HANDS OFF AT TERRA FIRMA
The U.K. mogul who acquired EMI Music for $4.7 billion (£2.4 billion) in May 2007, is stepping down as CEO at Terra Firma two weeks after the company reported a 1.39 billion euro ($1.8 billion) loss for 2008.
The 49-year-old Hands will remain Chairman and Chief Investment Officer, but the firm’s lawyer Tim Pryce will replace him as CEO.
Terra Firma posted the loss after writing down by half the value of its 2.6 billion-euro investment in EMI.
Hands said he will focus on investments, investors and developing the business internationally, while Pryce will be responsible for Terra Firma’s “day-to-day” operations.
An Oxford graduate who spent 12 years at Goldman Sachs Group, Hands joined Nomura Holdings in 1994 after the Japanese securities firm agreed to finance his takeovers. He built up Nomura’s buyout unit in the 1990s, purchasing 1,800 pubs from Grand Metropolitan Plc and Fosters Group Ltd., a deal financed with bonds secured by lease payments on those properties.
Hands launched his own firm with Nomura’s backing in 2002, and closed a 2.1 billion-euro fund in 2004, acquiring companies including Tank & Rast, a German highway services chain and U.K. gas provider East Surrey Holdings. Hands and his wife Julia boasted a personal fortune of 250 million pounds ($351 million) as of 2008, according to the Sunday Times.
Terra Firma raised 5.4 billion euros for its latest fund in 2007, and invested about 30% of it in EMI. Hands has reorganized the company and cut costs to revive profit. EMI’s net loss in the six months ended Sept. 30 shrank by 52% to 155 million pounds, the company said in January. Sales rose by 10% to 737 million pounds.
Fitch Ratings today downgraded some of the 5.4 billion euros of bonds Terra Firma sold in 2006 to fund the purchase of German residential properties.The firm yesterday offered to buy back the bonds from investors for as little as 30% of par value.
Hands agreed last week to buy 90% of Consolidated Pastoral Co., Australia’s second-largest beef producer, from billionaire James Packer.
“Exactly why an Australian cattle ranch is appealing, we don’t know,” said one analyst of Hands’ latest deal. “Maybe he knows something we don’t, like there’s oil or gold under there.”
