WILL GUY HANDS OVER EMI MUSIC?

Various press reports indicate that the Terra Firma boss has been telling his private equity backers that he may be forced to hand over the business to Citigroup after losing a nasty court battle against the bank, and his former pal David Wormsley, in N.Y. District Court in Oct. Insiders say the transfer could come before the end of the year.

A Terra Firma source insisted the company has not yet made any decision on EMI's future and is still mulling its options.

One of its options includes Hands walking away from the music group he paid a staggering $6.7 billion to acquire back in 2007 despite the crash of financial lending markets at the time.

Hands had already persuaded investors to throw an additional $156 million into EMI to keep it from defaulting on the roughly $5 billion loan he took out from Citi to buy the company.

Several Terra Firma investors have already told Hands they won’t be throwing good money after bad at this point.

Terra Firma faces another debt deadline in March, when Citi is likely to demand it inject more money into EMI to make good on the terms of its loan.

What Citigroup have in mind for EMI Music is anybody’s guess, though indications are they would split up the record label and music publishing divisions and sell them both off individually, with Warner Music Group and BMG Rights Management two likely buyers.