JSM Financial: Struggling EMI in dire straits as licensing talks fail.

March 31, 2010 - PRLog -- Mr. Guy Hands’ private equity group Terra Firma, the current owner of EMI is desperately trying to secure cash ahead of the firms looming financial year end to meet a test on a $2.6 billion loan from Citigroup. JSM financial believes that according to reports EMI has been in separate negotiations with both Universal Music Group and Sony for a licensing deal.  

Sources close to the matter have indicated however that these talks have proved fruitless and had fallen through at the last minute. One source is believed to have indicated that the deal had collapsed because it was too complicated while another source said the offers received for the licensing agreement were not acceptable.

Terra Firma has, according to JSM Financial sources, already notified investors that it may need to inject over $150.7 million (£100 million) to remain within its covenants until March next year or risk Citigroup, the firm’s major creditor seizing the business.

Guy Hands has also attempted to sue Citigroup for $3.03 billion (£2 billion) over “fraud” and “lies”. Terra Firma alleged that senior Citigroup banker David Wormsley had lied about the presence of other buyers in the auction in 2007 in order to bid up EMI’s price.

EMI which has already lost iconic acts such as Radiohead and the Rolling Stones may also still loose legends such as Queen and Pink Floyd and new acts like Lilly Allen who are all said to have lost faith in the label.

JSM Financial believes that with Terra Firma likely to fail the end-of-year covenant test it will be forced to find money to inject into the ailing EMI before mid-June if it hopes to retain the business.

# # #

JSM Financial is an independent broker focused on the realization of superior returns from seed stage and early-stage equity investment and active partnerships with exceptional entrepreneurs building market-leading technology companies.