Pension fund hole adds to EMI's problems
The pension fund at EMI is in deficit to the tune of at least £115m, the music group has admitted, more than ten times the amount it previously suggested, presenting the heavily indebted company's private equity owners with a new cash crisis.
And the final amount of money needed to top up the fund could hit £217m, according to the company's annual report, out yesterday.
The pension deficit adds to financial problems at the company, which already needs hundreds of millions of pounds in cash infusions from its owners over the next four years if it is not to fall into the hands of its main lender, Citigroup. Stronger operating profits – thanks to big hit albums from the likes of Lady Antebellum and Katy Perry – are still not enough to prevent the company breaching its covenants, the report reiterated.
The Pensions Regulator failed to negotiate a deal between EMI and its pension trustees, so the matter has been passed to a formal determinations panel. EMI has dropped its argument that the deficit is only £10m, but will still argue that it is at the low end of the range.
Eric Champion, chairman of the EMI pensioners' association, said: "We think the regulator will be fair but the question that follows is whether the company will follow – or be able to follow – its ruling."
Terra Firma, the private equity group controlled by Guy Hands, acquired EMI in 2007. As well as offering the debt financing, Citigroup also ran the auction of the company, and Terra Firma is suing the bank, claiming it was misled during the auction process into paying over the odds for EMI. The two sides have scheduled arbitration proceedings in front of a US judge next month, in the hope of avoiding a courtroom showdown.
educationTo mark International Women's Day, Sarah Brown on how charities have brought proper joined-up thinking to the delivery of education
Lammily: Barbie-like doll hits Kickstarter fundraising target in a day
12 Years A Slave star Lupita Nyong’o on racism in beauty: 'Every day I woke up hoping my skin was a little bit lighter'
Belle Knox: How a porn star student from Duke University became bigger than Justin Bieber
Oscar Pistorius trial: Neighbour feared South African athlete would use gun that killed his girlfriend Reeva Steenkamp to shoot himself
Top 10 most expensive cities in the world: Singapore named costliest place to live – but what about London?
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
- 1 The future of sex: The first female condoms were derided, mistrusted and shunned - but will their modern counterparts catch on?
- 2 South African rhino finally put down after roaming Kruger park for days with horn hacked off and bullet in brain
- 3 Study suggests that 'gaydars' are real - at least for women
- 4 Man stabbed with Legend of Zelda Master Sword in serious condition
- 5 First clip of Outkast's Andre 3000 in Jimi Hendrix biopic All Is By My Side emerges
iJobs Money & Business
£1200 per month: Inspiring Interns: Our client is one of Europes leading mobi...
£18000 - £19000 per annum: Inspiring Interns: Our client is the UKs leading i...
£30000 - £45000 per annum: Inspiring Interns: A (non-bank) fast-growing intern...
£40000 - £80000 per annum + Very Compeititve Salary: Austen Lloyd: Corporate F...