Warner Music is planning a £470 million ($750 million) bid for EMI's recorded music division, according to media reports over the weekend, and may file a proposal with Terra Firma in the next few weeks.

This news comes less than two weeks after Terra Firma lost its lawsuit against Citigroup. A court victory or an out-of-court settlement would have given Terra Firma most room to breathe in its Citigroup debt used to acquire EMI in 2007.

Onlookers should remember that EMI and Warner Music Group have gone through this dance in the past - and never managed to get a deal done.

However, in the past EMI was not burdened with nearly as precarious a financial position. In this case, its lender, Citigroup has leverage. And, according to the Observer/Guardian report, Citigroup supports a sale to WMG: "Although Terra Firma boss Guy Hands says he is not interested in a sale, the U.K.-born tax exile is understood to be under pressure from Citigroup to do a deal... Citigroup is said to support a sell-off of EMI's recorded music division to American company Warner, led by Edgar Bronfman Jr, as part of a debt- reduction programme."

Another scenario offered by the Guardian would see Citigroup canceling debt in return for control of EMI's music publishing division. In that case, Terra Firma would have the freedom to seek a deal with WMG for EMI's record company.

EMI has publicly dismissed such scenarios. In an internal memo last week, reproduced in full at Billboard.biz, EMI Group CEO Roger Faxon dismissed the likelihood of four scenarios in which all or part of EMI would be sold to a competitor.