EMI Group’s holding company Maltby Investments Ltd, after defaulting on its loans, has called in PwC as administrators, who have in turn sold the music company on to its creditor Citigroup.
Citigroup has immediately recapitalised EMI Group in a debt-for-equity swap, bringing its debts down by 65 percent to £1.2 billion and giving it £300 million in free cash.
As statements from both PwC and EMI have it, it’s all about continuity and “business as usual“…
– PwC: “This transaction has enabled ownership of the EMI Group to transfer without any disruption.”
– EMI: “(The company will) continue delivering on its strategy to maximise value for the artists and songwriters it is dedicated to serving.”
That’s true, to an extent; EMI’s leadership is unchanged. But what long-term future there may be for EMI, and whether a tie-up with Warner Music Group (NYSE: WMG) – potentially itself up for sale – may ensue, remains to be seen. But executives from both EMI and Citigroup are not yet suggesting anything other than independence…
– Citigroup vice-chairman Stephen Volk: “Our objective is to have EMI perform its absolute best for our shareholders over time. EMI is an iconic business and we are completely supportive of both its management and its strategy.”
– EMI CEO Roger Faxon: “It has given us one of the most robust balance sheets in the industry with a modest level of debt and substantial liquidity. With that solid footing, we are confident in our ability to drive our business forward … We have a clear vision for the future, a strong and committed management team, and now the right capital and financial structure in place to deliver successful outcomes for artists and songwriters.”