The long drawn battle over the ownership of legendary music company EMI came to an end on Tuesday, when US banking company Citigroup finally took control over the record label company that launched groups like the Coldplay and Beatles.
Citigroup had funded a Leveraged Buy-Out deal by forwarding a loan of $2.6 billion in 2007 to Terra Firma – the Private Equity firm owned by Guy Hands and had recently written off most of the debts after guy Hands defaulted on payments.
The two parties have clashed since in the courts and in the media while Guy Hands fought hard to keep control over the company behind singers like Robbie Williams and Kylie Minogue and others.
After the deal, EMI has £300 millions of cash on its books while debts have come down by 65 percent to £1.2 billion from £3.4 billion.
Welcoming the recent development, EMI Chief Executive Roger Faxon said: “The recapitalization of EMI by Citi is an extremely positive step for the company”.
Adding that a lower level of leverage will help the company, he said: “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”.
Terra Firma had formed a separate vehicle called Maltby to control its stake in EMI – which now is in administration. However, EMI confirmed that bit will continue under the same management.
Peter Spratt – joint administrator in the liquidation process said: “As a result of a default under loan (Citi’s) facilities, and the subsequent acceleration of the outstanding debt, Tony Lomas and I were appointed as administrators”.
“Since that appointment … the EMI Group has been sold to Citi”, he concluded.
Terra Firma was unreachable for comments.