Citigroup takes over EMI

US banking group Citigroup has taken control of EMI, one of the world’s largest record
labels. The bank had previously given a large loan to Guy Hands to buy the company in 2007.
Hands was unable to repay his debts to Citigroup. Mark Gregory reports.
EMI owns the rights to some of the world’s best-known musicians, including the Beatles and
the rock band Coldplay. The company was bought for $6.5 billion by a private equity group
headed by one of London’s most prominent financiers, Guy Hands, in 2007, shortly before
the global financial crisis.
That valuation looked massively optimistic after the markets crashed and EMI’s new owner
was saddled with an unpayable legacy of debt. Citigroup, which bankrolled the deal, fought
for repayment of loans.
The issue was the subject of a high-profile court case in London, which Guy Hands lost. He
claimed Citigroup, his bankers, had duped him into paying too much for EMI by suggesting
there was a rival bidder when there wasn’t. EMI’s business performance improved
considerably under his ownership, but the debt burden was just too big.
It’s unclear what will happen now Citigroup have taken control, but the move means a big
chunk of EMI’s debt has been erased leaving it financially stronger.
Mark Gregory, BBC News

Vocabulary and definitions

rights	legal permissions to publish
private equity group	group of businesspeople which raises money among its members to buy another business or company
prominent	significant or well-known
valuation	judgement of how much something is worth
crashed	dropped suddenly and by a large amount
saddled with	burdened or responsible for
bankrolled	funded or financially supported
high-profile	famous or widely talked about
duped	tricked
chunk	portion or amount

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