Guy Hands is seeking to recover documents about reductions to EMI Group Ltd.’s debt in a move to review the deal that led Citigroup Inc. to seize control of the music label, three people with knowledge of the matter said.
Lawyers for Hands’s private-equity firm, Terra Firma Capital Partners Ltd. and PricewaterhouseCoopers LLP, which was EMI’s administrator in the restructuring process, met yesterday in a London court at a so-called pre-action disclosure hearing, said two of the people, who declined to comment because the matter is private. Terra Firma will formally present a request to the High Court by December to obtain the valuation documents used as the basis of the EMI debt deal, they said.
Citigroup gained control of EMI in February as the record label struggled to meet the terms of 3.4 billion pounds ($5.4 billion) in loans used to finance its takeover by Terra Firma in 2007. New York-based Citigroup has since initiated a process to sell the 114-year-old British company.
The U.S. lender ended up owning all of EMI after the debt-for-equity swap reduced EMI’s debt by 65 percent to 1.2 billion pounds, EMI said in a statement then.
Officials at Citigroup, Terra Firma, EMI and PricewaterhouseCoopers declined to comment today. Sky News reported earlier today that Hands had started legal proceedings over EMI. No lawsuit has been filed.
Pre-action disclosure in the U.K. allows claimants to obtain copies of documents before a possible lawsuit.
Coldplay, Snoop Dogg
EMI has both production and publishing units that sign and promote singers and songwriters such as Coldplay, Snoop Dogg and Pink Floyd.
Last year, Hands lost a U.S. lawsuit over claims Citigroup had tricked him into buying EMI, and sought extra cash from his backers to stop the label breaching debt covenants.
Talks between Hands and Citigroup to restructure the debt broke down in November over the valuation of the record label. By then, Hands’ firm had written down the value of its 2.6 billion-euro EMI investment to zero.