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More EMI chatter – could BMG buy the whole caboodle?
By CMU Editorial | Published on Tuesday 11 January 2011
Following those reports in The Observer on Sunday that claimed equity group Terra Firma would likely hand over EMI to Citigroup within the next six weeks, spokesmen for both the equity outfit and the American bank have told Music Week that such claims are “hobdosh” (actually, they probably didn’t say “hobdosh”, me having just made that word up, but it’s the sort of term those guys would use).
As previously reported, EMI will almost certainly need a £100 million+ cash injection from Terra Firma later this Spring to meet the covenants of the major music firm’s loan agreement with Citigroup, the loan agreement put in place by the equity firm when it bought the music company in 2007.
Everyone seems certain that Terra Firma’s financial backers won’t let the equity group provide that cash injection, thus allowing Citigroup to take ownership of EMI so to sell it off and recoup (some of) the money it is owed. Recent gossip, including that reported in The Observer last weekend, has said that this is now such a certain eventuality that Terra Firma is negotiating with Citigroup to enable the hand over and sell off sooner rather than later.
But a Terra Firma source told Music Week yesterday that all such talk is a nonsense, and that nothing will happen regarding the equity group’s ownership of EMI until March at the earliest. So, eight weeks then. March is when EMI’s financial position regards the aforementioned covenants will next be reviewed, and therefore when the expected breach will actually come into effect.
Oh well, whatever, that’ll be a few extra weeks for us journalists and commentators to participate in some wild and slightly idle speculation, which is how we get our kicks. Speculation like this. Sources have told the Telegraph that BMG and its private equity backers KKR may now bid for the whole of EMI, which everyone seems to think will cost £1.5 billion when it goes on the block.
As previously reported, it has long been assumed BMG/KKR would bid for the EMI publishing business, leaving the less lucrative EMI record labels for someone else. But then last month BMG boss man Hartwig Masuch said he was actually more interested in EMI’s recording catalogues.
And now the Telegraph’s sources are predicting that BMG will bid for the whole of EMI, publishing and recordings. They add that BMG is mainly interested in EMI’s master recording archives rather than the company’s active labels, or its actually rather successful distribution and label services business, both of which could be sold off once EMI belongs to BMG.
Still, all such talk is possibly jumping the gun for the time being.
