PERELMAN, MAJOR MUSIC COMPANIES PREPARE SECOND-ROUND BIDS FOR EMI

Second round bids on EMI Group are due Wednesday (Oct 5), which apparently include four major music companies and billionaire buyout investor Ronald Perelman as finalists, according to a report this morning in the London Financial Times.

Second round bids for the U.K. music company are due for owner Citigroup, who took over the company from Guy Hands’ private equity firm Terra Firma, which defaulted on its loan back in February.

Citigroup, which backed Terra Firma’s ill-fated buy-out of EMI, is looking at estimated offers of $1.1bn-$1.5bn for the group’s recorded music business and $2bn-$2.5bn for its publishing arm.

Two banks hava already refused to lend to potential buyers of EMI. Citigroup is expected to name the winning bidders within two weeks, but could yet hold onto EMI if those offers don’t meet their expectations.

The combined offers add up to less than the £4.2bn Terra Firma paid for EMI, but is more than its valuation when Citigroup seized the company this year, writing off most of its loans to leave the company with £300m in cash and £1.2bn of debt.

Sources insist Len Blavatnik’s Access Industries, which acquired Warner Music for $3.3 bn in May, hasn’t decided whether to bid for the whole company, or just the recorded music division.

BMG Rights Publishing, the publishing venture between KKR and Bertelsmann that lost out in the Warner Music auction, will decide this week whether to bid for the whole company or just music publishing. Sony ATV is expected to bid for EMI Music Publishing alone, while UMG is eyeing just the recorded music side.

The burden of passing regulatory must be assumed by any bidder, according to stipulations by Citigroup.

Perelman’s MacAndrews & Forbes, the privately held holding group for assets including Revlon cosmetics, joined forces with Sony in the Warner Music auction and is apparently most interested in EMI’s recorded music business.

Perelman, a drummer whose media interests include Deluxe, a Hollywood film processing business, could look for a bidding partner interested in publishing, or seek a distribution deal with a larger music company if it wins control of EMI Music.

Other interested individuals include Ron Burkle, the billionaire investor who bid for Warner Music and is teamed up with Napster co-founder Sean Parker, but other private equity bidders have now backed off.

Alec and Tom Gores, the brothers who control Gores Group and Platinum Equity respectively, bid aggressively for Warner Music, but are understood to have decided against an offer for EMI. Private equity group Apollo has also dropped out of the bidding.