Coldplay label in doubt as EMI's woes are made public

A planned break-up and a £2billion loss in value threatens the UK major label, EMI

A letter filed by the Citigroup bank in New York has revealed that Terra Firma, the company that bought EMI in 2007, now values its acquisition at £2billion less than they paid for it. On the eve of the credit crunch, Terra Firma paid £4.2 billion for the record label that Coldplay, Robbie Williams and Lily Allen call home.

And according to various internet sources this morning, it is believed Guy Hands tried to break EMI up three months ago. That's according to the latest court documents in the legal battle between Citigroup and the Terra Firma chief. According to the Financial Times, Terra Firma now need to raise £120 million by June to stop EMI falling into the hands of Citigroup, the bank that lent it the money to complete the ill-fated deal.

Guy Hands hoped the break up would salvage his £4.2 bn investment in the label It was rejected by EMI's lender, but it's thought it could provide a blueprint to its future The battle between terra firmer and Citigroup launched at the starts of the year because Hands reckons he was duped into buying the label. Court documents filed Friday by Citigroup, include a letter Mr. Hands sent on November 5th to Citigroup executive Chad Leat proposing the separation and recapitalization of EMI's two businesses: the ailing recorded-music division, known as EMI Music, and the healthier EMI Music Publishing unit.

The behind-the-scenes tussle is another reminder of the extreme fragility of the world's No. 4 music business, the recording home of bands as big as Coldplay, following its leveraged buyout in 2007. It also speaks volumes of the lengths Mr. Hands is willing to go to salvage the investment. The battle between Guy Hands and Citigroup erupted at the start of this year when Guy Hands launched a lawsuit in a New York court. He reckons that Citigroup and it's most high-profile bankers had duped him into buying EMI, by falsely claiming there was a rival bidder.

Citigroup have launched a scathing attack on Guy Hands - a tax exile in Guernsey. It's claimed he pleaded to keep the trial out of the UK courts to protect his 'non-domiciled' tax status.

Chris Martin attends the London Evening Standard British Film Awards (9th February 2010):