Citigroup seizes control of beleaguered EMI label.
INVESTMENT bank Citigroup has seized control of The Beatles' record label, EMI, from beleaguered financier Guy Hands, it was announced yesterday.
EMI - which is also home to artists including Lily Allen and Robbie Williams - has seen its debt reduced from pounds 3.4bn to pounds 1.2bn under the terms of the deal.
The company is the subject of an ongoing legal dispute between Mr Hands and Citigroup.
The music group had been bought by Mr Hands's private equity firm, Terra Firma, in 2007, with the buy-out group borrowing billions of pounds from Citi to finance the ill-fated takeover.
Terra Firma's pounds 4.2bn takeover of EMI is seen as being one of the worst-timed deals of the credit bubble, coming just before the crisis struck.
The deal left EMI, already struggling in a declining music market, saddled with crippling repayments on its pounds 3bn debt.
Mr Hands tried to sue Citi for up to pounds 7bn, after accusing the bank of pretending that other bidders were interested to bump up the price, but lost the case.
Citigroup claimed Terra Firma's legal action was only brought in an attempt to reduce the debt it owes the bank following the acquisition.
EMI chief executive Roger Faxon said: "The recapitalisation of EMI by Citi is an extremely positive step for the company.
"With that solid footing, we are confident in our ability to drive our business forward.
"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."
Citigroup, which provided Terra Firma with pounds 2.6bn in loans to help finance the EMI takeover, eventually plans to sell EMI with another recording label such as Warner Music the most likely buyer, according to press reports.
Stephen Volk, vice-chairman of Citi, who will be the new chairman of EMI's holding company, Maltby Acquisitions, said: "This is a positive development for EMI, its employees, artists, songwriters and suppliers.
"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."
EMI's other artists include The Beatles, Coldplay and Tinie Tempah.
A spokesman for Terra Firma said: "Terra Firma is pleased that EMI's debt burden has been reduced through Citi agreeing to write down a substantial proportion of EMI's debt."
Terra Firma refused to comment as to whether it received a pay-out from the deal, but it is understood that Mr Hands and the company came away empty-handed.
Meanwhile, Mr Hands is waiting for an appeal hearing, following his failed legal action against Citi last year.
Label rescue: EMI artist Lily Allen performing at the Liverpool Echo Arena in 2009
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|Publication:||Daily Post (Liverpool, England)|
|Date:||Feb 2, 2011|
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