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The buyout firm had reportedly offered to inject about £1 billion ($1.67 billion) into EMI in exchange for Citigroup waiving a similar proportion of its $2.6 billion of EMI loans.
CITIGROUP NIXES EMI AGAIN
Banking Group Again Rejects Hands’ Proposal to Adjust Loan Terms
Looks like EMI Music still has its Hands full of debt, with no relief in sight.

Citigroup has rejected a proposal from Guy Hands' private equity firm Terra Firma Capital Partners to restructure the debt of music group EMI, according to a Wall Street Journal report this morning.

The buyout firm had reportedly offered to inject about £1 billion ($1.67 billion) into EMI in exchange for Citigroup waiving a similar proportion of its $2.6 billion in loans to the music group.

Citigroup would have had to write off more debt than it was prepared for, according to sources.

Terra Firma struck its high-risk £4 billion buyout of EMI at the height of the buyout boom in 2007.

EMI accounted for the vast majority of Terra Firma's €1.37 billion ($2.05 billion) writedown this year, with Hands’ private equity firm forced to inject extra capital into the ailing music company twice in just the past six months.

Recently, about 10 Terra Firma executives that helped run EMI on a day-to-day basis have left, with the private equity firm deciding they would be put to better use at other companies in their portfolio. That transition period isn't unusual after acquiring a business, according to insiders, and is no indication of Terra Firma waning on its commitment to the music group, which has improved its EBITDA substantially under the guidance of Elio Leoni-Sceti. Terra Firma had close to 40 executives working at EMI after its buyout two years ago.

EMI's own executives will likely be running the company by March 2010, although Terra Firma's appointed board members, including Pat O'Driscoll, former chief executive of Northern Foods, and Lord Birt, former director general of the BBC, will remain in place.

In a statement released this morning, Terra Firma insists:  "Per today’s news articles, we can confirm that we have made an offer involving the injection of £1 billion into EMI to resolve its capital issues. We continue to believe EMI is an excellent company and we remain committed to doing all we can in the best interests of EMI, its employees and artists, our investors and all stakeholders."



 

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