George S. May Business Blog

Terra Firma, EMI need $160 million

Private Equity Group, Terra Firma, is seeking 100 million pounds, or around $160 million, in an attempt to keep EMI alive.

Thanks to the Beatles remastered box sets and a a few new chart-topping artists, Terra has been able to survive recent covenant tests. However, word is that Terra had fallen short on earlier tests and as a result was forced to dip into reserves to cover the shortage. Even with Terra Firma being able to meet recent obligations to their lender Citigroup, in the end, analysts say that the outlook is very grim.

“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 Financial Times notes.

The folks at Wall Street Journal agreed, declaring that Terra Firma is “almost certain to fall short” on their upcoming financial tests.

Terra Firma refuses to comment on the reports.

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