Terra Firma Losing Its Grip on EMI

As we mentioned a few weeks ago, EMI is in trouble. As of November 4th, a verdict has been reached in the Terra Firma v. Citibank court case. Only four and a half hours of federal jury deliberation determined that Terra Firma chairman, Guy Hands’ allegations of fraud against the 2007 EMI acquisition lender were unsubstantial. Now, having burned the bridge with his longtime friend/ Citi-Financer, David Wormsley, Hands must find a way to keep the EMI label alive without the prospect of a Citigroup refinancing deal. However, with the company’s net worth estimated at less than half of what was initially paid, and over $3 Billion in debt still owed to Citigroup, the odds are certainly not in Hands’ favor.

Considering its delicate position, the other three Majors, as well as a number of other companies have already shown interest in various EMI divisions. Warner Music Group has expressed interest in acquiring the label’s recorded music sector, should the opportunity arise. In addition, Sony/ATV has also got its sights on EMI’s publishing division- currently holding a dominant market share of over 21%.

As Hands struggles to maintain control of the label, the next few months will reveal the true fate of EMI. In all likelihood, the company will fall into the hands of Citigroup, where it will either be resold or divided amongst a host of eager buyers. For more information, read the Peter Lattman’s post on the cases’ final outcome and let us know what you think!

-Evan