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Hands to bug investors for £360 million for EMI

By | Published on Tuesday 20 April 2010

That guy, you know, that guy… the guy… you know, Guy, right? Guy. Him, yes, you know. Mr Hands to his children. Him. Yes, well, he’s apparently hoping to persuade his financial backers to not only stump up the £120 million EMI must pay Citigroup in June, but another £240 million as well, partly to cover the next loan fee payment, presumably due in twelve months time, and partly to help plug that previously reported hole in the major music company’s pension fund.

As previously reported, Guy Hands and his top team at EMI owners Terra Firma seem to be increasingly optimistic of late that they can persuade the equity group’s investors to provide the flagging music company with a multi-million pound cash injection to help keep the bankers away from the door. If they don’t, Citigroup is likely to foreclose on the major’s multi-billion dollar loan, taking control of the music company and probably splitting it up for sale.

As also previously reported, EMI’s Executive Chairman, Charles Allen, has penned a report into how he plans to turn round EMI’s fortunes in the next five years, so that the major can start to pay its own bank fees sooner rather than later, while starting to generate the kind of profits that will make a serious dent into the £3.2 billion the music firm owes its bankers, so that Terra Firma might actually start to see some pay back from it’s big musical experiment one day.

With that report pretty much complete, Hands, although apparently stranded in New York because of the ash cloud (though he’s unable to come to London anyway, for tax reasons), is now expected to start sweet talking Terra Firma’s backers with the aim of getting approx £360 million in place by the end of next month.

According to the Financial Times, Hands will tell his backers that he and the top team at the equity firm will personally put £58 million in the pot, almost three times more than they would be due to pay under existing allocation agreements. Presumably Hands wants to demonstrate his confidence in Allen’s grand plan via his wallet. 

It’s thought that grand plan will propose further job cuts, more outsourcing of back office activity, the sale of some stand alone divisions and the much reported licensing out of the major’s recordings catalogue in North America. As well as resulting in significant savings, it’s now thought the plan might also propose using some of the money generated by selling off recording assets to buy new catalogues for the more stable EMI Music Publishing.