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Citigroup sells EMI pension fund, as retrial over Terra Firma allegations gets provisional kick-off date

By | Published on Wednesday 10 July 2013

Terra Firma v Citigroup

Citigroup has sold the EMI Group pension fund to the Pension Insurance Corporation, in a deal which brings to an end the US bank’s involvement in the former UK music major.

As much previously reported, Citigroup took ownership of EMI in early 2011, basically repossessing the music firm from Terra Firma, the equity group which acquired the record label and music publisher in 2007 in an audacious debt-laden Citigroup-backed deal of the kind that prospered prior to the credit crunch, and fell over spectacularly post-crunch.

After taking control of EMI, Citigroup split the firm into its two constituent parts – recordings and publishing – and sold them off to Universal Music and a Sony-led consortium respectively. Though there remained the issue of what to do with the EMI pension fund, which complicated Citi’s sale negotiations for a time, especially on the side of the sound recordings deal.

In the end the pension fund stayed with Citi when the bank confirmed its Universal and Sony deals, but ownership will now be transferred to PIC, whose Chairman Clive Gilchrist told reporters yesterday: “I have written to the fund members telling them that their benefits have been secured in full with PIC; as a trustee, fully securing benefits is the ultimate goal”.

So Citigroup can put its EMI adventure behind it once and for all. Except, of course, Terra Firma’s Guy Hands is having a second go at suing the bank over its involvement in his catastrophic and costly 2007 takeover of the music company. In 2010 a New York jury ruled that Hands’ allegations of dodgy dealings on the part of Citi were unfounded, but in May an appeals court decided that ruling was based on bad advice from the judge, and ordered a retrial.

According to the FT, unless an out of court settlement can be reached (both sides came out of the original trial looking like bumbling fools, so such a settlement would be attractive to all), the retrial could kick off on 7 Oct. We’ve put in a biscuit order, just in case.