Citigroup Takes Control of EMI

[mjzee]

LONDON—In a dramatic end to one of the most disastrous leveraged buyouts of last decade's deal boom, Citigroup Inc. seized EMI Group Ltd. from financier Guy Hands's Terra Firma Capital Partners LP in a move that is expected to kick off an auction of the storied music company.

Terra Firma bought EMI in 2007, largely using a loan from Citigroup that eventually was too much for the private-equity firm to manage. Now, EMI said in a statement Tuesday, Citigroup has acquired 100% of its shares and slashed the company's debt to £1.2 billion ($1.92 billion) from £3.4 billion. The timing is somewhat surprising, as Citigroup wasn't expected to officially foreclose on debt-laden EMI for five months.

WSJ

Let the bidding begin!

[Teasing the Korean]

Great, will I need a PIN to play my EMI CDs now?

[Morganized]

  On 2/1/2011 at 11:03 PM, mjzee said:

LONDON—In a dramatic end to one of the most disastrous leveraged buyouts of last decade's deal boom, Citigroup Inc. seized EMI Group Ltd. from financier Guy Hands's Terra Firma Capital Partners LP in a move that is expected to kick off an auction of the storied music company.

Terra Firma bought EMI in 2007, largely using a loan from Citigroup that eventually was too much for the private-equity firm to manage. Now, EMI said in a statement Tuesday, Citigroup has acquired 100% of its shares and slashed the company's debt to £1.2 billion ($1.92 billion) from £3.4 billion. The timing is somewhat surprising, as Citigroup wasn't expected to officially foreclose on debt-laden EMI for five months.

WSJ

Let the bidding begin!

Any bets on where Blue Note ends up? Do they split up EMI?

Speculation anyone?

[GA Russell]

The first commenter had it right. Citibank was bailed out bigtime by the taxpayers. If there was going to be a bailout, I'd be better off if EMI got the money!

[Chuck Nessa]

I've told Citibank to put BN on my card.

[mjzee]

In all seriousness, if I had to guess, I'd say that BN and all jazz-related labels (Roulette, UA, etc - but just the jazz titles) might be sold to a rich "white knight" who loves jazz and would get a kick out of operating it on a break-even basis, not looking for profit. Think Clint Eastwood, someone like that.

[Ron S]

Or, think Concord Music Group.

[paul secor]

  On 2/1/2011 at 11:59 PM, Ron S said:

Or, think Concord Music Group.

I'd rather not.

[GA Russell]

Warner has been interested in acquiring EMI. Maybe now the price will come down.

[Chuck Nessa]

Warner has their own problems.

[GA Russell]

Chuck, I read an article about Warner just the other day. It said that their stock had remained essentially flat, while two of its competitors had fallen 20%.

I was surprised to see that, because I have no faith in Edgar Bronfman, Jr.

By the way, the article said that Warner was also putting itself up for sale.

Was that story linked to in another thread here? I don't remember.

[Quincy]

  On 2/2/2011 at 1:31 AM, GA Russell said:

Chuck, I read an article about Warner just the other day. It said that their stock had remained essentially flat, while two of its competitors had fallen 20%.

Warner is well off the highs of 2006, roughly 80% off the peak. KKR (as featured in Barbarians At The Gate) is rumored to be interested in Warner though I have no idea if there's anything to it. As far as Warner buying EMI, do anti-trust concerns exist for a business sector that's so damaged?

[GA Russell]

Quincy, the article said that Bronfman and his partners had taken all of their money and plenty more out of the company. Perhaps that is why the price has fallen.

[mellowT]

Doesn't EMI own Mosaic Records? Would this be a good time to buy all wish-listed items before something bad and unexpected happens (again)?

[John L]

  On 2/2/2011 at 5:02 AM, mellowT said:

Doesn't EMI own Mosaic Records? Would this be a good time to buy all wish-listed items before something bad and unexpected happens (again)?

Either that or sell off all the rare sets now before they are reprinted and sold off cheap in JSP/Proper-type boxes.

Edited February 2, 2011 by John L

[papsrus]

Potential buyers:

A cash-rich company with an interest in digital media? Microsoft buys EMI and folds it into their struggling Zune franchise?

[medjuck]

  On 2/2/2011 at 2:07 AM, GA Russell said:

Quincy, the article said that Bronfman and his partners had taken all of their money and plenty more out of the company. Perhaps that is why the price has fallen.

Where was the article? I think they want to buy EMI but may not be able to afford it.BTW I don't understand how the Citigroup takeover helped retire debt but it has and EMI is now viable on its own for a couple of years.

[GA Russell]

Medjuck,I don't remember where I saw the article, but it was within the last week or so - very recent.

I gather that most of the debt was owed to Citigroup, so Citi took over the company and converted the debt into equity, thus cleaning up the balance sheet.

As I understand it, no one said that EMI's sales were ridiculously low, only that they weren't enough to make the payments on the large sum of money borrowed by Guy Hands to take the company private.

[Ron S]

My only concern is: what's going to happen to Norah Jones?

[gmonahan]

  On 2/3/2011 at 9:49 PM, Ron S said:

My only concern is: what's going to happen to Norah Jones?

I think EMI should just give all its masters to Mosaic and take a nice charitable deduction.

gregmo

[Patrick]

Mosaic is a charity now???

[gmonahan]

  On 2/3/2011 at 10:36 PM, Patrick said:

Mosaic is a charity now???

To read some of our posts about it on this Board, it does sometimes seem that way!

gregmo

[felser]

  On 2/2/2011 at 12:47 AM, paul secor said:

  On 2/1/2011 at 11:59 PM, Ron S said:

Or, think Concord Music Group.

I'd rather not.

Maybe the trainwreck session would finally be released as something like "Tyrone Washington Plays For Star-Crossed Lovers"

[mjzee]

Citigroup looking to sell EMI, PDQ

[mjzee]

The latest on the pending sale of EMI:

NY Post