Citigroup in talks with EMI pension fund
By CMU Editorial | Published on Tuesday 10 January 2012
One of the sticking points when Sony, Universal, BMG and Warner Music were busy negotiating with US bank Citigroup about buying up the EMI businesses was who should take on the liabilities the London-based major had to its pension fund. Although not particularly big in terms of the number of former EMI employees it’s supporting (it being something of a legacy from a past era), the music major’s liabilities to the pension pot were not insignificant, not least because previous owner Terra Firma had agreed to fund the pension scheme to the tune of £197 million over six years.
With none of the EMI buyers especially interested in inheriting the major’s pension obligations, we now know that Citigroup had to hang on to those liabilities, and it was confirmed last week the bank was now in talks with the winding down major’s pension trustees. It is thought Citigroup may have to pump up to £200 million into the pension fund, though the bank may try to negotiate that down to something near the pension outfit’s current deficit of £125 million.
Of course Citi will get billions from its sale of the EMI businesses (assuming those sales get regulator approval), though given past losses incurred by its funding of Terra Firma’s 2007 acquisition of the music company, the bankers are keen to keep as much of that money as it can.
Elsewhere in EMI news, it was revealed last week that the collapse of Terra Firma’s ownership of EMI this time last year cost certain execs at the music major dearly, because the private equity owners had put them on City-style mega-bonus schemes, all of which became redundant once Citigroup had seized ownership of the music firm. Between them these directors, which included overall CEO Roger Faxon, lost £41 million in bonuses. Though given the immense stress of working for the then floundering private equity twonks, some of those execs possibly thought it was worth it.