EMI, whose artists include Lily Allen, is the subject of fierce battle between Terra Firma and Citigroup Music group EMI is due to begin a courtroom showdown with US bank Citigroup, amid reports that the two sides may yet reach a last-minute deal.
The investment bank faces allegations – fiercely rejected – that it tricked Guy Hand’s private equity firm, Terra Firma, into overpaying for EMI in 2007.
Newspaper reports have said that the combatants held peace talks about the £4.2bn ($6.7bn) takeover of EMI.
Unless a last-gasp deal is agreed, the case will open in New York on Monday.
Mr Hands wants damages and for Citi to agree to restructure the £3bn it lent Terra Firma to finance the deal, easing pressure on EMI’s finances.
David Wormsley, Citi’s main financial adviser on the deal, is accused of encouraging Terra Firma to pay more for EMI by telling Mr Hands that Cerberus Capital Management was still in the race to buy the music group.
Citi denies the allegations, arguing that Terra Firma had already approved the EMI bid before the conversation took place.
The case is said to centre on three phone calls between Mr Hands and Mr Wormsley in the days before bids for EMI were due.
Meanwhile, EMI, whose artists include Lily Allen and Robbie Williams, has finally agreed a plan with its pension fund trustees to pay off the £197m deficit in the EMI pension scheme.
The dispute between the two sides had threatened the company’s solvency and forced the pensions regulator to intervene.
EMI said it would pay the £197m in instalments between now and April 2016.
EMI’s chief executive Roger Faxon, said: “I am very pleased that we have been able to work with the trustee board to resolve all outstanding matters and reach this amicable agreement, which is aimed at reassuring members of the fund of the security of their pensions.”
But the pensions regulator made it clear that the repayment plan had only been agreed because it had threatened to impose a deal.
“As is often the case, our ability to impose a solution provides an incentive for parties to agree, even if at the last moment,” said June Mulroy, a director at the regulator.
“We are determined that scheme funding targets are set with appropriate levels of prudence, and we will not hesitate to invoke our powers where necessary.”
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