Beleaguered private equity group Terra Firma is now trying to raise an additional $160 million to keep EMI afloat, according to numerous reports surfacing early this morning.
The figure, more accurately 100 million pounds, is apparently needed despite recent successes meeting financial obligations to lender Citigroup.
Terra has survived recent covenant tests, thanks partly to sales of Beatles remastered box sets. A current crop of chart-toppers is also good news.
But the broader picture is less positive – Terra has reportedly fallen short on earlier covenants, and used reserves to cover the deficits. Now, the Financial Times noted that Terra’s chances of meeting upcoming covenants are seriously in jeopardy. “The accounts show that EMI Music will fall far short of critical covenants on its debt when these are tested between March and December this year and could suffer further shortfalls next year,” the Times noted.
The Wall Street Journal echoed the sentiment, noting that Terra “is almost certain to fall short” on upcoming financial tests. Both publications pointed to revised business plans and proposals from the label group. Separately, a source close to the label recently told Digital Music News to expect a ‘near-term blowup,’ including possible divestitures and breakups of various recording and publishing units. EMI Music Publishing remains the far healthier sibling, and is not contributing to the current financial concerns.
Terra Firma is not commenting on the reports, and EMI has not yet responded to an early-morning inquiry.