Terra Firma invests extra £200m in EMI

Terra Firma has told staff at portfolio company EMI its plans to revive the fraught music group. Terra Firma intends to cut costs by £200m and will make between 1,500 and 2,000 staff redundant. The group's marketing budget will be curtailed, while spend on digital marketing will rise and acquisitions are likely in the music publishing side of the business.

Terra Firma completed the £4bn take-private of EMI as July's liquidity crisis unfolded, pushing lead arranger Citigroup into precarious waters. As part of a restructuring of the business in the new year, Citigroup has reduced its debt in the deal from £2.7bn to £2.5bn. Simultaneously, Terra Firma has raised £250m as part of a co-investment fund for EMI and invested an additional £200m of its equity. According to reports, Terra Firma has also agreed a set-up of 'unlimited cure rights' with Citigroup, which enables it to inject extra equity and count it as operating profit until 2010.

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