EMI sale rumours quashed

Speculation that US bank Citigroup could take over EMI in the next few weeks – paving the way for the sale of the UK music major – has been quashed by both parties, with one insider branding the rumour as “bizarre”.

Spokesmen from both Citigroup and Terra Firma –the private equity group in charge of the music group- denied weekend reports that the sale of EMI is imminent – with the two parties both looking towards March as the time when a formal announcement regarding the future of the company will be made.

It is then that Terra Firma is next expected to be in breach of the terms of its formal banking terms with Citi – allowing the bank the right to take formal ownership of the company. Citi is owed £3bn.

“The suggestion that this so called ‘handing over of the keys’ could be happening in the next few weeks is bizarre, it really does not make sense,” said a Terra Firma source. “We have not been given any indication that anything will happen before March and there is no reason to believe that won’t be the case.”

As previously reported by Music Week in July, KPMG, the auditor for Maltby Holdings, the Hands-controlled company which owns EMI, said that Terra investors had provided equity cure funding relating to the covenant test periods to December 31 2010.

However, KPMG added further funds would then be needed from shareholders in order pay “cure payments” for March 2011 onwards.

Source: Music Week