Citigroup has acquired EMI Group and has recapitalized the major label group in a debt-for-equity swap, the two sides announced Tuesday.

As a result, the company's debt has been reduced by 65% from £3.4 billion to £1.2 billion, and the company has in excess of £300 million of cash available, EMI said in a press release. EMI's management team remains unchanged, with Roger Faxon as the group's CEO.

The transaction ends Guy Hands' troubled reign at EMI, which began with his £4 billion buyout of the company in 2007 through his private equity firm Terra Firma. The acquisition was financed with debt from Citigroup, and speculation has been rife in recent weeks that the company would take over EMI before March, when Terra Firma's debt to CitiGroup was due.

Following the appointment of Peter Spratt and Tony Lomas of PwC (PricewaterhouseCooper) as administrators to Maltby Investments Limited, the borrowing vehicle of British private equity firm Terra Firma, the administrators sold EMI and its immediate holding company Maltby Acquisitions, Limited to Citi. Immediately following the transfer in ownership, Citi effected a debt-for-equity swap to recapitalize EMI, the press release continues. The EMI Group continues under the same management and is now separate from MIL, which remains in administration.

Roger Faxon, EMI's chief executive, said: "The recapitalization of EMI by Citi is an extremely positive step for the company. It has given us one of the most robust balance sheets in the industry with a modest level of debt and substantial liquidity. With that solid footing, we are confident in our ability to drive our business forward. We have already made great progress in meeting the challenges facing our industry. The closer alliance between our two operating divisions is already delivering impressive results on behalf of the creative talent we are privileged to represent. We have a clear vision for the future, a strong and committed management team, and now the right capital and financial structure in place to deliver successful outcomes for artists and songwriters."

"Citi today took ownership of MAL, the holding company that controls EMI. In the process, the previously unsustainable debt load at EMI was reduced by 65%, leaving the company with a strong balance sheet and the ability to invest in and grow its business. This is a positive development for EMI, its employees, artists, songwriters and suppliers. Our objective is to have EMI perform its absolute best for our shareholders over time. EMI is an iconic business and we are completely supportive of both its management and its strategy. It is business as usual for everyone at EMI," said Stephen Volk, Vice Chairman of Citi, who will be the new Chairman of Maltby Acquisitions Limited.

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