August 16, 2022

Media Decoder: EMI Puts Itself Up for Sale. Again.

EMI, the music company that was seized by Citigroup in February after a disastrous four-year ownership by the private equity firm Terra Firma, is going up for sale again.

EMI announced on Monday that it had begun a process “to explore and evaluate potential strategic alternatives, including a possible sale, recapitalization or initial public offering.” A sale is widely considered the likeliest outcome.

Terra Firma, led by the British financier Guy Hands, paid $8.4 billion for EMI in 2007, at the height of the credit market. Citi provided about $5.5 billion through a loan, but EMI was crushed under the weight of its debt, and Terra Firma had to invest more than $300 million to meet the requirements of regular financial covenant tests. When Citi seized EMI, it wrote off 65 percent of its loan, leaving EMI with a far more manageable $1.9 billion of outstanding debt.

EMI releases music by the Beatles, Katy Perry, the Beastie Boys and many others, and the company’s music publishing division, which controls the copyrights to the music and lyrics underlying songs, is considered one of most highly prized in the industry.

The success of the recent sale of the Warner Music Group is seen by many on Wall Street and in the music industry as an encouraging sign for an EMI sale. Last month Access Industries, led by the Russian-born billionaire Len Blavatnik, paid $3.3 billion for Warner, which releases music by Madonna, Led Zeppelin and Bruno Mars. Many of the same bidders who were interested in Warner are expected to pursue EMI, but given EMI’s British roots the company may draw further interest from European investors.

This post has been revised to reflect the following correction:

Correction: June 20, 2011

An earlier version of this post misstated the price of Warner Music Group. It was purchased for $3.3 billion, not $3.3 million.

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