EMI in battle for survival as rights deal collapses

EMBATTLED music group EMI faced being taken over by its bankers last night, after failing to clinch a deal to sell some distribution rights for its artists.

The firm, which has the Beatles, Coldplay, Lily Allen and Pink Floyd on its books, had hoped to raise about 200 million by selling North American rights to rivals Universal Music Group or Sony Music for a five-year period.

A source close to both sets of talks said the discussions fell apart after the parties failed to agree on price. EMI declined to comment.

That leaves EMI battling to raise 120m by mid-June to meet its commitments on loans from US bank Citigroup. It has been struggling to stay afloat since it was bought by private equity firm Terra Firma Capital Partners for 4.2 billion on the eve of the credit crunch in 2007, saddling the company with debt.

Several big-name acts, including Radiohead and the Rolling Stones, quit EMI amid the restructuring that followed.

Another source familiar with discussions said that Terra Firma would talk to investors about raising the funds needed. If that proves unsuccessful and it defaults on its loans, Citigroup could seize EMI and sell it either as a single entity or in parts to recoup the outstanding debt.

Terra Firma, led by British financier Guy Hands, still owes 3bn to Citigroup due to its takeover of EMI and relations between the private equity house and bank have soured.