3 replies to this topic

[Skid_MacMarx]

Expect changes...

Quote

Citigroup takes over record label EMI

Citigroup has taken over debt-strapped EMI Group, closing a disastrous purchase of the music label by Guy Hands, founder of British private equity firm Terra Firma.

The foreclosure by Citigroup, EMI's main lender, brings the label of British acts such as The Beatles and Pink Floyd under American control until a new buyer can be found.

The takeover had been long expected, but came more than a month before Terra Firma Capital Partners Ltd. officially defaulted on roughly STG3.4 billion ($5.46 billion) of borrowings it took on to buy the label in 2007.

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Citigroup's move eliminates some uncertainty over EMI's future, and restructures EMI by reducing its debt by 65 per cent to STG1.2 billion ($1.93 billion).

Citigroup booked a STG2.2 billion ($3.53 billion) loss, while Terra Firma saw its STG1.75 billion ($2.81 billion) investment evaporate.

The agreement leaves EMI, which also represents Lily Allen, Katy Perry, Coldplay and dozens of other acts, with more than STG300 million ($481.77 million) of available cash, enough to fund its operations, and a sustainable level of debt.

For now, it won't have to rush into the arms of a financial saviour, although companies like Warner Music Group Corp and private equity firm Kohlberg Kravis & Roberts have been jockeying to buy the company.

EMI now has "the ability to invest in and grow its business," said Stephen Volk, the Citigroup vice chairman who will become the chairman of EMI's holding company, Maltby Acquisitions Ltd, in a statement.

"This is a positive development for EMI, its employees, artists, songwriters and suppliers."

EMI's chief executive, Roger Faxon, said in a statement that the restructuring "has given us one of the most robust balance sheets in the industry."

Uncertainty over its future was seen as a major distraction for EMI, which in recent years lost business from the Beatles' Paul McCartney and rock band Queen.

The move also came after a jury in New York found in November that the US bank did not fool Hands into buying EMI at an inflated price. Hands had testified that Citigroup dealmaker David Wormsley had misled him about the number of suitors for the label, while Citigroup said the accusations were an attempt to gain leverage in restructuring talks. Hands appealed the verdict earlier this month.

http://www.smh.com.a...0202-1act4.html

[Skid_MacMarx]

Universal Music Group expected to bid for EMI Group

Universal Music Group is expected to be among the bidders for EMI Group, according to a person close to the label.

EMI's owner, Citigroup Inc., formally put the 114-year-old music company up for sale Thursday, opening a bidding process that's likely to take months.  

Universal, the largest of the four major record companies, avoided making a serious run at Warner Music Group when it was up for auction earlier this year, primarily because a merger of the two companies would have had trouble clearing antitrust hurdles in Europe and in the U.S., where Warner and Universal each have a double-digit market share.

But EMI is a different story. So far this year, its share of the U.S. recorded music market has been just under 9%, according to Nielsen Soundscan. Universal has had just under 30% of the market, while Warner's share has been 19%.

The thinking is that a Universal-EMI mashup would be an easier sell to regulators than a Universal-Warner deal, according to the knowledgeable person.

Universal is most interested in EMI's recorded music business, with a talent roster that includes Katy Perry, Beastie Boys and Lady Antebellum. But Universal could bid for the entire company, including EMI's publishing unit, which handles the songwriting rights for artists such as Jay-Z, Snoop Dogg and Gorillaz.

As with Warner, which fetched $3.3 billion from oil baron Len Blavatnik, EMI could attract similarly priced bids. EMI posted $2.6 billion in revenue in its fiscal year ended March 2010, according to its most recent publicly reported earnings release. Warner had just under $3 billion in annual revenue in its 2010 fiscal year ended in September.

Warner is also expected to make a bid for EMI once its own deal is complete sometime this summer.

EMI, Universal and Warner declined to comment on their plans.

http://latimesblogs....id-for-emi.html

[myrantz]

Gee. That's quick.. So corporate.. EMI used to be big in Asia... Nowadays I hardly know what label my favs are from..

[Skid_MacMarx]

After reviewing bids, Citi looks to sell EMI in pieces - sources

EMI Group Ltd, the home of Coldplay and Katy Perry, looks increasingly likely to be sold off as two separate businesses -- recorded music and song publishing -- after final bids came in last week, according to several people familiar with the matter.

The music company is reviewing competing offers for EMI Publishing from BMG Music, a joint venture between Bertelsmann and private equity firm Kohlberg Kravis Roberts, and Sony/ATV -- a joint venture between Sony Corp and the estate of Michael Jackson, these people said.

BMG-KKR and Sony have submitted the highest offers for EMI's publishing business, the people said. One of them added that the two bids came in close to each other.

Vivendi SA's Universal Music Group and Len Blavatnik's Warner Music Group are vying for the recorded music side of EMI, people familiar with the matter said.

U.S. bank Citigroup, which took control of EMI in February, is expected to pick winning bidders for the businesses by the end of next week, the people said.

While Warner Music has also been interested in buying all of EMI, significant anti-trust hurdles on the publishing segment, as well as challenges in lining up financing in a volatile market, makes such a deal unlikely, the people said.

Moreover, Blavatnik, whose Access Industries bought Warner Music in May for $3.3 billion (2.1 billion pounds), has privately expressed reluctance to bid aggressively so soon after winning Warner Music, according to two of the people close to the transaction process. WMG Chairman Edgar Bronfman Jr. has long coveted EMI, and losing out on the chance to buy it once again is certain to hasten his departure from the company.

EMI Chief Executive Roger Faxon has publicly argued against splitting the business, saying that each side benefits the other. Since the former head of EMI's publishing operation took over leadership of the entire company, he has pushed to more closely integrate both divisions, making it potentially more difficult to split the company.

But the chances of selling EMI as a whole were hurt by the tightening of credit markets in recent weeks, which have prompted banks to stiffen lending terms, thereby making deals more expensive, the people familiar with the matter said.

EMI, whose artist roster includes the Beastie Boys, the Beatles and Keith Urban, is seen as one of the last remaining attractive assets in the music industry. The company said in June that it was exploring strategic alternatives and has since been running an auction, which two sources said has been code named "Project Nile."

Dividing EMI will likely generate richer bids for Citi, which is hoping to collect as much as $4 billion from the auction, said people familiar with the matter.

EMI's publishing unit is the stronger of the two assets and has attracted bids of roughly $2 billion from Sony/ATV Music Publishing and BMG Music Rights, according to two people. Sony/ATV is run by Marty Bandier, who is best known in the music business for building EMI Publishing into the industry's premiere publishing operation over 16 years before leaving in 2006.

BMG, which is a joint venture of German media giant Bertelsmann and private equity firm KKR, has made a string of music publishing acquisitions in the last year. The venture does not have a recorded music arm.

Universal Music Group is currently the frontrunner for EMI's recorded music division, which includes the Capitol and Virgin labels, one of the people said.

A Citi spokeswoman declined comment. A representative for EMI was not immediately available for comment. All bidders have declined to comment throughout the sale process.

http://uk.reuters.co...E79B7XY20111012