EMI Sale Timeline Legal

High court to consider Terra Firma’s EMI documents claim next month

By | Published on Monday 17 October 2011


As Citigroup mulls over the various bids made earlier this month to buy EMI, a court will next month consider whether accountants PricewaterhouseCoopers should be forced to had over documents relating to the music major to Terra Firma, EMI’s previous owners.

As previously reported, Terra Firma has questioned the decisions made by PWC when, earlier this year, they decided to put the holding company through which the private equity group owned EMI into administration, a move that allowed Citigroup – as principal creditor – to take ownership of the music firm.

Last month the equity types – who have already had one court battle with Citigroup over EMI, on that occasion about the advice the bank gave before they bought the music company – went to the High Court in London to ask judges to force PWC to hand over documents that would give them a better idea of what happened on the day Citigroup seized ownership of their music firm. They also want more details of PWC’s valuation of the EMI businesses.

While EMI was struggling to meet the terms of its loan agreements with Citigroup, and Terra Firma boss Guy Hands was reportedly having a tough time convincing his financial backers to keep pumping more money into the music firm so that it didn’t default, sources say that Hands and his team believe that, at the point Citi seized EMI, the major, thanks to Terra Firma support, was meeting all of its commitments under its loan agreements.

According to Financial News, the High Court will consider Terra Firma’s request for access to PWC documentation next month. It also notes that, had changes to UK insolvency rules currently being considered by the government already happened, it is unlikely Citigroup could have seized ownership of EMI from Terra Firma in the way that it did.

Presumably, given its interest in the PWC documents, Terra Firma is considering legal action over the way it lost control of EMI, as well as appealing the ruling on its aforementioned previous action over the way it bought it in the first place.