LONDON (Reuters) - U.S. bank Citigroup (C.N) seized control of troubled music company EMI from its private equity owner Guy Hands on Tuesday, to finally bring an end to the long-running ownership saga at the home of the Beatles.
Citigroup took control of the firm -- and wrote off most of its debt -- after Hands’ company Terra Firma defaulted on its loans.
Citigroup provided 2.6 billion pounds of debt for the 2007 buyout of EMI, a deal that came to epitomize the risks of loading companies with debt when the company’s performance slumped.
Since then the two sides have clashed in court and on the front pages of national newspapers as Hands struggled to keep hold of the firm behind Robbie Williams, Kylie Minogue and others.
Following the deal, the company’s debt has been reduced by 65 percent from 3.4 billion pounds ($5.47 billion) to 1.2 billion pounds, and the company has in excess of 300 million pounds of cash available.
“The recapitalization of EMI by Citi is an extremely positive step for the company,” EMI chief executive Roger Faxon said in a statement.
“It has given us one of the most robust balance sheets in the industry with a modest level of debt and substantial liquidity. With that solid footing, we are confident in our ability to drive our business forward.”
EMI said it would continue under the same management and it is now completely separate from its previous owner, Terra Firma. The vehicle formed by Terra Firma to own EMI, called Maltby, is now in administration.
“As a result of a default under (Maltby‘s) loan facilities, and the subsequent acceleration of the outstanding debt, Tony Lomas and I were appointed as administrators,” Peter Spratt, joint administrator and partner at PwC said.
“Since that appointment ... the EMI Group has been sold to Citi.”
Terra Firma was not immediately available for comment.
Reporting by Kate Holton, Editing by Douwe Miedema