We’re getting a bit sick of banging on about the problems besetting EMI Records, but like a car crash, it can be hard to look away. Today’s installment in the running saga sees an article in mergers and acquisitions magazine The Deal, in which it quotes a letter from Terra Firma head honcho Guy Hands, who says the label is valued at a billion pounds more in debt than it is worth! The letter, written in November 2009 and tendered as a court document recently states:
“The proposal to recapitalize MP [Music Publishing] implies a value for this business of £1,462m (or 11.3 times Ebitda after deducting the per annum pension contribution) and the proposal to recapitalize RM [Recorded Music] implies a value for this business of £771m (or 5 times Ebitda after deducting the per annum pension contribution). Thus in total, the combined proposals lead to an implied total enterprise value for EMI of £2,233m (or 7.9 times combined Ebitda)” [EBITDA means Earnings Before Interest, Tax, Depreciation and Amortisation – Tone Deaf’s Finance Ed]
Considering that EMI is in £3.16 billion of debt, that’s a very hard sell to try and flog a billion pounds of net debt to any investor. Stay tuned for more details on this car crash happening in widescreen.
