Seeking to persuade Terra Firma investors to inject a reported $158.5 million of additional investment, Guy Hands, founder of private equity group Terra Firma, has asked EMI Music chief executive Elio Leoni-Sceti to draw up a new plan for the company. London’s Financial Times reports today (2/4) that the cash injection is intended to meet the terms of its loans from Citigroup this year.
Terra Firma needs to raise the funds to salvage the remainder of its equity in investment vehicle Maltby Capital, and so avoid losing control of the company to Citigroup which holds its $4.1 billion debt. The lending terms will be tested again March 31, and further cash injection into EMI will need to happen by the end of June 2010 to avoid the covenant breach.
Billboard.biz reports that an EMI spokesperson insisted the company is doing well, stating that EMI “has been increasing its market share and operating profits have increased substantially both last year and in the current year. The new strategic plan that Terra Firma has asked EMI Music to draw up will build upon these successes.”