After Court Defeat, What's Next For EMI?

A Deal With Citigroup? A New Owner? The Speculation Begins.

With last week's defeat in a MANHATTAN courtroom, what does the future hold for EMI MUSIC? CITIGROUP was exonerated on fraud charges in NEW YORK DISTRICT COURT THURSDAY, NOVEMBER 4th. A jury of five men and three women found the company didn't commit fraud against TERRA FIRMA CAPITAL PARTNERS over the EMI purchase (NET NEWS 11/4).

Now the speculation has begun, with BRITAIN's DAILY MAIL writing, "TERRA FIRMA investment fund is understood to be keen to begin negotiations with U.S. bank CITIGROUP over EMI. The preferred option is a deal with CITIGROUP," a TERRA FIRMA source told the paper. "TERRA FIRMA has a responsibility to EMI, as well as its investors."

WARNER MUSIC GROUP is one likely suitor if TERRA FIRMA cannot persuade CITIGROUP to do a debt-for-equity exchange for what CITIGROUP is owed. A major stumbling point however, is that EMI is worth less than half what TERRA FIRMA originally paid for EMI.

In addition to WMG, BLOOMBERG NEWS reports "WARNER MUSIC GROUP CORP. and BMG RIGHTS are among companies that have expressed an interest in buying EMI's publishing and recorded assets. WARNER, which abandoned a takeover for EMI in 2007, last year held talks to make a joint offer with KKR & CO. BMG, a music-rights firm owned by KKR and BERTELSMANN AG, said it's interested in the deep catalog in EMI’s recording unit."

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