Guy Hands has 12 days to persuade investors to stump up fresh funds for EMI or risk losing control of the troubled music group, home to top acts such as Coldplay and Katy Perry, The Times Online are reporting today. More discussion on this is at the Coldplay forum here onwards.
A handful of the largest backers of Terra Firma, Hands's investment vehicle, have given verbal commitments to contribute £105m - enough to plug the latest breach of its borrowing agreement with Citigroup. But Hands still needs to secure the support of 75% of his fund's 200 investors by May 14 for the money to be drawn down. That is the date Terra Firma must submit a "compliance certificate" to Citi showing EMI can meet the terms of its £3.2billion loan.
If Terra Firma fails to win enough backing, it will tap outside investors for fresh investment. However, it is unlikely to have enough time to do so by a week on Friday, giving Citi a chance to seize control. The cash needs to reach Citi by June 11.
Hands was forced to scrap plans to raise £360m in one go because of time pressures. He calculated that this sum would have covered top-up interest payments until 2015, when the loan is due to be renegotiated.
Instead, he has targeted £105m, enough to cover March's loan breach and carry EMI through to next spring. The figure is less than initially thought because the music group's trading was better than expected in the final months of the year.
The plan is to approach investors again for £255m later. As soon as it has secured some breathing space, EMI is expected once again to attempt disposals. Analysts believe its Christian music label, based in Nashville, Tennessee, will be offloaded. Plans to license its American music catalogue will also be revived.
Terra Firma's annual review reveals that another €256m (£223m) has been written off from the value of EMI, confirming that the Pounds 1.8billion investors pledged in the 2007 buyout is all but worthless. Hands made a series of presentations to investors last week based on a revised five-year plan for EMI drawn up in part by Charles Allen, executive chairman of the recorded music arm.
Pictures of Coldplay at Estadio Universitario, Monterrey, Mexico (11th March 2010):
Photos by Galo González
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