Terra Firma chief executive Guy Hands reaffirmed his restructuring plan for EMI Group in a recent note to partners. The address, which traversed a broad number of Terra investments, acknowledged a dire financial backdrop that is steadily getting worse. “These times are not going to be easy for any private equity practitioner,” Hands admitted.
The worsening credit crunch is bad news for banks, and lender Citigroup has been unable to syndicate or offload its EMI debt. “In all leveraged buyouts, your bank is your partner, and we have worked hard … to see if there are ways to help Citigroup syndicate or sell down this loan,” Hands expressed.
Meanwhile, Hands reaffirmed a downsizing initiative that will reduce 100 million pounds ($197 million) from the annual balance sheet. That will require thousands of layoffs, a process that is just getting underway. In the assessment, Hands offered few strategy specifics on a planned turnaround of the recorded unit, and speculation continues to surround a near-term sell-off of new music divisions.
More solid units, including publishing and catalog, remain cushions. “Meanwhile, and importantly, our investment has strong downside protection in the publishing and catalog assets of the business, where revenues are on an upward trend,” Hands said.
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