I.B. BAD ON HANDS AND EMI:
THAT WAS CLOSE. NOW WHAT?

The rank and file of EMI breathed a collective sigh of relief when the news hit Tuesday morning that Guy Hands had managed to secure the $156m needed to maintain the status quo at the company for the next 10 months (the next covenant is due in March 2011). But the Terra Firma chief’s last-minute save hasn’t altered the attitudes of Sony or UMG toward making a distribution or licensing deal with EMI.

What the two potential partners remain understandably concerned about is locking down a long-term agreement, only to have Terra default on the loan to Citigroup at some point down the line. Hands’ next challenge involves providing an ironclad assurance that such a situation won’t occur, either by demonstrating that he can secure the needed additional hundreds of millions from investors, or by proving that EMI has the wherewithal to generate enough revenue on its own to keep it solvent. At this point, both scenarios are tough sells, to say the least.

Meanwhile, insiders say that the relationship between EMI and Citi is improving, though the same can’t be said about relations between Terra and the lender, with an October court date to resolve Terra’s suit against Citi on the calendar.

As Hands was locking down the funds, EMI kept the pedal to the medal, coming with a new single from Katy Perry that was immediately declared a smash by Top 40 handicappers. “California Gurls,” the latest video-centric concoction from the formidable Perry-Dr. Luke team, further intensifies EMI’s hot streak, paced by Lady Antebellum, whose title song has broken wide open at Pop and Hot AC under the veteran leadership of Greg Thompson, while the album passed the 2m mark this week.

Perry’s track provides a tantalizing preview of her eagerly anticipated sophomore album, streeting in August, which should give another boost to EMI’s remarkable turnaround; the company is just below 12% in new release marketshare.