Citi rejects Hands's 1bn offer to refinance EMI

GUY Hands&rsquo;s private equity firm Terra Firma has been sent back to the drawing board after Citigroup rejected its proposed restructuring of music publisher EMI&rsquo;s &pound;2.6bn debt.<br /><br />Citi was not impressed by Hands&rsquo;s offer of a &pound;1bn capital injection into the business in return for the lender writing off the same amount of EMI&rsquo;s debt, and Terra Firma must now come up with a new proposal.<br /><br />Sources close to the negotiations said that the bailed-out US bank is willing to restructure &ndash; and is unlikely to be interested in taking over a majority stake in EMI itself &ndash; but that it felt the terms of the proposal were tipped too much favour of Terra Firma.<br /><br />Citi was Terra Firma&rsquo;s sole lender when it bought EMI for &pound;2.5bn in 2007, as market conditions made it difficult to syndicate the debt. With market conditions now improved, it is possible that the bank could look at revisiting syndication of the loan.<br /><br />Sources denied yesterday that Hands had withdrawn Terra Firma staff from EMI&rsquo;s management as a result of Citi&rsquo;s snub, saying that the majority of the buyout firm&rsquo;s staff had left 18 months ago.<br /><br />After it acquired EMI, Terra Firma had around 40 executives working at the firm, but this has been reduced to just 10 in recent months.