EMI has confirmed that it will receive “additional sums” from Terra Firma and its investors – thought to be £105 million ($153 million) – that will avoid a breach of the major’s loan covenant with Citigroup.
Maltby Capital, the investment vehicle used to acquire EMI, has informed Citigroup about the receipt of this confirmation for new equity.
The equity cure, which is expected to be completed by no later than June 14, gives Terra Firma breathing space for another year. Citigroup holds more than £3 billion ($4.4 billion) of EMI debt.
“We are very pleased to have received this confirmation of an additional investment, which is a vote of confidence in EMI from Terra Firma and its investors, following the significant improvement in the company’s operating performance,” said Charles Allen, executive chairman of EMI Music, in a statement.
It is unclear whether the extra investment will come entirely from the firm’s existing investors or another source of capital.
Hands had reportedly been hoping to raise £360 million ($524.6 million) to see EMI through any other covenant tests until 2015. Reuters reported that Terra Firma plans to go back to investors for the remaining £255 million ($371.6 million) at some point.