The EMI Mess

The situation continues to worsen at EMI Group, a company battling against sagging recordings and a difficult restructuring. According to a recent Sunday Telegraph report, label group owner Terra Firma has now extended its terms with lender Citigroup, and signed onto revised turnaround benchmarks. The London-based paper pointed to a three-month extension with Citigroup, one that postpones a nearing, June deadline.

That offers some breathing room, though it also cranks the pressure even higher on EMI. Meanwhile, Citigroup has been unable to repackage its EMI loan, considered an ultra-risky bet on the street. Additionally, less-restrictive terms of the Citigroup loan are making it difficult for the bank to impose onerous demands on Terra Firma, according to various sources.

Another source close to the situation was less concerned for Citigroup and other creditors. "The lenders will get their money in the end," the source told Digital Music News, pointing to the multi-billion pound equity value carried by EMI Music Publishing. That opens the possibility of a worst-case liquidation ahead, a move that would stem the bleeding and realize current-term valuations.

Meanwhile, the day-to-day appears to be a grind. Fresh recruits like ex-Googler Douglas Merrill are part of a turnaround strategy, though the mood on the inside is reportedly grim. That could be a contributor to recently-missed financial targets, as well as untapped acquisition and licensing opportunities. Just recently, news surfaced on a plan to eliminate another 1,000 jobs, on top of a previously-disclosed reduction of between 1,500 and 2,000.