Terra Firma fails in High Court bid to re-open EMI forced sale

February 2012

Record labels


CMU Daily reports that private equity group and one time EMI owner Terra Firma has failed in its bid to force PricewaterhouseCoopers to hand over documents relating to the winding up of the music major’s holding company last January, the move than enabled US bank Citigroup to take control of the London-based music company off the equity firm, and put it up for sale. Terra Firma has questioned the decisions made by PWC that enabled Citigroup to repossess EMI, and also questioned the accountants’ valuation of the music business at the time the equity company lost control, and that PWC was not validly appointed as administrator for the EMI holding company. Terra Firma lost the entirety of its investment after CitiGroups takeover, totalling some £1.85bn. Terrra Firma had previously lost an action over the way Citi behaved when the equity group first acquired the music company in 2007. In the current case, Mr Justice Nicholas Warren has ruled that there is no case to force the accountancy firm to hand over any documents at this time, partly because there isn’t “the slightest suggestion [Citi] effected sales at undervalue” because it wouldn’t make commercial sense for them to do so, and partly because he didn’t see why PWC handing over documentation would “assist in achieving a fair disposal of the anticipated proceedings”. The separate US proceedings relating to Citi’s advice to Terra Firma at the time of the purchase may go to appeal in March.

EMI itself, is due to be split up into its recordings and publishing parts and sold to Universal Music and Sony/ATV respectively, assuming Citigroup’s plans get regulatory approval.

www.thecmuwebsite.com 11 January 2012

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