A dramatic intervention by the Takeover Panel has bolstered Terra Firma's chances of succeeding with its 265p-a-share offer for music major EMI.
Over the weekend, the Panel agreed to extend the deadline for acceptances from noon yesterday to 1pm on Wednesday, giving Terra Firma boss Guy Hands extra time to push acceptances past the 90pc level necessary to finance the deal.
Citigroup has offered to lend Terra Firma £2.5bn to finance the acquisition of EMI, which is home to Robbie Williams and Coldplay, but only if it secured the 90pc of acceptances where the deal becomes unconditional.
Typically, banks waive the formal requirement to reach 90pc when bidders come close to that level. However, demonstrating just how jumpy the credit markets have become, Citigroup declined to give Terra Firma any assurances.
That left Mr Hands's bid, which values EMI's equity at £2.4bn, looking rocky when on Friday afternoon it had just under 85pc acceptances. Terra Firma's adviser, Dresdner Kleinwort, asked the Panel for an extension to the deadline, a move supported by EMI's adviser, Greenhill.
Terra Firma faced a dash to get enough acceptances by the original deadline of yesterday because Warner Music, a potential rival bidder, took until day 50 of the 60-day timetable to withdraw. Terra Firma understands a number of acceptances are still being processed in Crest's three-day settlement system, but is still unclear whether it will have enough. "I think there's a good chance," said one source close to Terra Firma. He did not believe there were any major positions being taken by hedge funds to frustrate the deal.
Citigroup undertook to provide the £2.5bn loan when the credit markets were much more buoyant and now faces potential losses syndicating the debt.
Source: http://www.telegraph.co.uk
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