Music giant EMI slashes losses by 64% but still needs cash injection
Music group EMI have slashed annual losses by two-thirds but said it needs millions more to stay out of the hands of lenders.
Pre-tax losses at the group, whose artists include Coldplay and Katy Perry, fell 64% to £624m in the year to March 31. EMI wrote off £602m, although revenues rose 5% to £1.65bn after successes like the remastered Beatles catalogue.
Terra Firma, the private equity who bought EMI for £4.2bn in 2007, was forced to raise £105m earlier this year to meet covenant tests. EMI's annual report stated up to £26.9m was needed over the quarters to June 30, September 30 and December 31 with a further "significant shortfall" for the March 31 test.
The report said directors know further shortfalls lie ahead in respect of the covenant test periods.
Stephen Alexander, chairman of EMI's holding company Maltby Capital, said the group faced more than £3bn in debt due for repayment between 2014 and 2017.
Although EMI could push for a renegotiation of its lending terms, Terra Firma is currently in a legal battle with bank, Citigroup, over the original deal three years ago before the credit crunch struck.
Terra Firma alleges Citigroup "misrepresented fundamental facts" over EMI's sale, claiming that Citi falsely said there were other bidders for the record company, to prompt a higher bid.
Citi denies the claims.