Guy Hands has asked EMI Music chief executive Elio Leoni-Sceti to draw up a new plan for the recorded music company, in order to persuade Terra Firma investors to inject a reported £100 million ($158.5 million) of additional investment.

The Financial Times reports today (Feb. 4) that Hands' Terra Firma private equity group will have to ask its investors to inject about another £100 million. Other reports have it at £120 million ($190.2 million).

The FT says that without the injection, EMI's recorded music business would otherwise not be able to meet the terms of its loans from Citigroup this year, citing people familiar with its accounts.

Terra Firma needs to raise the funds to salvage the remainder of its equity in investment vehicle Maltby Capital, and so avoid losing control of the company to Citigroup which holds its £2.6 billion ($4.1 billion) debt. The lending terms will be tested again March 31, and further cash injection into EMI will need to happen by the end of June 2010 to avoid the covenant breach.

Maltby Capital is due to publish its accounts at Companies House today.

"The report when published will show that EMI Music is doing well. Revenues are rising in a declining market," an EMI spokesperson tells Billboard.biz. "The company has been increasing its market share and operating profits have increased substantially both last year and in the current year.

"The new strategic plan that Terra Firma has asked EMI Music to draw up will build upon these successes."

EMI declined to comment on the FT report regarding further Terra Firma injections into EMI. Terra Firma declined to comment.

The accounts are set to show that EMI Music will fall short of its covenants on its debt when these are tested between March and December this year, and could endure more shortfalls next year.

Terra Firma will need to get approval from at least 75% of voting investors in its two most recent funds. It has already written to investors to say it is considering the move, dependant on the new EMI Music business plan.

Last year the private equity firm did get investors' approval for an aborted plan to put £1 billion ($1.6 billion) of new equity into EMI in return for Citigroup writing off £1 billion of debt.

Past shortfalls, totaling around £100 million ($158.5 million), have been made up from money set aside by Terra Firma, but the FT says this has now been almost exhausted.

Terra Firma has written down its equity in EMI by 90%, which is set to result in a huge loss for the year to March 2009. EMI declined to comment on advance reports of the loss - expected to be up to £1.4 billion ($2.2 billion).

It is understood that the major has to include a huge impairment charge against the business of around £1 billion ($1.6 billion) in its accounts. The rest of the loss is down to restructuring costs and interest.

Terra Firma paid £4.2 billion ($6.67 billion) for EMI Group in 2007 before the credit crunch hit and at the height of the private equity boom.

Last month Terra Firma launched a lawsuit against Citigroup, demanding billions of dollars in damages relating to its 2007 buyout of EMI.

Citigroup acted as adviser for EMI and sole financier to Terra Firma. Terra Firma accuses Citigroup of fraud. The U.S. bank has said the lawsuit is "without merit."

The operating performance of the company has improved as a result of cost cutting and the stability of its music publishing income.

According to figures released last year, earnings before interest, tax, depreciation and amortization rose from £164 million ($259.7 million) to £298 million ($471.8 million) for the financial year to the end of March 2009.

EMI Music also had a strong week on the Billboard 200 this week with four out of the top 10 titles - the first time the major has done that in 12 years. Lady Antebellum's second album, "Need You Now," is at No. 1, selling 481,000, according to Nielsen SoundScan.