EMI in fresh sale talks

GUY Hands had barely surrendered control of EMI to Citigroup last night before speculation started over who its next owner might be.

Citi, which took EMI from Hands’ private equity firm Terra Firma last night after declaring its £3.4bn debt mountain unsustainable, denied it had solicited interest from potential buyers.

“There is no sales process underway at this point,” a spokesman said. “We are in no rush and have not reached out to any potentially interested parties at this point. We are prepared to hold onto EMI until the time and/or valuation is right.”

But with £1.2bn of loans still extended to EMI and £2.2bn of its own money written off in the takeover, Citi is likely to want to recoup its funds soon.

That would leave EMI, home to a stable of stars including Lily Allen, Kylie Minogue, Coldplay and The Beatles, up for sale again.

Interested buyers potentially include US rival Warner Music and German music rights manager BMG, which is owned by private equity house KKR.

But private-equity-backed Warner, which courted EMI in 2007, is already looking for investors in order to sell its own music publishing arm, Warner/Chappell.

Warner has called in Goldman Sachs to negotiate with its potential buyers after interest from BMG – but Goldman is also now considering how Warner might acquire EMI.

A joint bid between KKR and Warner may also be on the cards, as Warner’s chairman and key shareholder Edgar Bronfman is keen to bid for EMI.

Citi is reputedly seeking a sale price of about £1.8bn.

Other potential bidders are Simon Cowell’s Syco venture; Sony Music and Universal, although the two major music companies are likely to face competition concerns over a takeover.

EMI has endured a turbulent period under Terra Firma’s management, as Hands fell out with Citi over EMI’s debt burden.

Hands asked Citi repeatedly to renegotiate the debt terms as EMI struggled in the recession, but the bank refused, instead pressuring Hands to sell it.

The battle for EMI was soured further by an acrimonious US court case last year in which Hands accused Citi of tricking him into paying far more for the company than it was worth. US judges found in favour of Citi but Hands lodged an appeal last month, a step seen as designed to repair his reputation as much as affect EMI’s ownership.