Hands may hold EMI with extra backing

FINANCIER Guy Hands was yesterday reported to have secured the backing he needs from investors to prevent music group EMI slipping into the hands of banking giant Citigroup.

He is reported to have obtained verbal agreement from 75 per cent of investors in his Terra Firma fund to put a further 105 million into EMI.

Hands is said to be "confident" that enough of the 200 investors, each of whose vote is weighted according to the size of their holding, will back him.

He has put forward a new business plan – drawn up by Charles Allen, the executive chairman of EMI's recorded music division – which includes the possibility of selling some assets. But the vote is still expected to be extremely tight, and a number of investors are thought to have rejected the plan as being too ambitious.

Hands has until Friday to give Citigroup a compliance certificate showing that EMI – which has The Beatles, Coldplay and Pink Floyd on its books – can avoid breaching the terms of its 3.2 billion loans for another year. If he is unable to do this, Citigroup would take control of EMI by the middle of June.

The 105m being raised is well short of the 360m Hands originally wanted to tide the group over until 2015, and he will still have to go back to investors for an additional 255m later in the year, or secure the additional funding from other sources.

Terra Firma bought EMI for 4.2bn in 2007 on the eve of the credit crunch, borrowing some 3.2bn from Citigroup to fund the deal. But the music group has seen its finances strained by difficult trading conditions, and posted a 1.75bn loss for the year to March 2009.

Meanwhile, German Sunday paper Frankfurter Allgemeine Sonntagszeitung reported that Sony Music might consider a bid for EMI.