk of their investment over the last two years. One investing institution, the CANADA PENSION PLAN, is believed to oppose the idea of contributing more cash.
Last week, HANDS made an offer he hopes investors can't refuse. BLOOMBERG reports that HAND is claiming that investors could earn up to a 58% rate of return (NET NEWS 5/4).
The latest hope for EMI is in coming from of new Executive Chairman CHARLES ALLEN, who is submitting a new business plan "looking at the possibility of asset sales, with some analysts speculating he could offload its JAPANESE business for £200m. ALLEN is also looking at a deal that could see WARNER MUSIC brought in to distribute EMI MUSIC in the U.S. WARNER would make an upfront payment of between £150m and £200m."
Report: Sony Music Considering EMI Bid
SONY MUSIC is considering a bid for EMI, "while its main rivals deny any interest or decline to comment on their intentions," reports REUTERS.
"We are in a position that allows us to seize every opportunity in the market -- including EMI," SONY MUSIC Chief ROLF SCHMIDT-HOLZ, was quoted in GERMAN's FRANKFURTER ALLGEMEINE SONNTAGSZEITUNG newspaper.
TERRA FIRMA continues to ask investors for 360 million pounds ($557 million) for EMI to prevent the investment from falling into its lenders hands (NET NEWS 4/20).