EMI Faces the Music after It Records Huge Losses of [Pounds Sterling]1 Billion
Byline: Gideon Spanier and Jonathan Prynn
THE future of EMI, the British record label behind Robbie Williams, Madonna, Coldplay and Lily Allen, was plunged into doubt today when it admitted to making massive losses.
The 113-year-old company is said to have fallen more than [pounds sterling]1 billion into the red last year and is struggling to repay bank loans.
Its private equity owner, Terra Firma, has been forced to demand extra money, at least [pounds sterling]105 million, from its investors to meet terms of the deal set by lender Citicorp. If it fails to, the US bank could seize control of EMI.
EMI, also home to Kylie Minogue, David Bowie and Katy Perry, is expected to disclose losses of [pounds sterling]1 billion in annual accounts for the year to 31 March 2009. They are being filed by its parent company Maltby Capital this week. Some reports put the losses closer to [pounds sterling]1.5 billion.
Terra Firma, headed by financier Guy Hands, bought EMI for [pounds sterling]4.2 billion in 2007. It has been forced to disclose the losses as it prepares to sue Citigroup in a dispute about how much the US bank knew about the state of the record label's finances before the deal.
Terra Firma has already had to inject more than [pounds sterling]100 million over the past two-and-a-half years as it struggled to meet the bankers' terms.
EMI's chief executive Elio Leoni-Sceti is working on a new business plan that will be submitted to Terra Firma investors within weeks.
The losses have been caused mainly by financial write-offs, and the underlying day-to-day performance of EMI has been relatively successful. …