Hands says he would re-bid for EMI if the price was right
By CMU Editorial | Published on Friday 11 February 2011
Guy Hands is interested in buying back EMI, but only at the right price, or so say Bloomberg in a report about a speech the Terra Firma chief gave to business types in Guernsey earlier this week.
Hands’ equity group lost control of EMI last week, of course, after the holding company through which it owned the music major was put into administration by bankers Citigroup for failing to meet the terms of the multi-billion pound loan Terra Firma took out to buy the music company back in 2007. The bank took ownership of the music firm and immediately restructured its debts. Although Citi insists it is in no major rush to sell off EMI, it is know that is the bank’s ultimate intent.
Rumours that Hands might try to buy back his music company after its repossession by Citigroup began circulating at the start of the year, with other City-based gossipers insisting the bank, despite still being embroiled in a legal dispute with Terra Firma over the 2007 EMI deal, would consider an offer from the financier.
And this week Hands confirmed some of those rumours, saying he was considering making a bid to buy back EMI, even implying he’d already made an offer. But he cautioned that – having vastly over-paid for the music firm in 2007 – he’d be very conservative in his offer this time round, and possibly too conservative for Citigroup’s liking. Both Hands and the US bank have lost billions from the 2007 acquisition.
According to Bloomberg, Hands said this week: “It’s a question of price. Terra Firma and Citigroup agreed on what EMI was worth back in 2007. We clearly both got it wrong. Now, we disagree quite strongly about what it’s worth. They are going to auction it, and we will see if they can get more for it than we offered”.
Whether EMI’s current management, put in place by Hands, but seemingly complicit in Citigroup’s speedy repossession of the company last week, possibly without the equity group’s knowledge, would be pleased to have Terra Firma back as owners isn’t clear. There would be benefits, though. Other buyers might look to split EMI up, which runs contrary to top man Roger Faxon’s belief that the only possible future for a music company as large as his is for previously autonomous record and music publishing divisions to be integrated into one music rights bonanza.
And Hands agrees. Possibly implying that, as was rumoured, at one point Terra Firma did consider splitting up EMI, the equity chief said this week: “We got convinced that if EMI is split up between publishing and recording, it will die as a company. You’ve really got to keep the two together so that you have the stability of publishing’s earnings versus the volatility of the recorded music division”.
It’s not clear how Hands would finance even a conservatively priced takeover of EMI, though he is still sitting on significant funds to invest. But, presumably, many of his financial backers would be very nervous about throwing more money at the equity group’s to date disastrous musical adventure, even if EMI is looking much more healthy now the shackles of a three billion debt have been removed.
In a seemingly candid speech, Hands also admitted that was initially shocked by the public interest in his takeover of EMI, and hadn’t been prepared to be pushed quite so squarely into the limelight. He said he took the Chairman’s role at the major reluctantly, mainly because having fired so many of the incumbent EMI management on his arrival there was no obvious other contender. He added: “It would take a lot to get me to do another deal which is as public as [the EMI one]. I had very little sympathy for rock stars before buying EMI. Now I have enormous sympathy for them and all those who find themselves in the public eye”.