Terra Firma injects a further £28m into debt-laden EMI

The £28m (€32m) second cash injection was deemed necessary after EMI reportedly failed to meet the conditions of a £2.6bn loan from Citigroup, which financed the £4bn takeover of the record company in 2007.

According to the FT, Terra Firma’s debt to Citigroup must stay at a particular proportion to the record label’s earnings, which are to be checked every six months. If it does not meet this target, however, the firm can make up the difference by adding more equity.

Earlier this month, EMI announced that cost cutting and currency gains had boosted its EBITDA from £51m (€58.5m) to £163m (€187m) in the last financial year, and that it was on track to deliver £200m of cost savings over the coming year.

Sources told the FT that Terra Firma chairman Guy Hands held talks last year with Edgar Bronfman, Warner Music’s chief executive, regarding a possible merger, but there have been no negotiations so far this year.

Terra Firma wrote off half of its £2.3bn (€2.6bn) investment in EMI in March, and Citigroup has also partly written down the debt.

Acts signed to EMI have included Duffy, Take That, Amy Winehouse, the Beastie Boys and Depeche Mode.

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