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"The recapitalization of EMI by Citi is an extremely positive step for the company."
—-Roger Faxon, EMI Music

EMI GOES TO CITIGROUP

Company Cuts Its Debt, Increases Liquidity, Will Remain Under Current Management
The other shoe dropped this morning, as Terra Firma had to Hands over the fabled EMI Music Group to Citigroup in a debt for equity swap.

Citigroup has now acquired 100% of its share capital. Immediately following the acquisition, Citi completed a recapitalization of the company, with its debt "dramatically" reduced by 65% from £3.4 billion to £1.2 billion,. EMI now has in excess of £300 million of cash available, which according to this morning's press release "provides [it] with the financial strength and flexibility to continue delivering on its strategy to maximise value for the artists and songwriters it is dedicated to serving." For now, anyway.

Following the appointment of Peter Spratt and Tony Lomas of PwC as administrators to Terra Firma parent company Maltby Investments Limited, the administrators sold EMI and its immediate holding company Maltby Acquisitions Limited to Citi. Immediately following the transfer in ownership, Citi effected a debt-for-equity swap to recapitalize EMI. The EMI Group continues under the same management and is now completely separate to MIL, which remains in administration. Neither MAL nor EMI were in administration during the process.

EMI has achieved creative and commercial success over the last twelve months and will continue to pursue an ambitious growth strategy. Last week, the company had the top-selling album in the U.S. in The Decemberists, and could have another this week with Blue Note singer-songwriter Amos Lee.

EMI Chief Exec Roger Faxon was in a jolly mood (see related internal memo): “The recapitalization of EMI by Citi is an extremely positive step for the company. It has given us one of the most robust balance sheets in the industry with a modest level of debt and substantial liquidity. With that solid footing, we are confident in our ability to drive our business forward. We have already made great progress in meeting the challenges facing our industry. The closer alliance between our two operating divisions is already delivering impressive results on behalf of the creative talent we are privileged to represent. We have a clear vision for the future, a strong and committed management team, and now the right capital and financial structure in place to deliver successful outcomes for artists and songwriters."

Added Citi Vice Chairman Stephen Volk, who will be the new Chairman of Maltby Acquisitions Limited: "This is a positive development for EMI, its employees, artists, songwriters and suppliers. Our objective is to have EMI perform its absolute best for our shareholders over time. EMI is an iconic business and we are completely supportive of both its management and its strategy. It is business as usual for everyone at EMI.”

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