EMI is in talks to allow rival labels to manage its back catalog in order to raise funds and prevent a takeover from its lender, reported the Sunday Times.

EMI, owned by Guy Hands' private equity group Terra Firma, is trying to put in place a new business plan as it faces a covenant shortfall on its £2.6 billion ($3.95 billion) debt.

The group is said to be offering other labels the chance to manage its North American catalog business for a five-year period, which Terra Firma thinks could raise £400 million ($601 million), enough to stave off a looming takeover by lender Citigroup, the newspaper said.

EMI declined to comment.