London – Major record label EMI, which has reportedly been
seeking to license its catalog as a means of making a crucial loan repayment,
has seen two potential suitors pass on such a deal while "last remaining
hope" Sony (NYSE: SNE) Music "is close to bowing out" as well, The Wall
Street Journal reported. EMI parent company Terra Firma is looking to raise as
much as $150 million to make a loan repayment to Citigroup, which helped
finance its $3.6 billion takeover of EMI in 2007.
One fundraising tactic EMI
has resorted to is potentially licensing its catalog to a competitor, who would
pay as much as $150 million per year for the rights to market and distribute
EMI titles in the U.S.
In addition to Sony, Universal Music Group was also reportedly in discussions
with EMI — which ended last week — while The Journal refutes an earlier
report that indicated Warner Music (NYSE: WMG) was in talks as well.
The Journal notes that
if EMI were still able to reach a licensing deal, it would "likely shut
down most of its operations in the U.S."
If Terra Firma and EMI
are not able to work out a licensing deal or raise funds via other means to
avoid defaulting on the payment, Citigroup could potentially "seize the
company, break it up and sell it."