EMI bank debt battle leaves artists wary

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Uncertainty over EMI’s financial future deters some prominent music industry executives and lawyers from signing artists to its record label as parent company battles debt burden with bankers of its 2007 takeover.

Terra Firma, the private equity firm run by Guy Hands, won over one of the first outspoken critics of its takeover of EMI: Tim Clark, manager of singer Robbie Williams. Two years ago, Mr. Clark accused Mr. Hands of acting like a plantation owner, but he told the Financial Times he was “incredibly satisfied” with EMI’s handling of his client’s latest album.

However, a clear majority of managers, music lawyers, consultants and financiers interviewed by the FT, most of whom asked not to be named, said the artists were reluctant to sign with EMI Music, the recorded music arm. of the group, due to the finance debt of the parent company. charged.

“It would be very difficult to tell your client that you should sign with EMI,” Jonathan Shalit, director of Jamelia and Myleene Klass, told FT. “It would be the same right now as saying you should buy a Toyota.”

Another official, who asked not to be named, said: “In terms of artists speaking to EMI, I have stepped down. I resisted because of the uncertainty.

Gary Borman, manager of Lady Antebellum, a Nashville band that has sold over a million albums in four weeks, said he was “thrilled” with EMI. “Their long-term financial stability is not of great concern to me. They are doing their job well, ”he said.

Debate over EMI Music’s ability to smash new acts and effectively market established stars is critical to Terra Firma’s chances of saving some of its investment from a stalemate with Citigroup over £ 3.2bn of loans.

Terra Firma, who sued Citigroup for driving the EMI auction, has until June to raise an additional £ 120million from investors or risk losing EMI to his bank, after auditors raised a “significant doubt” about the ability of the company to continue its activity. .

Managers and lawyers said EMI has made an effort to persuade artists that concerns about its capital structure have not affected its ability to generate success. There have been few signs of concerns from managers affecting its charts performance. EMI Music has signed around 200 artists over the past 18 months.

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