Print Edition
August 2010 
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Citigroup Requested Debt-for-equity Swap In EMI Negotiations |
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Claire Spencer, December 2009 |
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(18 December 2009)
Citigroup attempted to take control of struggling music publisher EMI Group just prior to Terra Firma, which owns EMI, launched legal action against the bank. This was reported in the Financial Times, which cites three sources familiar with the negotiations.
Two of the people told the newspaper that Citigroup wrote to Terra Firma in September, proposing a debt-for-equity swap that would have given the bank the majority of EMI’s equity, and leaving the private equity firm with a share in the upside from restructuring the company. The third source added that the proposal offered Terra Firma a management fee.
It is thought that the plan was designed to allow Citigroup to cut its current debt exposure to a sustainable level.
However, Terra Firma rejected the proposal, considering it to be thin on financial detail, says the report. Subsequently, Citigroup rejected an offer from Terra Firma to put £1bn of new equity into EMI in exchange for the bank writing off £1bn in debt.
Terra Firma has written down its investment in EMI by 90 percent. The music publisher currently owes £2.6bn to Citigroup.
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