Will Citigroup Gain Control Of EMI Before March?
January 10, 2011 at 4:12 AM (PT)
The future of EMI may be played out this week, as British newspaper THE GUARDIAN reports, "GUY HANDS, the private equity tycoon, could surrender the keys of EMI to its lender CITIGROUP within weeks, paving the way for a sale of the British music group to U.S. buyers for about £1.5bn."
EMI's financial issues have been well documented. In NOVEMBER (NET NEWS 11/4/2010), CITIGROUP was exonerated on fraud charges in a NEW YORK DISTRICT COURT after being sued by HANDS. The jury of five men and three women found the company didn't commit fraud against TERRA FIRMA CAPITAL PARTNERS over the EMI purchase.
"The endgame is fast approaching. Guy's backers don't want to put any more money into EMI, which means he has to cede control and admit defeat.
A source told THE GUARDIAN, "The endgame is fast approaching. GUY's backers don't want to put any more money into EMI, which means he has to cede control and admit defeat."
TERRA FIRMA bought the label in 2007 for $6.7 billion, taking out a loan from CITIGROUP to finance the deal. HANDS has had to get investors to put $156 million into EMI to avoid default, and faces another debt deadline in MARCH. CITIBANK technically cannot take ownership of EMI until after MARCH, when TERRA FIRMA expects to be in formal breach of the terms of its banking covenants.
THE GUARDIAN report claims "HANDS is studying an option that would allow him a swift exit from one of his worst investments in 20 years."
"It's all very hush-hush, but we are talking about something that is likely happen in the next four to six weeks," a source said.