The private equity tycoon Guy Hands has won the battle to keep control of EMI Music, whose artists include Kylie Minogue and Robbie Williams, after raising enough investment to avoid the beleaguered label defaulting on its loans.
Terra Firma, which is run by Mr Hands, yesterday confirmed it was to meet the "equity cure" for EMI of about £105m after a frantic week of negotiating with the label's investors. The company now has until 14 June to pay Citigroup, the US bank which provided the bulk of the £3.2bn loans.
EMI is owned by Terra Firma, although the label's debt and equity sits in the parent company, Maltby Investments. It needed an equity cure of £105m to prevent the label from falling into the bank's hands and possibly being broken up and sold off.
Charles Allen, executive chairman of EMI Music, was delighted after his business plan proved crucial to bring the potential investors on board.
"We are very pleased to have received this confirmation of an additional investment," he said, before adding it was "a vote of confidence in EMI from Terra Firma and its investors, following the significant improvement in the company's operating performance".
The plans drawn up by Mr Allen include the potential sell-off of the Japanese operation and its Christian music arm. The need to turn to investors came after a potential licensing deal with two rivals collapsed when they failed to agree terms.
This is not expected to be the end of the shareholder support for EMI. Terra Firma is likely to need more funds – currently estimated at £255m – to cover loans due to mature in 2015.
The private equity group bought EMI in 2007, at the peak of the leverage bubble, in a deal worth £4.2bn. The company was then hit by the onset of the global financial downturn and is part of an industry struggling to cope with structural change of the digital revolution.
Sony Music has reportedly been considering a move for all or part of the business.Reuse content