Playing for time

11 May 2010 By Una Galani Follow @ugalani

The UK music group s private equity owner has raised just enough equity to keep creditor Citi from taking control before 2011. Investors rejected requests for more cash. Even so, EMI is now in a slightly better position to pursue an orderly debt restructuring with Citi.

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Terra Firma has secured sufficient support for its plan to inject fresh money into EMI and stop creditor Citigroup from seizing control of the music group, according to a person close to the fund. The move marks the completion of the first of a twostep fundraising plan.

Investors have given Terra Firma permission to inject a further 105 million pounds into EMI following a breach of covenants on its 3.3 billion pound loan to Citigroup. Terra Firma will use the funds to cure the covenant breach and keep EMI from any further risk of default until 2011.

Terra Firma intends to raise a further 255 million pounds for EMI from investors at a later point. The additional funds will ensure EMI can trade safely until 2015, according to the source, when the Citigroup loan is due to mature.

Terra Firma must inform Citigroup by May 14 whether or not the fund intends to cure its covenant breach before the midJune deadline.

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