EMI cuts losses, but faces more debt woes
Record labels may need to wean themselves off Apple’s powerfuliTunes digital music store, music major EMI signaled Wednesday inreporting its latest financials. It also warned that it will needto raise more money to stay independent as it continues to strugglewith a huge debt burden following its private equity buyout.
EMI reported that it reduced its annual losses by two-thirds -thanks to the re-release of The Beatles’ catalogue and hits fromKaty Perry and Lady Antebellum, but warned that it needs millionsmore in the coming years to stay out of the hands of lenders.
While the company seems to generate enough cash to cover interestpayments on its high debt burden, its banking covenants willtighten next year and beyond. Breaching them could lead to atakeover by lenders.
According to PaidContent, the company in a filing listed this one amongrisks it faces: “The substantial dependence on a limited number ofonline music stores, in particular the iTunes Store, for the onlinesale of music recordings, and the resultant significant influencethat they can exert over the pricing structure for on-line musicstores.”
Meanwhile, Sky News reported that EMI’s private equity owner Guy Hands andhis firm Terra Firma will next month hold settlement speaks withCitigroup in a multi-billion pound legal action. Hands has blamedCiti for overpaying in his £4.2bn takeover of EMI, saying it hadclaimed other suitors were still eyeing the music firm when theyhad already abandoned possible bids. Citi has denied theallegations.
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Submited at Wednesday, August 18th, 2010 at 4:00 pm on Music by jessica
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