The pension fund at music company EMI is in a deficit of 115 million pounds. The music group admits this is more than 10 times the amount they had previously expected. This puts an enormous cash crisis on the private equity owners. The amount needed to bring the fund back to a healthy level would be close to 217 million pounds.
The company already has been having financial difficulties. To keep the company afloat it will require large amounts of cash from the owners. There have been high selling hit albums by its artists Antebellum and Katy Perry, but the company continues to have struggles.
EMI worked with a Pensions Regulator in hopes to negotiate a deal with its pension trustees, but the effort failed. Now a formal determination panel will look into the pension deficit.
Eric Champion, EMI pensioners’ association chairman, said: “We think the regulator will be fair but the question that follows is whether the company will follow – or be able to follow – its ruling.”
Meanwhile, Terra Firma, the company that purchased EMI in auction is suing the sole lender bank Citigroup. They are alleging fraud over how the bank represented the state of competition in the EMI auction. Citigroup denies the allegations. The companies are going into mediation in New York, but should that fail the hearings are due to begin on October 18. The EMI Loan is the single largest debt on Citigroup’s tarnished balance sheet.
Other music holdings by EMI are The Beatles, Iron Maiden, Kylie Minogue, Lily Allen, Bryan Ferry, Van Morrison, Amy Grant, Coldplay, 30 Seconds to Mars, Keith Urban, Norah Jones, Cali Swag District, and Willie Nelson.