LONDON (CelebrityAccess MediaWire) — Terra Firma is reducing their direct involvement at EMI after key debt refinacing negotiations with their lender Citigroup fall apart.
According to the Wall Street Journal, sources at Terra Firma said the private equity group is pulling at least 10 of their execs from management duties at EMI after concluding that Terra Firma has little chance of recouping their £2.3bn investment in the troubled label group.
Terra Firma had offered to inject an additional 1.1 billion euros into EMI if Citigroup would cancel a commensurate amount of Terra Firma's debt, however Citigroup rejected the plan. Sources close to the negotiation told the Wall Street Journal that Citi had already written down a 'mark to market' loss on EMI.
An unnamed person close to Citi told the Financial Times that the Terra Firma and Citi were at loggerheads because Terra Firma's Guy Hands wants to stay in control of the company and is essentially passing the losses to Citi. "He is trying to get us to do something that is not economic," the source told the Financial Times.
EMI execs are expected to be overseeing the firm by March, 2010 but its Terra Firma appointed board members including Patrick O'Driscoll and Lord Birt will remain.
Citigroup had become Terra Firma's sole lender due to the tightening of credit markets in the wake of the global financial crisis, leaving Terra Firma with little in the way of apparent alternatives.
While EMI's earnings this year have been bolstered by the release of remastered Beatles albums which sold more than 5 million units in their first ten days on the shelves, their share of recorded music in the US has slipped to 8.74 per cent, according to Soundscan. EMI is hoping for a strong holiday season behind the aforementioned Beatles retreads along with new releases by Snoop Dogg and Norah Jones. – CelebrityAccess Staff Writers